In a revenue ruling, the IRS further standardized a benchmark it first proposed in 1991 for determining when a partial termination of a defined contribution retirement plan under IRC section 411(d)(3)(A) has occurred. The provision comes into play often when employers downsize, as in the scenario of the ruling, 2007-43,
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TOPICS / TAX
Employee benefits
S Corporation Profits or Payday
EXECUTIVE SUMMARY CPAs can help their clients determine what is a reasonable salary to pay shareholder employees (SEs) of S corporations, thus satisfying an IRS priority to collect proper amounts of employment taxes. Distributions, including “disguised distributions” such as a loan to an SE by the corporation or in-kind
Managed Accounts
EXECUTIVE SUMMARY A growing number of companies are beginning to offer employees professionally managed accounts for 401(k) assets. In these managed accounts, an independent investment manager handles investment decisions, makes portfolio changes as needed based on each participant’s specific needs and risk tolerance, and rebalances the
Turn the Spotlight on Tax-Friendly Benefit Options
Young employees are in the dark when it comes to retirement planning, and as a result, potential tax savings are slipping through their fingers, according to a taxpayer survey by CCH and Harris Interactive. Employees ages 18 to 24 were least likely to use company-sponsored 401(k) plans—participation rates sit at
Time to Rethink Your 401(k) Plan?
EXECUTIVE SUMMARY The PPA has made it easier for plan sponsors to automatically enroll employees in a retirement plan by eliminating the worry over state withholding laws. It delineates a new safe harbor automatic enrollment provision that starts the automatic deferral at 3%, raising it by
Taking Stock of ESPPs
EXECUTIVE SUMMARY Employees of corporations with an employee stock purchase plan (ESPP) often fail to participate fully in the plan because they don’t understand why it can be a good deal. Many plans offer a purchase discount of as much as 15%. Effectively, the discount can
Choose the Right Health Care Account
EXECUTIVE SUMMARY Health spending accounts offer opportunities for employees to save and pay for health care with pretax contributions. Three basic types are flexible spending arrangements (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs). FSAs are typically funded by pretax payroll deduction and are
To Roth or Not to Roth?
EXECUTIVE SUMMARY Companies took a wait-and-see attitude toward the Roth 401(k) in the plan’s first year, but researchers say 2007 is nearly certain to see rapid growth in participation by companies and enrollment by employees. CPAs can help workers decide between a traditional and a Roth
Hired Help: Finding the Right Consultant
EXECUTIVE SUMMARY CPAs can help companies hire consultants to deal with a wide variety of employee benefits challenges including managing the rising cost of health insurance, maintaining competitive benefits offerings and dealing with the complexity of pension and other retirement plans. Before hiring a benefits consultant, companies should check
Too Much of a Good Thing
EXECUTIVE SUMMARY Companies that allow employees to invest their 401(k) accounts in company stock face a serious risk if the stock declines precipitously. Faced with large losses, employees can take legal action to recover their retirement savings. To head off trouble, companies should consider limiting how much 401(k) money employees
Smart Stops on the Web
EMPLOYEE BENEFIT SITES Know the Law www.dol.gov/ebsa Firms shopping for health insurance will want to read up on the potential pitfalls at the Department of Labor’s Employee Benefits Security Administration Web site. Focus on Health Care Fraud has fact sheets on how to protect your employees when purchasing health insurance
Outrageous Employee Benefits
EXECUTIVE SUMMARY THE PARTNERS AT VITALE CATURANO & CO. (VCC) have listened carefully to what employees and potential hires say matters to them in the workplace—growth, intellectually stimulating and diverse projects, and a sense of being appreciated. VCC ATTRACTS STAFF AND ENCOURAGES LOYALTY by offering a generous work/life incentives program
IRAs and 401(k)s: How to Pick the Best Plan
EXECUTIVE SUMMARY RETIREMENT PLANS ARE OFFERED BY a variety of providers, including financial institutions, insurance companies and payroll service providers. But adherence to IRS regulations is the responsibility of the business owner. ANY BUSINESS WITH ONE EMPLOYEE that does not have any other type of retirement plan can set up
Class-Based Pensions
EXECUTIVE SUMMARY CLASS-BASED PENSIONS, WHICH GROUP EMPLOYEES in different categories for purposes of determining employer plan contributions, are one way companies can reduce pension costs and increase benefits to key employees. Larger organizations often use class-based plans to provide employee incentives or reward productivity. COMPANIES CAN DEFINE CLASSES IN A
Employer-Provided Education Benefits
EXECUTIVE SUMMARY MANY EMPLOYERS PROVIDE EMPLOYEES WITH TAX-FREE education benefits. The two most common are scholarships and grants under IRC section 117 and education-assistance programs under section 127. There is, however, a third alternative: CPAs can recommend using the working condition fringe benefit of IRC section 132(d). SCHOLARSHIPS UNDER SECTION
Military Call-Up Prompts Focus on USERRA
EXECUTIVE SUMMARY THE UNIFORMED SERVICES EMPLOYMENT AND Reemployment Rights Act of 1994 (USERRA) gives employees who take a leave of absence for active military service certain statutory rights—not only to reemployment but to specific coverage for retirement and wellness benefits. THE LAW APPLIES TO ALL EMPLOYERS in the United States,
Health Care Costs on the Rise
EXECUTIVE SUMMARY THE COST OF PROVIDING EMPLOYEES WITH HEALTH insurance coverage is increasing at a double-digit rate. Businesses are seeking to solve the problem by decreasing their premium contributions, changing the products they offer or the insurer and even reducing coverage. CPAs can help suggest cost-saving strategies to reduce the
Mutual Fund Redemptions
EXECUTIVE SUMMARY CLIENTS REDEEMED A RECORD AMOUNT OF MUTUAL FUND shares during the summer of 2002, apparently fed up with markets that continued to decline. CPAs can help these investors use the basis elections in Treasury regulations section 1.1012-1 and the capital loss provisions in IRC sections 1211 and 1212(b)
Accounting
For news from the AICPA and state societies, visit www.cpa2biz.com , which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. FASB issues Statement no. 147, Acquisitions of Certain Financial Institutions ( www.fasb.org/news/nr100102.shtml ). It provides guidance on accounting for all such
Securities
The SEC proposes two rules governing mutual funds’ and investment advisers’ proxy voting on behalf of their investors and clients, respectively. The first proposal ( www.sec.gov/rules/proposed/33-8131.htm ) would require mutual funds to disclose the policies and procedures they use to determine how to vote proxies relating to their shareholders’ securities.
Features
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Get ready for tax season with the JofA’s annual filing season quick guide, an easy-to-use compilation of dollar thresholds, tax tables, standard amounts, credits, and deductions. Download and print for quick reference this tax season.
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