Audit Your Retirement Plan Before the Feds Do

It's a good idea for companies to self-audit their retirement plans by hiring an experienced professional to determine if there are any problems -- before they hear from federal examiners.

Here are six common operational faults found by the IRS and the Department of Labor:

1. Late Deposit of Deferrals. Many employers do not realize that deferrals must be deposited as soon as reasonably possible after the pay date.

2.ERISA Violations. Section 404(c) of ERISA permits retirement plans to transfer the responsibility and liability for selecting investment options to participants if certain requirements are met. Many companies believe that they will be afforded protection for participants' investment decisions under this provision. However, we have found that most plans do not comply with the requirements of §404(c).
 
3.Employees Versus Independent Contractors. There are strict rules to determine whether a worker is an employee or independent contractor for tax purposes. The IRS looks at many factors in making a determination.  If your company hires an independent contractor and the IRS later reclassifies the person as an employee, your firm can be hit with a tax bill for unpaid taxes, interest and penalties. You might also be liable for state taxes, unemployment taxes and employee benefits, such as retirement plan contributions.
 
4.Services Performed Through an Professional Employer Organization. Hiring employees through a PEO for long periods of time may not eliminate your obligation to make retirement plan contributions for these workers.
 
5.Improper Correction Method. Employers can correct compliance problems in qualified plans without requesting advance IRS approval. However, they must use the proper correction method.
 
6.Default Account. Plans often specify a money market account or a GIC (guaranteed investment contract) as the plan's default account. But the fiduciaries for 401(k) plans must prudently invest non-directed participants' accounts, even if the plan document provides for a "default" account.

Contact us. Our firm can audit your retirement plan and help you avoid costly penalties and time-consuming investigations. We can work with you to define the scope of a compliance review so that it conforms to your budget.

Is This Your Situation — Too Many Overdue Accounts?

Collection issues are very serious.

To solve the problem, you generally must take a big picture view of the situation. Look at collections as an entire process that must be evaluated, changed and monitored.

Here are some issues to consider:

• Do you have a collection policy? Is it communicated effectively?
• Do you charge late fees? If not, should you?
• Do you offer discounts for early payment?
• Can your systems handle late fees and discounts?
• Who is responsible for collections?
    Is the process centrally managed?
    Do you have a system of calling customers to collect accounts?
    Are all calls recorded and followed up?
• Do you send collection letters? Is the process automated?
• Do you refer to attorneys early enough to make a difference?
• Are sales people involved? Should they be? Do you back charge commissions?
• Have you examined your cash cycle?
• How long does it take to get an invoice out? Can you shorten the process?
• Do you have special situations? Problem customers that need to be dealt with separately?
• Are your write-offs too high?

These are only some of the issues involved in looking at a collections system. We can help you evaluate your systems, establish new policies and procedures and monitor your results.

Contact us for help in improving collections.
Putting more money in the company often won't solve the real problems.

The Time for Year-End Tax Strategies Is Now

The Time for Year-End Tax Strategies Is NOW!

For most people, the fourth quarter is a good time to consider year-end tax strategies. By implementing a tax strategy now, you can gain additional flexibility you might not enjoy if you wait until late December.

Some examples of tax strategies include: selling securities to match capital gains against capital losses, implementing and contributing to a retirement plan, contributing to an IRA, and giving appreciated assets to charities or to other individuals.

Of course, there are many other ways to help you reduce your taxes, and not all of them are available or appropriate for everyone. While it is important to reduce your tax burden, moves made primarily for tax reasons may not be in your overall best interest. It is important to remain focused on your long-term strategies. For example, taxable investments may earn a better return than tax-free investments even after taxes, and some tax strategies may have a negative effect on other aspects of your financial picture.

Please contact us if you have questions about which tax strategies might be appropriate for you.

Estimated Tax Payments - Don't Forget!

If you are self-employed or retired, you don't have tax withheld from a paycheck. So you need to "pay as you go" by sending estimated tax payments to the government on a quarterly basis.

The federal due dates are April 15, June 15, September 15, and January 15. (If the due date falls on a Saturday or Sunday, or national holiday, the deadline moves to Monday.)

Contact us if you have questions about estimated tax or you've lost the coupons we prepared for you.