berkowitz pollack brant advisors and accountants

Don’t Lose Flexible Spending Account Dollars at the Year-End by Adam Cohen, CPA

Posted on November 30, 2017 by Adam Cohen

As 2017 comes to a close, it is time for individuals with Flexible Spending Accounts (FSAs) to understand their responsibilities and potentially take action to use or lose any remaining balance in their FSAs before Dec. 31, 2017.

 

While FSAs can provide significant tax savings, such as lowering participants’ taxable income and reducing the amount of taxes they are required to pay, these plans also come with some restrictions that can be extremely costly when individuals do not plan appropriately.

 

FSAs allow individuals to set aside pre-tax dollars via payroll deductions to pay for qualified medical and dependent care expenses not covered by their health insurance plans. These out-of-pocket expenses can include insurance copayments and deductibles, medical equipment, prescriptions drugs and some over-the-counter medications, as well as dental and vision exams, weight loss programs, acupuncture, travel vaccines and other health care treatments and services allowable by each particular plan.

 

Typically, individuals will automatically forfeit unused dollars left over in an FSA at the end of the year. However, some plans provide participants with more flexibility. For example, an employer may allow its workers to roll over a maximum of $500 in FSA savings to the following year, or it may give employees a three-month grace period to use end-of-year balances in the following year. It is important that workers understand these options and whether or not they apply to their individuals FSA plans.

 

If a plan follows the “use it or lose it” rules, participants should take the time now, in the remaining weeks of 2017, to make needed doctor’s appointments, schedule important procedures or stock up on contact lenses and qualifying medications.

In addition, workers should review how much they spent on health care costs in 2017, and whether or not they expect to spend at least the maximum FSA contribution limit of $2,650 for 2018. If an individual’s health care costs are minimal during a year, they may opt to contribute less to an FSA in 2018 or forego this tax-advantaged vehicle entirely.

 

About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail info@bpbcpa.com.

How to Maximize Health Savings Accounts for Retirement Spending by Adam Cohen, CPA

Posted on June 23, 2016 by Adam Cohen

Taxpayers who participate in high-deductible health plans are permitted to make tax-deductible contributions to health savings accounts (HSAs) to cover the costs of qualifying medical expenses. The current pre-tax contribution limits are $3,350 for individuals and $6,750 for family coverage, which will increase $50 for individuals and remain the same for family plans in 2017.

To be eligible to contribute to an HSA in 2016 and 2017, a taxpayer must participate in a health plan with an annual deductible of $1,300 for self-only coverage and $2,600 for family coverage. The maximum out-of-pocket medical expenses a HSA may cover will also remain unchanged in 2017, with a cap of $6,550 for self-coverage and $13,100 for family coverage.

Contributions to HSAs can be invested in a variety of mutual funds, similar to how workers save money in 401(k) and other retirement plans. As a result, workers not only have the ability to use tax-deductible HSA contributions to cover rising out-of-pocket medical expenses, they also have the opportunity to carry HSA balances forward from year to year and allow them to grow tax-free for use in retirement. As long as distributions from HSAs are used to cover qualified medical expenses, they are not subject to taxes. Therefore, retirees will have the benefit of paying down a significant portion of HSA savings before having to tap into retirement savings to pay routine expenses.

Understanding all of the health insurance options and their tax implications to individuals and businesses is a complex endeavor. The professional advisors and accountants with Berkowitz Pollack Brant have deep knowledge and experience guiding taxpayers through the process including access tax efficiency and compliance with the Affordable Care Act.

About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail info@bpbcpa.com.

 

Six-Year Deadline for Retirement Plan Sponsors Comes Up in 2016 by Sean Deviney, CFP

Posted on February 11, 2016 by Richard Berkowitz, JD, CPA

Businesses that sponsor pre-approved 401(k), profit-sharing or other defined contribution (DC) retirement plans, must sign and adopt restated plan documents that comply with IRS-approved wording by April 30, 2016. Doing so will ensure the plans continue to qualify for tax benefits.

 

Sponsors of pre-approved prototype and volume submitter retirement plans typically purchase their plans from financial institutions, third party administrators or similar providers, who are required to update their plans every six years. These providers should have already sent to employers sponsoring pre-approved retirement plans the IRS-approved plan documents that have been updated to comply with changes in the law. Employer who have not yet received pre-approved defined contribution plan restatement should contact their providers immediately.

 

This mandatory restatement is an ideal time for businesses to evaluate the current provisions in their retirement plans. Provisions put in place years ago may no longer be optimal for a company and its employees today. Items to consider are the plan’s eligibility requirements, entry dates, automatic enrollment, vesting schedule, matching or profit sharing formula and Roth availability.

 

With the April 30 deadline around the corner, employers should be in the midst of planning to submit their determination letters as soon as possible. The professionals with Provenance Wealth Advisors work with businesses of all sizes, through start-ups, mergers and acquisitions, to design benefits plans and implement best practices to meet regulatory compliance and serve the needs of plan sponsors and participants.

 

About the Author: Sean Deviney is a CFP®* professional and retirement plan advisor with Provenance Wealth Advisors, an independent financial services firm that often works with Berkowitz Pollack Brant Advisors and Accountants. For more information, call (800) 737-8804 or email info@provwealth.com.

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

* Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

 

 

Be Prepared for Stricter Scrutiny of Employee Benefit Plans in 2016 by Lisa Interian, CPA

Posted on January 25, 2016 by Lisa Interian

Sponsors of employee benefit plans will need to take on more responsibilities to keep up with heightened regulatory scrutiny in 2016. Included in a list of priorities recently issued by the Internal Revenue Service (IRS) is a narrow focus on internal compliance controls of the “operation and form” of employer-sponsored retirement plans. According to the IRS, some of these benefit plans have a “historical pattern of non-compliance” and will therefore become subject to limited Employee Plans Team Audit (EPTA) audits, which will help the IRS determine if a more comprehensive audit is required.

With this in mind, retirement plan sponsors should respond promptly to EPTA notices from the IRS and take action to voluntarily correct any plan errors to avoid a more intense and expanded IRS examination. Moreover, sponsors should make every effort to keep up with evolving regulations that impact the way in which they administer their plans and protect participants’ investments. Following are just some of the issues that are coming under increased regulatory scrutiny.

Know Your Fiduciary Responsibilities and Document Your Actions

In a unanimous decision, the Supreme Court in 2015 reaffirmed that businesses sponsoring 401(k) plans have a fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) to prudently monitor investments, dispose of inappropriate assets and minimize management plan fees on a continuous and regular basis that may extend beyond the six-year statute of limitations. The key takeaway from the Tibble v. Edison decision is a reminder of the important role plan sponsors play in overseeing all aspects of their retirement benefit plans. While the Court declined to list all of a fiduciary’s responsibilities, sponsors should take special care in the hiring of well-vetted and qualified third-party administrators, auditors and other consultants charged with fiduciary duties. Failing to meet these responsibilities may put plan sponsors at risk of being held personally liable for their actions or inactions. Take time to understand all your fiduciary responsibilities, seek advice of qualified advisors and document key decisions to support your compliance.

Choose a Qualified Auditor

Among concerns recently expressed by the Department of Labor is a high deficiency rate for employee benefit plan audits. These issues can jeopardize a plan’s compliance with reporting and disclosure standards established by the Employee Retirement Income Security Act of 1974 (ERISA) and put plan assets in danger.

Federal law requires that plans with 100 or more participants hire an experienced, independent, certified or licensed accountant to conduct an audit of their financial statements and the integrity of their plan’s financial assets. The DOL found a direct correlation between the auditor’s experience and the rate of deficiency, noting that CPAs performing the fewest number of employee benefit plan audits annually had a 76 percent deficiency rate.

In order for to meet the unique audit and reporting requirements of employee benefit plans, the Department of Labor advises that plan administrators select a CPA with the knowledge, experience and expertise that conforms to professional auditing requirements. Among its recommendations, the DOL urges plan sponsors and administrators to consider the following factors when assessing a CPA’s qualifications:

  • The number of employee benefit plans the CPA audits each year, including the types of plans;
  • The extent of specific plan audit training the CPA received;
  • The status of the CPA’s license with the state board of accountancy;
  • Whether the CPA has been the subject of prior DOL findings or referrals, or has been reported to a state board of accountancy or other agency for investigation; and
  • Whether the CPA’s employee benefit plan audit work has been peer reviewed and whether such a review resulted in negative findings.

As sponsors of employee benefit plans, businesses are responsible for administrating all aspects of their plans, including ensuring promised funds will be available for employees. Hiring an auditor to conduct a quality audit is a fiduciary duty that businesses should address with special care to avoid personal liability for failure to complete and file accurate annual returns.

Know What Has and What Hasn’t Changed as to Annual Filings

Included in the recently enacted Fixing America’s Surface Transportation (FAST) Act of 2015, is a repeal of a provision enacted in July that extended filing deadline for sponsors of calendar year employee benefit plans. Effective immediately, the maximum extension for filing Form 5500 will go back to October 15, two-and-a-half months after the general filing deadline.

Navigating the complexity of retirement plan compliance and enforcement is a difficult task that plan sponsors should undertake only under the guidance of experienced advisors.

Berkowitz Pollack Brant and its affiliate Provenance Wealth Advisors (PWA) have an experienced and qualified employee benefit plan service team that works with businesses of all sizes and across all industries to meet the rigorous compliance issues associated with establishing, maintaining and auditing employee benefit plans.

About the Author: Lisa N. Interian, CPA, is an associate director of Audit and Attest Services with Berkowitz Pollack Brant, where she performs retirement plan audits and works with privately held companies in a range of industries to meet their reporting and compliance needs. She can be reached in the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.

 

Sponsors of 401(k) Plans Must Heed Supreme Court Warning by Sean Deviney, CFP

Posted on September 30, 2015 by Richard Berkowitz, JD, CPA

A recent U.S. Supreme Court decision reaffirmed that the fiduciary duty of employers sponsoring 401(k) plans extend beyond the six-year statute of limitations. In its unanimous decision, the court ruled that 401(k) fiduciaries must monitor investments, dispose of inappropriate assets and minimize management fees on a continuous and regular basis. According to the court, “an ERISA fiduciary’s duty is derived from the common law of trusts… and a trustee has a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset.”

 

This ruling is an important reminder that plan sponsors should develop detailed investment policies and take steps to follow and documents prudent fiduciary principles. The professionals with Provenance Wealth Advisors work with businesses of all sizes to design benefits plans and implement best practices to meet regulatory compliance and serve the needs of plan sponsors and participants.

 

About the Author: Sean Deviney is a CFP®* professional and retirement plan specialist with Provenance Wealth Advisors, an independent financial services firm that often works with Berkowitz Pollack Brant Advisors and Accountants. For more information, call 800-737-8804 or email info@provwealth.com.

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

* Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

 

 

 

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