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Now’s the time to move forward with updating your employee retirement plan so that its in compliance with the latest IRS requirements.

Every six years the IRS mandates that retirement plans with pre-approved status update their plan document or restate… to incorporate any recent regulatory or legislative changes. In return, they receive a new “opinion letter” from the IRS.   

We’re in the middle of a two-year restatement period for pre-approved defined contribution plans, which includes 401(k)s. The restatement period started August 1, 2020 and will close July 31, 2022. Since it is the third cycle of defined contribution plan restatement since the Pension Protection Act (PPA) of 2006, it’s also known as Cycle 3 Restatement.   

What does it mean to do a plan restatement? In simple terms it is a complete rewrite of your retirement plan document. It will reflect those mandatory regulatory changes and include any voluntary changes you’ve made to your plan document since your last restatement.

Pre-approved document definition: A pre-approved plan document has fixed provisions and pre-selected choices that can be chosen by the plan sponsor. The pre-approved language has already been reviewed and approved by the IRS. Any employer adopting a pre-approved plan can be confident that the terms of the plan will satisfy IRS code requirements. An important terminology note: “prototype”/ “volume submitter” are terms you’re likely familiar with but are no longer recognized by the IRS. There are now two types of pre-approved plans: standardized and non-standardized. The chart below offers a helpful side-by-side comparison.

Why do you need a plan restatement? As laws and regulations change, so must your plan document to remain in compliance. It must reflect new rules because of acts of Congress and new requirements from the IRS and US Department of Labor.

The IRS released its “Cumulative List of Changes” document in 2017, including new regulations in place since the prior restatement period that ended in April of 2016. But the cumulative list of changes happened before some other major changes included in the SECURE Act and the CARES Act.

SECURE Act and CARES Act changes won’t be part of Cycle 3 (or Post-PPA) restatement, but instead be incorporated separately through good faith amendments. 

Why should you act now? The two-year plan restatement period is already half over. If you don’t do a plan restatement by the July 31, 2022 deadline, you’re subject to IRS penalties and can also jeopardize the plan’s tax status.

Some other important considerations:

• Any plans terminated and cashed out prior to the restatement period will only need to address the changes brought on by the SECURE Act and the CARES Act. They won’t need to do a full restatement.
• Plans you’re considering terminating, are inactive or frozen do need to go through the restatement process.

Our Specialization.

GJM Accounting Services Manager Molly Wolf specializes in employee benefit plans and assists many GJM clients with plan restatement. In many cases she works very closely with those responsible for managing their company retirement plan document. Other times the client prefers to be more hands off with the project. Each business must determine their level of comfort and what works best for them.

“There’s quite a bit involved in terms of evaluating a plan document, ensuring compliance, and avoiding any penalties,” says Wolf. “Quite often the retirement plan manager will step aside and let our team take the lead. That way they can rest assured they’ll stay in compliance.” 

If you have yet to begin your plan restatement, Wolf says you probably don’t want to wait much longer. She says now’s the time to reach out to your service provider to be sure Cycle 3 (Post-PPA) restatement isn’t an afterthought, but a priority. GJM clients in need of a plan document restatement who haven’t begun this work already, are encouraged to reach out to their GJM team to discuss what’s needed.

Molly Wolf is an accounting services manager with over 15 years of experience specializing in employee benefit plans. The first 9 years of her career were spent as a dedicated employee benefit plan auditor. Her expertise also includes consulting for third party plan administration and benefit plan design, compliance testing, payroll integration and reconciliation. Since joining Gilmore Jasion Mahler in September of 2019, Molly continues to provide third party administration services, prepares related tax forms, consults on plan design, and prepares plan documents. She is a graduate of Bowling Green State University with a Bachelor of Science in business administration with accounting specialization

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

President Biden has signed into law the $1 trillion Infrastructure Investment and Jobs Act approved by the U.S. House of Representatives. The law will bring infrastructure investments across the country, including improved roads, railroad lines and other public transportation infrastructure.

The new law will also do away with what’s become an important benefit for businesses around the country still working to recover from the financial impact of the COVID-19 pandemic. The Infrastructure Investment and Jobs Act will end the Employee Retention Credit (ERC) early for most businesses. Expanded to certain employers as a result of the American Rescue Plan Act, the ERC had applied to the third and fourth quarters of 2021. Now the ERC will end with the third quarter of this year. In other words, any wages paid out after September 30 of this year won’t be eligible for the ERC.

If your business planned to take advantage of the ERC for the fourth quarter, be sure to be in touch with your GJM team so you can make the necessary adjustments in your business planning as we approach yearend.

We continue to watch developments in Washington, D.C. with the Build Back Better Act as lawmakers continue to work to come to an agreement. The proposed legislation addresses climate policy, social spending and would bring many tax policy changes. Lawmakers are hoping to pass something in the next couple of weeks.  

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

The COVID-19 pandemic has changed the way we do many things. It’s changed the way we go out for dinner, the way we travel, the way we do business and the way we work, to name just a few. While some would like to go back to “normal”, or the way things used to be, there seems to be a consensus that in many ways we aren’t going back. Some of these changes are here to stay.

As trusted advisors to businesses across many industries, Gilmore Jasion Mahler (GJM) is seeing some of these changes within client businesses. Those looking to hire for internal accounting positions, for example, say there are simply no candidates out there. And some are turning to a different solution: GJM Outsourced Accounting.

Outsourced Accounting (OA): What is it?

Outsourced Accounting isn’t a new concept. For those who aren’t familiar with the service offering, its exactly what it sounds like: handing over the entire accounting function within your business to outside experts. New software platforms and other technology pushed the idea more into the mainstream. The pandemic, remote work, and hiring issues have further contributed to what’s emerging as a significant shift in the way businesses view the accounting function.    

“There’s no question, many business owners are taking a closer look at outsourced accounting,” says Judy Anderson, CPA, who leads GJM’s Outsourced Accounting team. “These services solve a major problem, removing the need to fill that internal role, but more importantly, outsourced accounting at GJM brings experts to your team, and checks and balances.”

Clients say the service brings peace of mind, knowing that capable CPAs and other GJM professionals are on the job. Technology offers real time numbers 24 hours a day, 7 days a week to business owners and managers. They get to choose how involved or uninvolved they are in the accounting function.

 “It’s the best of all worlds”

Retina specialist Dr. George Rosenthal has transitioned his medical practice to GJM Outsourced Accounting and says it allows him to do what he does best: care for his patients.

“One of the great things about this,” says Dr. Rosenthal, “It’s not just an accounting service. It’s a business administration service. I want to spend my time being a doctor and its nice on so many levels to have somebody who’s a business expert help... It’s the best of all worlds.”

Equally important: knowing that GJM professionals are part of your team. They could spot a trend in your numbers or see an opportunity for tax savings that you missed. Should you need other specialists, they’re at the ready to be pulled in as your business needs change.

“I can’t overstate enough the importance of having trusted experts as part of the extended team who can be pulled in as needed,” says GJM Partner Matt Cavanagh, who is also part of the firm’s Outsourced Accounting team. “Things come up, such as tax strategy, a merger or acquisition, the need for a valuation, or cyber risk assessment. Our team can also see from a high-level view something that you might miss.”  

The GJM Outsourced Accounting team has seen businesses in many industries pursue the service offering, including health and medical practices, nonprofits, law firms, real estate businesses and other professional services firms.

What to Expect

If your business is considering looking into outsourced accounting services, be sure you understand the offering and most importantly, what you need. Here are some of the services/capabilities you should expect from a provider:

State of the art technology/software platform featuring:

• Real-time numbers  
• 24/7 dashboard access
• Safe and secure financial information
• Easy, secure document sharing
• Automation
• Integration with other service providers
• Monthly payment format with no large financial investment

Accounting experts:

• Team of specialists, including a partner
• Professionals who become an extension of your team
• Direct access to your account team leader
• Access to other specialists, advisors and consultants as needed

Here’s another important piece when considering the team of professionals: make sure you have a good relationship. You should enjoy working with the team, and view them as an extension of your staff, which, after all, they are.

Dr. Rosenthal says of his lead GJM service provider Alyssa: “She’s unbelievable. I’ll email her something at six in the morning. I’ll get a response in 10 minutes. She’s amazing. And she’s good.” He jokes with Alyssa that she needs to get better sleep, but you can hear it in his voice that he’s sleeping better with Alyssa on his team.

In the end it’s simple: you need to trust that you’re in good hands, and you need to enjoy the working relationship. If that’s the case, you’re well on your way to saying, “problem solved.”

If you’d like to learn more about GJM Outsourced Accounting, here’s a short video featuring GJM’s Judy Anderson with a high-level explanation of the service. To reach out to our team directly, email outsourcedaccounting@gjmltd.com.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

The owner of any business that offers a retirement plan understands there’s a great deal of work associated with proper administration of the plan. Rather than trying to manage the plan internally, many businesses turn to a third-party administrator (or TPA). The number one job of a TPA is to ensure the accuracy and continued compliance of your retirement plan. The U.S. Department of Labor regulations can be confusing and mandatory compliance testing can quickly become complicated. If not performed correctly, lack of proper compliance could cost the plan a great deal of money in penalties. A TPA’s role is to review plan documents and confirm the plan is following and meeting those critical required government compliance standards. Perhaps most importantly, the right TPA in place can remove these concerns from the business owner or manager and offer the reassurance of ongoing compliance.

Considering a TPA?  

If your business is considering bringing on a TPA, be sure you clearly understand your needs before selecting a service provider. Making the right choice will save your business potential headaches down the road. In this article we’ll offer three helpful suggestions for finding the right TPA for your unique business needs.

Choose someone who understands your industry. Each industry is different, from industrywide regulations to practices very specific to your business. You will benefit from working with a TPA who understands your area of specialization.

GJM Benefit Plan Services Specialist Molly Wolf agrees that industry knowledge is invaluable. She services benefit plans across many industries, including healthcare.

“I happen to do quite a bit of work for healthcare entities: physician practices, dental practices and other health facilities. The more work you do in a specialized industry,” she says, “the more knowledge you gain, and clearer understanding you have of industry specific compliance standards. That knowledge has served me very well as I service my healthcare clients.”

Make sure you work well together. Communication is everything. Think of your TPA as a member of your extended team and keep the communication lines open. Regulations can change. Your needs can change. Be sure you’re on the same page. If you’re communicating with your TPA and not seeing the type of responsiveness you need, it may be time to consider another provider. Consider establishing a point person within your business to work directly with your TPA. Typically, that will be your Human Resources Director.

Understand the value of experience. Your TPA should have solid experience and knowledge. Make sure the provider is familiar with the different types of retirement plans, clearly understands product offerings and can help you select the best benefit plan for your needs and the needs of your employees. The ideal TPA is also engaged with continuing education to stay abreast of changes in compliance requirements.

Our Expertise

Retirement Plan Services at GJM include:

• Benefit plan audits
• Retirement consulting
• Preparation and filing of related retirement tax forms
• Retirement Plan Third Party Administration (TPA)
  • Required compliance testing
  • Preparation of plan documents, restatement, and amendments
  • Reconciliation of each individual participant account
  • Preparation of annual and quarterly notices

GJM’s benefit plan administration specialist team works with businesses with varying needs. Here’s just some of what you can expect:

• Lower administrative burden
• Ability to make recommendations and provide practical solutions
• Assistance with plan corrections
• Intimate knowledge of your plan and business
• Ability to work with your current providers including advisors/brokers, investment companies, record-keepers, and payroll services
• New plan start-up
• Assist with determining participant eligibility
• Compliance testing
• Employer contribution projections
• Annual and quarterly notices
• Processing and reconciliation of participant loans
• Processing of distributions
• Preparation of Form 1099-R and 945
• Vesting
• Preparation and filing of Form 5500 and Form 8955-SSA

If you think your business could benefit from GJM’s specialized Benefit Plan Administration Services, reach out to your GJM team to start the discussion.

Molly Wolf is an accounting services manager with over 15 years of experience specializing in employee benefit plans. The first 9 years of her career were spent as a dedicated employee benefit plan auditor. Her expertise also includes consulting for third-party plan administration and benefit plan design, compliance testing, payroll integration and reconciliation. Since joining Gilmore Jasion Mahler in September of 2019, Molly has continued to provide third-party administration services, prepares related tax forms, consults on plan design, and prepares plan documents. She is a graduate of Bowling Green State University with a Bachelor of Science in business administration with accounting specialization.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

• A second round of $1,200 stimulus checks for individuals
• Liability protection for businesses from COVID-19 related lawsuits
• Capping federal unemployment benefits at 70% of wages
• Extension of the Paycheck Protection Program allowing certain businesses to get a second PPP loan
• Over $100 billion for schools
• $25 billion for COVID testing

The package is in response to a stimulus package proposed by the US House of Representatives in May (The HEROES Act). Negotiations now begin to reach a final compromise before the Senate summer recess begins August 7.  

Help for Businesses

As of now, there are several options for businesses to get help, including the recently launched Main Street Lending Program, now available and accepting applications. Which businesses and organizations can apply for this program? And what’s the status of the other existing loan programs? What else should you be doing to protect your business in these unprecedented times?

GJM’s Bob Bobek, CPA offers this easy reference status report on loan programs out there and an important checklist for businesses.

COVID-19 Business Loan Programs Status Report

Paycheck Protection Program:  

The Paycheck Protection Program (PPP) was established through the CARES Act and is run through the Small Business Administration (SBA). PPP loans are forgivable for those borrowers who prove they meet requirements for forgiveness. The loan program is intended to help businesses keep workers on the job during the pandemic. Loans must be $10,000,000 or less. Those businesses with loans under $2 million will be deemed to have met the economic uncertainty requirements for the loan. Some other details on the PPP:

• Money must fund payroll and specific nonpayroll costs (like rent, utilities)
• Loans received before June 5: maximum 2-year maturity
• Loans received after June 5: maximum 5-year maturity
• Loans are issued through approved lenders
• Interest rate: 1%
• File forgiveness application with your bank
• Application deadline extended to August 8, 2020

Paycheck Protection Program status: Second round of funding is now available, and applications are being accepted. As of July 24, 2020 the SBA reports there are over $130 billion dollars left in funding for the PPP. You can access the PPP loan application here.

Main Street Lending Program  

The Main Street Lending Program was established as part of the CARES Act, offering $75 billion to those businesses and organizations that meet requirements. Designed for: small/medium-sized businesses in good shape prior to the pandemic that didn’t qualify for the PPP or need more help in addition to their PPP loans. Other information:

• Standard loan, not forgivable
• Accessible to nonprofits
• Loans issued through approved lenders
• No more than 15-thousand employees or 2019 annual revenues no more than $5 billion
• Minimum loan $250,000
• Principal payments defer 2 years
• Interest payments defer 1 year
• Maturity of 5 years. 15% in years 3 and 4. Year 5: 70% balloon payment

Main Street Lending Program status: Now open for applications through September 30, 2020. Businesses must work with an eligible lender.

Economic Injury Disaster Loans (EIDL)  

Economic Injury Disaster Loans (EIDL) are designed to help businesses and nonprofits in response to a disaster like a hurricane or flood. Administered by the SBA, they provide liquidity in a time of need and have been made available as a result of the COVID-19 pandemic.    

Some details:

• Capped at $150,000 per company
• Very low interest rate: 3.75% for businesses, 2.75% for nonprofits
• Not forgivable
• You get 30 years to pay back the loan
• Can defer first payment for a year
• Can get both PPP and EIDL, just don’t use the money to pay the same expenses funded by your PPP loan

EIDL status: accepting applications. You can access the EIDL application here.

Your Checklist:

So, you have a high-level view of the loan programs out there to help businesses respond to COVID-19. What now? GJM Partner Bob Bobek has counseled many of his clients and other businesses through COVID response to secure a loan that will work for their business and help them to get through this difficult time with more liquidity. If your business has decided to pass on applying for a loan, he cautions that could be a big mistake.  

“These loan programs have been designed with one goal in mind: to infuse cash into American businesses,” he says. “The government has made available billions and billions of dollars for these programs. It won’t be reallocated. When it’s gone, it’s gone.”

Here’s Bob’s checklist for businesses not sure how to proceed:

1. Talk to your banker. He or she can assist you in deciding which loan program is the right fit for your business. Bob says most banks are willing to defer loan payments to help you keep more liquidity.
2. Talk to your landlord. Most landlords are open to deferring payments or restructuring your lease.
3. Talk to your insurance agent. If your sales volume is down or equipment is idle you may be eligible for a reduction in your insurance cost.
4. Look at the Paycheck Protection Program. If your business decided not to pursue a PPP loan, Bob says you need to look at this again.
5. Defer FICA taxes. The CARES Act allows businesses to delay payment of the FICA Match portion of your payroll taxes through December 31, 2020, with half due by December 31, 2021 and the rest due December 31, 2022.
6. Review other government loan programs such as the EIDL and Main Street Lending Program. While they are loans, they have favorable payment terms. They will help give you that extra liquidity in case you get hit hard by the downturn and find your business in a position where its more difficult to secure a loan.
7. Talk to your accountant. In addition to the loan programs outlined here, your business could qualify for tax credits as part of the CARES Act.

Bobek says be sure you look into all options that can help you get through this worldwide public health emergency, including any new opportunities that may result from the HEALS Act. You want to be sure that the business you worked so hard to build can survive and even thrive through the pandemic and into the future.

Bob Bobek, CPA has presented frequently on the Paycheck Protection Program and other loan programs designed to help businesses during the pandemic. He’s helped many business owners determine which loan program is right for their business and assisted with loan and forgiveness applications.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.