The SECURE Act's Impact on Employee Benefit Plans
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by
Shannon Bachara, CPA
We’ve already shared with our clients and colleagues about the impact of the SECURE Act in a December
e-blast
, and we’ll be sharing more through a
webinar
(see below) next week. One specific way this legislation may impact employers is the need for an employee benefit plan audit.
Through the SECURE Act, employers of all sizes can now join together to create more affordable defined contribution plans through “open” multiple-employer plans (MEPs) using a “pooled plan provider.” This is great news for employers who carry the burden of the cost of administering a plan for a small amount of people.
However, once an employee benefit plan is considered to be a “large” plan, audited financial statements are required to accompany the Form 5500. This form is required in order to satisfy annual reporting requirements under Title I and Title IV of
ERISA (Employee Retirement Income Security Act of 1974) and also under the Internal Revenue Code.
A plan is generally considered to be a “large” plan when it has more than 100 eligible employees at the beginning of the year.
Here at MMA, we have a dedicated team skilled in providing employee benefit plan audits. This is a specialty we offer to employers, whether the plan is a single employer plan or a MEP. If you have questions about your company’s need for an audit, please give us a call. We look forward to being of service to you.
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SECURE Act Webinar Open to the Public
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You are cordially invited to a
webinar sponsored by the
Wheaton Chamber of Commerce, “
The SECURE Act: What You Need to Know and Why You Need to Know It." MMA Partner
Brian Eisenmenger, CPA,
will be hosting the webinar from
10:00 to 11:00 a.m. on Thursday, March 5.
The webinar addresses issues related to recent legislation that was passed in December 2019. The goal of the law is to address the startling statistics on how little Americans have saved for retirement.
The SECURE Act, “Setting Every Community Up for Retirement Enhancement Act of 2019,” aims to address these challenges. Business owners and employees alike can benefit from hearing how these changes will affect them.
We hope you'll join us for this lively update by Brian, who also teaches on this topic to accountants across the country through
Thomson Reuters. He's also on the adjunct faculty of
Northern Illinois University's master's in accounting program and a generous mentor to our team.
There is no fee for this webinar, but registration is required through the Wheaton Chamber of Commerce. Please
click here to register.
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Market Responds to Coronavirus Scare
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by
John Vires, CFP®, CFA®
How worried should you be about the coronavirus? From a public health standpoint, the virus is serious enough that the
Centers for Disease Control and Prevention is warning Americans to be prepared for an outbreak in the United States.
Beyond first-order concerns (“Am I safe? Are my loved ones safe?”), we face other worries. You’ve no doubt seen or heard that the global stock market has declined steeply. Will this new strain of virus lead to a “bear” market?
The answer to that is, “Who knows?” We have faced outbreaks of disease before--SARS, MRSA and Avian flu, to name a few. No doubt we will face more in the future. Our clients are invested according to their customized, long-term plans. Built into our portfolios is the expectation that scary headlines may lead to falling stock prices from time to time.
In distressing times, we recommend that you rely on the solid foundation of your investment plan to ease your financial worries.
For more from
Forum Financial Management, LP on the coronavirus, please click
here. If you have any other questions or concerns, feel free to contact me at 630-653-1616 or
email me.
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Ballot Asks Illinois Voters to Choose:
Flat or Graduated Taxes?
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In June of 2019,
Illinois Governor Jay Pritzker signed into law
Senate Bill 687. This law now goes to the voters and will be on the November ballot, asking voters to approve an amendment to the Illinois state constitution to switch from a flat income tax rate to graduated rates for individuals. The bill will come into effect if the amendment passes.
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Here are some highlights from the bill:
- Individual income taxes will change from a flat tax rate (currently 4.95%) to a graduated tax rate, with a top individual rate of 7.99%.
- Corporate income tax rates will increase from 7% to 7.99%, with a provision that corporate income taxes cannot exceed the tax rates on individuals by more than a ratio of 8 to 5 (the maximum would be 12.78% based on the proposed 7.99% top individual tax rate).
- Net income on pass-through entities (S corporations, some LLCs, partnerships and sole proprietorships) will continue to be treated as income for individuals and subject to the graduated individual income tax rates.
- Personal property tax replacement income tax will stay the same at 2.5% for corporations and 1.5% for pass-through entities.
This constitutional amendment would go into effect January 1, 2021.
If you have questions about how this bill might impact you and/or your business, please
contact us or bring those questions to your annual tax meeting.
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5 Key Choices This Tax Election Year
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Speaking of elections, you have the opportunity to “cast your vote” for how you file your 2019 tax return. Here are five choices that can make a big tax difference:
- Joint or separate returns: Generally, a couple fares better with a joint return, but that is not always so. For example, one spouse might have a larger amount of deductible medical expenses. Due to the deduction floor of 7.5% of adjusted gross income (AGI) for 2019, the couple may benefit by filing separately. Caution: This election has numerous other ramifications, so please talk to us about the overall impact.
2.
Investment interest: The tax law allows you to deduct investment interest expenses up to the amount of net investment income for the year. Normally, “net investment income” for this purpose does not include capital gains. But you can elect to include long-term capital gains for which you forego the favorable tax rate. For 2019 returns, the maximum tax rate for long-term capital gains is 15% (20% for certain upper-income investors). With this election, you can “cherry-pick” the gains you want to treat as net investment income.
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3.
Installment sales: If you sell real estate or business interests in installments over two or more years, the tax liability is spread over the time in which payments are actually received. In effect, you postpone the tax from the sale, as well as possibly reducing the overall tax amount. This installment sale tax treatment is automatic. However, if it suits your needs, you can elect to pay the entire tax due in the year of the sale. This might be preferable on a 2019 return if it is otherwise a low tax year or you expect the next few years to be high tax years.
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4.
Home office deductions: Typically, a self-employed individual running a business from home qualifies for home office deductions. As a result, you are entitled to expenses directly attributable to the home office, plus a portion of the entire home’s expenses based on the percentage of business use of the home. However, instead of keeping detailed records, you may elect to use a simplified method equal to $5 per square foot of the home office, up to a maximum of $1,500. Note: The actual expense method often produces a bigger deduction and could be worth the extra work.
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5.
Standard mileage rate: When you use your vehicle for business driving, you can write off a portion of your actual expenses based on business use, plus a generous depreciation allowance. But this actual expense method requires detailed record-keeping for every business trip and documentation of all expenses. Alternatively, you can use an IRS-approved deduction rate with less record-keeping. For 2019, the flat rate is 58 cents per business mile (57.5 cents in 2020), plus related tolls and parking fees. However, you cannot use the standard mileage rate if you previously claimed accelerated depreciation for this vehicle.
Fortunately, you do not have to make these tough decisions on your own. We’re here to help answer your questions about these and other topics related to your own tax situation.
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News from Our Accounting Services Department
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Here's a quick update from
Becky Howell, our manager of
Accounting Services...
The Social Security Administration has drastically increased the number of
Employer Correction Request (EDCOR) notices, or "no-match" letters, it has sent out. Since April 2019, nearly 600,000 employers have received no-match letters, indicating that the SSA discovers a mismatch between information provided by the employer for wage-reporting purposes and the SSA's records.
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While there may be a variety of reasons names and numbers don't agree, including name changes, typographical errors and incomplete employer records, the mismatch also may be a red flag for the employer. After first checking for clerical errors, employers need to address the issue directly with the employee. Employers then need to submit corrections to the SSA. For more details, visit the SSA's
Business Services Online electronic portal.
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QuickBooks Desktop for Windows 2017 is set to sunset on May 31, 2020. We want to encourage you to upgrade if you haven't already.
QuickBooks will notify you in advance through mail, e-mail and in-product notifications. This means your access to QuickBooks Desktop payroll services, live support, online back-up, online banking and other services will be discontinued. Also, you won't receive critical security updates starting June 1, 2020. This includes all version of QuickBooks Desktop Pro, Premier and Enterprise Solutions 2017.
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The Internal Revenue Service issued the 2020
optional standard mileage rates used to calculate the deductible costs of operating an auto for business, charitable, medical or moving purposes. Taxpayers always have the option of calculating the actual costs of using a vehicle rather than using the standard mileage rates.
Beginning Jan. 1, 2020, the following rates apply:
- 57.5 cents per mile driven for business use
- 17 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in services of charitable organizations
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Our People Make a Difference
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In preparation for next week's
webinar,
Brian Eisenmenger spoke at the
Wheaton Chamber's February Luncheon, giving some tax highlights and sharing about the statistical probabilities of an audit by the IRS.
We also congratulate Brian for successfully completing the certification process with the
National Associatiaon of Certified Valuators and Analysts® to earn the
Certified Valuation Analyst (CVA®) designation. This is an indication of meeting rigorous standards in performing business valuations and financial consulting related to the discipline. MMA is now ready to offer business valuation services.
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Pictured here, L to R: Kim Austin, Ron Austin, CPA, John Straus, CPA, Debbie Straus, Brian Hagene, CPA, Holli Hagene, Mike Kuderna, CPA, Jennifer Grealish and Laura O'Malley.
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Nataliya McDonald, CPA (L), and
Alice Berardi, CPA, joined forces to talk with students at the
Northern Illinois University "Meet and Greet," held Feb. 6 at NIU's
Barsema Hall. Alice is a proud alum and wore her Huskies pin with pride. We also want to give a grateful shout-out to
Amy Buhrow, senior director of strategy, student success and accreditation at NIU's College of Business, who graciously invited us to the Meet and Greet.
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The following week, our team went back to NIU to host a table at the
Accountancy Career Fair, held twice a year at the Holmes Student Center on the NIU campus in DeKalb. This event, held Feb. 13, was for juniors and seniors who are considering accounting careers. We see career fairs as a great opportunity to meet with students and explore if there might be a fit for internships and other staffing opportunities.
L to R:
Iqra Majid, intern,
John Straus, CPA, partner and
Liseth Pozo, intern (
and current NIU student!), greet students at the MMA exhibit booth.
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We are now offering a new convenient way to pay online if clients choose this payment method. Please visit our website at
www.mmaadvisors.com and click the "Pay an Invoice" link at the top of the page. You can pay by credit card, by ACH bank transfer or by QuickFee financing for invoices totaling $2,000 or more.
Please note that a 3% processing fee will be applied to all
credit card transactions and debit cards are not accepted.
There is no fee when using ACH as a way to pay your invoice. Once you choose a payment option, enter your client ID or invoice number, click continue, enter your billing information and click "Pay now." Feel free to call our office if you have any questions.
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We hope your
Valentine's Day was filled with chocolate, flowers and love... or at least some of those little hearts that say "Be Mine." The
American Institute of CPAs (AICPA) shared a blogpost, "
7 Reasons to Date a Finance Professional" on Valentine's Day. We think you'll agree that our MMA CPAs reflect all of these loving characteristics present in an ideal relationship. (We like #2: "You'll never have to calculate the tip.") Read
here for more reasons why CPAs are such good Valentines.
Needless to say, we
love being of service to you. Please let us know how we can help, whether you're in the middle of taxes, needing an audit or facing some challenging accounting issues. We're here to help.
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Ron Austin, CPA
Brian Eisenmenger, CPA
Brian Hagene, CPA
Brett Mathieson, CPA
John Straus, CPA
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Please connect with us on Twitter and "Follow" us on LinkedIn!
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