Are you compliant with new 401(k) Fee Disclosure Rules?

Jennah Purk, CPA, MST

You may have noticed that new rules regarding fee disclosures for retirement plans from the Department of Labor have been in the news recently.  Note that these are not new fees, but the fee disclosure requirement is new.  Two of the new requirements include:

1.       Retirement plan vendors were required to provide plan sponsors with required fee disclosures by July 31, 2012.  This is referred to as the 408(b)2 disclosure.

2.       Plan sponsors are required to provide plan participants required fee disclosure information by August 31, 2012.  This is the 404(a)5 disclosure.

The new rules also impose a requirement that plan sponsors not only fulfill the disclosure requirements but that they now examine the disclosures to ensure they are adequate and determine that the fees charged are reasonable and fair.  Many plan sponsors may not be aware of these additional duties.

Be aware that these new fee disclosure rules are different from fiduciary standards for plan sponsors.  The DOL has prepared a fact sheet on these new requirements you may view here.

Slower refunds next year???

Scott Pinkowski, CPA

According to IRS officials, due to the rapidly increasing problem of identity theft, refunds this coming year will be slower due to additional work required to verify the return has not been fraudulently filed.  Identity thieves are using stolen social security numbers to file unauthorized returns early in the season and the victims are not aware their identity has been stolen until they file their return to find it rejected.

A few reminders about identity theft…

·         The IRS does not initiate contact requesting personal info via e-mail.

·         When unsure about who is contacting you, contact the IRS with a known phone number from their website and explain the situation.  This goes for other companies too. 

·         Use a reputable return preparer.

·         And, as always, be aware of what companies and what individuals you are allowing access to you personal information including bank account numbers and Social Security numbers.

·         For more information on identity theft and the IRS click here.

New ERISA Fee Disclosure Deadline is Looming

Rachel Smith, CPA

Do you know those packages that you get from your company's retirement plan service provider?  The ones that are sitting unopened in a pile on your desk or on the floor?   Well, you will want to open those soon since they likely contain information that you as your company's plan sponsor will need to pass on to your employees as soon as possible.  The DOL finally issued the final regulations relating to ERISA fee disclosure requirements earlier  this year.  Many people have been uncertain what these new rules mean, but not taking the time to figure it out could disqualify your company's retirement plan.  The DOL now considers it part of the Plan Sponsors job to not only pass the fee information on, but also to evaluate the quality of the services that the plan participants are receiving for the price that they pay.  A summary of the due dates and requirements are below.

Effective July 1, 2012 – Service Providers must provide fee disclosures to the Plan Sponsors.

Effective August 30, 2012 – Plan Sponsors must provide fee disclosures to Plan Participants.  An example of the fee disclosure form may be found at http://www.dol.gov/ebsa/pdf/401kfefm.pdf

November 14, 2012, quarterly expense statements are required to be provided to Plan Participants starting with the quarter ending September 30, 2012.  Going forward, participants must receive the expense statement within 45 days of the end of the quarter.

If your service provider failed to provide the information by July 1, it is the plan fiduciary's responsibility to request it and pass the information on to the participants by the end of August.  If you have made reasonable attempts to obtain this information and the service provider still refuses, you can report them to the DOL by filing a notice online at www.dol.gov/ebsa/regs/feedisclosurefailurenotice.html.

What can you do to prepare?

1.       Determine who is your company's responsible plan fiduciary.

2.       Determine which of your covered service providers are included in the regulations.

3.       Contact those covered service providers and ask when they will provide the required disclosure, if they haven't already.

4.       Determine if the disclosure provided complies with the new regulations.

5.       Document your review of fee reasonableness and retain all documentation.  Reasonableness may be determined by comparing the fees paid by your plan to other plans by requesting bids from other service providers.

6.       Pass the information on to your plan participants.

Sounds easy, right?  For more information regarding the DOL regulations go to http://www.dol.gov/ebsa/newsroom/fs408b2finalreg.html.

Good luck!

Missouri Back-to-School Sales Tax Holiday

Taylor Souder, CPA



It's that time of year again...summer is winding down, kids will be heading back to school, and parents will be doing back-to-school shopping. 

This marks the ninth year of Missouri's back-to-school sales tax holiday where consumers can take advantage of the lifted 4.225% state sales tax on certain clothing, school supplies, and select other items.  The sales tax holiday begins Friday, August 3^rd at 12:01am and continues through Sunday at Midnight.

However, not all local jurisdictions will be participating in the sales tax holiday and consumers will still have to pay local sales tax which varies for each locality.  Some of the cities not participating this year include Ballwin, Brentwood, Bridgeton, Clayton, Des Peres, Ellisville, Fenton, Ferguson, Kirkwood, Ladue, Maplewood, Overland, Richmond Heights, St. Ann, St. Peters, University City, and Webster Groves.  In addition, Illinois will not be participating in the back-to-school sales tax holiday this year as they have in prior years, but Illinois residents can visit Missouri retailers in order to take part in the sales-tax holiday. 

There are some things that both consumers and vendors need to keep in mind about the sales-tax-holiday.

Consumer Guidelines

Items qualifying for the sales tax exemption include:

- Clothing of $100 or less- School supplies up to $50 per purchase

- Personal computers and related devices less than $3,500

- Computer software of $350 or less

Layaway items are eligible as long as the final payment occurs during the holiday.

If an item is out of stock, any rain checks issued will qualify as long as the item is ordered and paid for during the holiday period.

If an item purchased during the holiday is later exchanged for another eligible item of equal or lesser value, no sales tax will be due.

Vendor Guidelines

If the business is located in a jurisdiction not participating in the sales tax holiday, they will receive a long form Sales Tax Return (Form 53-1).  This return will replace the normal filing method for this period only.  All sales not qualifying and taxed at the full tax rate must be indicated on one line, and all sales that would qualify for the reduced rate will be treated as an item tax on a separate line.

If the business is located in a jurisdiction participating in the sales tax holiday, the will use their normal filing method for this period by using the total gross sales receipts for all sales made and entering the holiday sales as a negative adjustment on the return.

The sales tax holiday may not apply to any retailer when less than two percent of the retailer's merchandise offered for sale qualifies for the sales tax holiday. However, the retailer must provide the taxpayer a refund of the sales tax paid if the customer requests one.

All businesses that do not sell qualifying items may continue to use the normal filing method or voucher filing for this period.

For more information regarding the Missouri sales tax holiday refer to http://dor.mo.gov/business/sales/taxholiday/school/ or contact us.