Employee Benefits Update April/May 2018

This issue’s topics include:

Tax Cuts and Jobs Act gives ― and takes away

While early drafts of the Tax Cuts and Jobs Act proposed significant changes to qualified retirement plans, the version that passed has minimal impact on them. However, the Tax Cuts and Jobs Act (TCJA) did make some notable adjustments to the tax treatment of other types of employee compensation and benefits, for both employers and employees. Here’s a closer look at how corporate compensation and family and medical leave tax incentives are affected. A short sidebar discusses the TCJA’s impact on employee achievement awards, moving expenses and transportation fringe benefits.

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Green Tax Reform Binder with information on the Tax Cuts and Jobs Act of 2017

Cash balance plans growing at a double-digit clip

The hybrid pension design known as the cash balance plan is on a roll. An analysis of the most recent IRS Form 5500 filings available reveals a 17% jump in the number of cash balance plans in 2015, while 401(k) plan formation growth was a meager 3%. This article examines which businesses may be interested in this type of plan.

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Interpretation or statutory violation?

Why it matters when deciding remedies
Do ERISA plan participants who believe a plan has treated them unjustly have to exhaust their administrative remedies before filing an action in court? Last year, the U.S. Sixth Circuit Court of Appeals joined all but two other circuits in finding that plan participants don’t have to do so. This article examines the split between the circuits and the Sixth Circuit’s conclusion.
Hitchcock, et al. v. Cumberland Univ., et al., No. 16-5942 (6th Cir. 2017).

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DOL increases scrutiny of defined benefit plans

Defined benefit plan sponsors might be facing tighter scrutiny from the U.S. Department of Labor (DOL). Last year the DOL’s Employee Benefits Security Administration ramped up pension audit operations in its Philadelphia office, and later decided to do so elsewhere, the agency announced at an ERISA Advisory Council meeting. This short article highlights what the DOL is focusing on in their audits.

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Compliance alert

This feature lists a few key tax reporting deadlines for April and May.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our Employee Benefit Plan Services, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update February/March 2018

This issue’s topics include:

Identity theft threat puts plan participants and sponsors at risk

News of commercial database hackings involving millions of people’s personal information seems commonplace. While many of these stories focus on bank and credit card accounts, many plan sponsors and participants don’t realize that 401(k) plan assets may be at risk — which can be a problem not only for participants, but sponsors as well. While no sponsor wants to see participants sustain financial hits, this article covers when, depending on how a cybertheft unfolds, sponsors could be left holding the bag. A sidebar offers tips for avoiding being a victim of fraud.

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Fiduciary rule’s tortured path to implementation

What this means for plan sponsors
Controversy, complicated legal wrangling and legislative maneuvering have been swirling around the Department of Labor’s “fiduciary rule” governing financial advice given to retirement plan participants. Delays, modifications, phased effective dates, and the involvement of the Securities and Exchange Commission have left confusion and headaches in their wake. This article briefly reviews what plan sponsors need to know.

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Tax cut law a mixed bag for retirement plan sponsors

Despite early indications that Congress was prepared to do much more, the Tax Cuts and Jobs Act (TCJA) that was passed in December largely left retirement plans unscathed, save for changes pertaining to plan loans and IRA conversions. This article reviews areas that are affected, as well as what could be ahead.

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2017 vs. 2018 retirement plan limits

This chart contains updated retirement plan limits for 2018.

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Compliance alert

This feature lists a few key tax reporting deadlines for February through April.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update: Year End 2017

This issue’s topics include:

Deciding what to do with orphaned 401(k) plan accounts

Sponsors of qualified retirement plans with orphan accounts need to consider whether such accounts are a problem. This article examines the state of orphan accounts and why the way plans charge administrative fees can help determine whether it’s beneficial to keep them in the plan. A short sidebar discusses the plan sponsor’s fiduciary duty to all plan participants, whether they’re active employees, former employees who have moved on to other jobs, retirees or beneficiaries.

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How high can you go?

Participants willing to accept higher default deferral rates

It’s generally accepted that a 3% deferral rate won’t get many employees where they need to be financially as they approach retirement. Most employees will need a figure closer to 10%, yet 3% has traditionally been the most common default deferral rate used by plans that auto-enroll participants. This article highlights why this is changing.

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Reimbursement road map for sponsor services

When retirement plan sponsors perform administrative services on behalf of the plan, they can be reimbursed by the plan for those services. This brief article examines why meticulous expense documentation is essential and reviews a recent case on the subject.

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Why adding a Roth 401(k) option could boost employee savings

A decade after they first became available, Roth 401(k) plans are now offered by many employers. Employees are also getting on board — particularly the younger ones — even without fully understanding how they work. This article looks at the pluses and minuses of Roth 401(k)s compared to traditional 401(k)s and Roth IRAs and reviews some data that highlights how employees are reacting to the Roth 401(k) option.

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Compliance alert

This feature lists a few key year-end tax reporting deadlines.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update: October/November 2017

This issue’s topics include:

Staging a comeback

Stable value funds are back in the spotlight

It’s been awhile since stable value funds reigned as a top investment choice for 401(k) plan participants. Very low prevailing interest rates and a booming stock market have diminished their status. Although no one is predicting they’ll unseat target date funds as the top investment election for retirement investors, stable value funds have staged a bit of a comeback recently. This article explores just what’s behind the renewed interest.

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Are you going to file Form 5500 on time?

Play it safe and avoid penalties

Missing filing deadlines for Form 5500, Annual Return/Report of Employee Benefit Plan, for retirement and health and welfare plans can be extremely costly. The best way to avoid trouble is to ensure that meeting filing deadlines never falls between the cracks. This article summarizes the penalties for delinquent filing of Form 5500 and whether plan sponsors can use the DOL’s Delinquent Filer Voluntary Compliance Program.

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Target date fund labels can obscure their investment strategy

The proliferation of target date fund (TDF) varieties can bewilder many plan sponsors. One survey found that, while 65% of plan sponsors consider investment performance the most important selection criterion when choosing a TDF, 54% aren’t confident about how to benchmark the TDFs against others in the marketplace. This article examines how to compare competing TDFs by segmenting them into logical categories.

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GAO report: Some plan designs may reduce retirement savings

Retirement plan sponsors have ways to limit their outlays for very young employees, and those that move to other employers soon after coming on board. The General Accountability Office (GAO) recently analyzed those plan design opportunities, and is sounding alarm bells. This short article highlights the GAO’s concerns that these options can reduce employees’ ultimate retirement savings potential.

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Compliance alert

This feature lists a few key tax reporting deadlines for October and November.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

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Employee Benefits Update: August/September 2017

This issue’s topics include:

Voluntary Correction Program

How to correct 401(k) plan loan “failures”

“To err is human; to forgive is divine,” as the familiar saying goes. But the IRS will forgive errors involving 401(k) plan loans only when retirement plans use the Voluntary Correction Program (VCP). One of the biggest areas that trip up plan sponsors is plan loans. This article summarizes the three primary “failures” involving plan loans that require an IRS remedy: loan defaults, loans exceeding prescribed loan limits, and loan terms that exceed repayment limits. A brief sidebar reviews the accounting implications of loan defaults.

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Making age a factor in choosing QDIA options

Target date funds (TDFs), the most popular 401(k) qualified default investment alternative, were designed to meet the investment needs of typical plan participants, no matter what their age. The theory is that employees can essentially “set it and forget it,” as TDF portfolios are automatically adjusted from aggressive to more conservative as employees approach and proceed through retirement. That theory, however, has been challenged by research pointing to participants’ failure to use TDFs as intended. This article examines why this is, and what employee benefit plans can do about it.

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Active vs. passive investment funds: Should you let participants decide?

According to a report from Casey Quirk by Deloitte and McLagan, 72% of money invested into funds went into passive funds in 2015. While some may see this as a strong case for passive investing, the issue for plan sponsors isn’t clear-cut. This article summarizes recent data on the trend and whether passive or active funds are right for participants.

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Consider your options with nonvested participant forfeitures

Employee benefit plans provide a combination of vested and nonvested assets. When employees leave a company before their matching 401(k) contributions have vested, they forfeit those amounts. This brief article reviews the options available to plan sponsors when dealing with these assets.

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Compliance alert

This feature lists a few key tax reporting deadlines for September.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

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Employee Benefits Update: June/July 2017

This issue’s topics include:

Is a safe harbor plan the right move?

This alternate approach can save headaches, but at a price
Many qualified retirement plan sponsors worry each year about whether their highly compensated employees will have “excess” salary deferrals returned to them because the plan failed the actual deferral percentage / actual contribution percentage (ADP/ACP) discrimination tests. Most small plan sponsors take advantage of “safe harbor” rules that, nearly always, eliminate the need to worry about passing these tests. This article looks at the pros and cons of this approach.

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Avoid litigation with attention to common red flags

Any size retirement plan can run into serious trouble when sponsors aren’t careful. With some planning, though, a qualified retirement plan doesn’t have to be the target of ERISA litigation. This article reviews some of the most common red flags leading to litigation and reminds plan sponsors of the importance of regularly reviewing fees and expenses.

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Employees who are approaching retirement age may be unaware of their required minimum distribution (RMD) obligations, which begin at age 70½ for both individual

Helping soon-to-be retirees understand RMD rules

IRAs and 401(k)s. This article summarizes what they need to know for financial and tax-planning purposes.

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IRS simplifies process for avoiding rollover penalties

The IRS has made it a lot easier for retirement plan participants (and IRA owners) to avoid penalties when they botch a rollover. This brief article discusses new IRS Revenue Procedure 2016-47, which allows participants to “self-certify” valid reasons to the receiving financial institution.

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Compliance alert

This feature lists a few key tax reporting deadlines for April and May.

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As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please feel free to contact me directly.

Want to learn more?

Join our Employee Benefit Plan Resources group on LinkedIn for more frequent updates on recent developments and best practices and discuss related topics with your peers.

Join the Group

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Audit & Accounting Update: May 24, 2017

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest financial reporting insights. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Stock compensation: Scope of modification accounting
ASU 2017-09 requires an entity to account for the effects of a share-based payment award modification unless certain conditions are met.
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Customer of operation services in a service concession arrangement
Per the FASB, the grantor is the customer of the operation services for service concession arrangements within the scope of ASC 853.
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FASB tentative decisions regarding down round features
The FASB recently completed its redeliberations regarding the accounting for certain financial instruments with down round features.
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Questions regarding ASU 2015-12
Employee benefit plan administrators commonly have raised three questions related to the implementation of ASU 2015-12.
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Audit and Accounting Updates for Business Owners and Financial Professionals

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/financial-reporting-insights.html

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please contact us directly.

Audit & Accounting Update: May 18, 2017

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest financial reporting insights. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

New Revenue Recognition Resource Center goes live
RSM US LLP recently launched a Revenue Recognition Resource Center with information about the new guidance in FASB ASC Topic 606.
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IRS permits self-certification for safe-harbor hardship distributions
Two recent IRS memorandums provide guidance on plan participant hardship distribution substantiation requirements.
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Audit & Accounting Guide for employee benefit plans updated
The American Institute of Certified Public Accountants Audit & Accounting Guide, Employee Benefit Plans, was recently updated.
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Proposed reporting on financial statements of plans subject to ERISA
A recent AICPA proposal addresses the auditor reporting model for audits of employee benefit plans that are subject to ERISA.
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Audit and Accounting Updates for Business Owners and Financial Professionals

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/financial-reporting-insights.html

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please contact us directly.

Audit & Accounting Update: April 27, 2017

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest financial reporting insights. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Premium amortization on purchased callable debt securities
A recent ASU requires the premium on certain callable debt securities to be amortized to the earliest call date.
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Changes to revenue recognition impacting insurance entities
Our whitepaper discusses changes to revenue recognition impacting third-party administrators, agents and brokers in the insurance sector.
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Auditor’s consideration of ability to continue as a going concern
A new standard provides some revised guidance on the auditor’s consideration of an entity’s ability to continue as a going concern.
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Proposed revisions to Government Auditing Standards
The United States Government Accountability Office is seeking comment on its 2017 Exposure Draft of Government Auditing Standards.
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SEC makes inflation adjustments to certain JOBS Act rules
The SEC recently made inflation adjustments to certain Jumpstart Our Business Startups Act rules, and other technical amendments.
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Proposed improvements to IFRS 8
If finalized, recent proposed amendments would make revisions to International Financial Reporting Standard 8, Operating Segments.
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Audit and Accounting Updates for Business Owners and Financial Professionals

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/financial-reporting-insights.html

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please contact us directly.

Audit & Accounting Update: March 9, 2017

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest financial reporting insights. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Changes to revenue recognition for financial institutions
In our whitepaper, we discuss the relevance of the FASB’s new guidance for certain categories of revenue for financial institutions.
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Clarification of derecognition guidance for nonfinancial assets
FASB ASU 2017-05 clarifies the scope of asset derecognition guidance and the accounting for partial sales of nonfinancial assets.
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FASB’S ongoing efforts to simplify hedge accounting
Our article highlights decisions made at the February FASB meeting related to its ongoing efforts to simplify hedge accounting.
Read more

 

Audit and Accounting Updates for Business Owners and Financial Professionals

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/financial-reporting-insights.html

As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our service offerings, please contact us directly.

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