No Time Like The Present To Put Your Strategy In Place
We’ve always heard that there is one constant in life – change. Whether we are “gaining experience” or keeping up with the technological advances that are rampant in our society (or maybe a little of both), it seems that we are continually amassed in change – particularly on the regulatory front. This article will zero in on a few changes that will soon impact the employee benefit plan world.
New Statement on Auditing Standards
In 2015, The Department of Labor (DOL) issued an audit quality study that indicated audit quality seemed to be lacking in employee benefit plan audits. While the DOL did provide some suggestions regarding the issue, they were not specific recommendations. As such, the profession realized that this matter needed to be addressed, which recently culminated into a new standard.
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While we are being told that the new standard will effect financial statements for periods ending on or after Dec. 15, 2020, the standard in question could still undergo additional changes before it’s actually implemented. Even so, it would be unwise to wait around for a final version. Instead, to avoid compliance issues, you should work to understand what will be expected and make plans to the changes we can already see coming down the pike.
The new standard includes requirements in various phases of employee benefit plan (EBP) audits – from an auditor’s acceptance of the audit engagement to required performance procedures and reporting. It aims to address audit quality by mandating that specific procedures are to be performed within all employee benefit plan audits in an effort to ensure that plan sponsors are taking proper charge of their fiduciary responsibilities. For example, plan auditors will have to obtain an acknowledgment from management that management acknowledges and understand its responsibility for:
- Maintaining a current plan instrument, including all plan amendments.
- Administering the plan and determining that the plan’s transactions on the financial statements are in conformity with the plan’s provisions, including maintaining sufficient records with respect to each of the plan participants.
Listen to episode 164, “Better Uses For Your Money In 2019,” of Rea & Associates’ award-winning podcast, unsuitable on Rea Radio, to hear Angie Isakson talk about some changes impacting retirement savings strategies as well as upcoming retirement plan trends for the year ahead.
Upcoming Trends in Retirement Plans
In the last several years, we have seen student loan debt skyrocket. In fact, the debt is currently at $1.5 trillion, which outweighs nearly all other types of debt (credit cards, auto loans, etc.) and runs second only to mortgage debt in the United States. Because student loan debt creates such a burden within the financial structure of our economy, employers are looking at solutions to attract talent and provide meaningful employment benefits for their team.
Providing student loan repayment benefits is a trend that is likely to gain momentum over the next few years. In August, the IRS approved a private letter ruling for a plan sponsor, allowing it to amend its retirement plan to offer a student loan benefit program, under which the plan sponsor would make certain contributions on behalf of an employee provided that employee is making student loan repayments. Recently, The Retirement Parity for Student Loans Act legislation was introduced. This bill would allow retirement (401(k), 403(b) and SIMPLE) plan sponsors to make matching contributions to workers as if their student loan payments were salary reduction contributions.
Welfare Benefit Plan Focus
There has been talk of the DOL changing their focus from retirement benefit plans to welfare (such as health) benefit plans. With the new Statement on Auditing Standards coming in 2020, it is a good idea to ensure your house is in order with your welfare benefit plans in the event the DOL’s focus is shifted. We’ve put together a compliance dashboard questionnaire that, once completed, can help us determine whether your current welfare benefit plans is compliant.
Our Year-End Process
And what would a world of changes be if our firm didn’t implement a few changes of our own? In an effort to streamline our processes for our employee benefit plan audit clients, we are utilizing an internal program to perform our year-end data collection process. In the near future, you will receive an email similar to the example below.
Dear Client:
It is now time to start preparing the year‐end data collection process for Client 401(k) Plan.
We are pleased to announce that we have a new web portal to help streamline the data collection process for you and your staff. The link for this new website is https://REA.plansponsorlink.com, which will provide you with an easy way to provide responses to our annual questionnaire and forward any associated documents.
Please login to the website https://REA.plansponsorlink.com. Your login will be your email address. You can obtain a password by selecting the New User Setup link under the Sign In button. A new password will be emailed to you that you can then use to sign on to the system.
Once logged in, the data collection will display on your Active Tasks list. Please press the Begin Task button found to the right of the data collection line item to begin the process.
If you have any questions or need any assistance completing the questionnaire or attaching associated documents, please feel free to contact me.
Regards,
Your Rea Advisor
While the content is similar to what you have received in the past, the delivery will be slightly different. Please be sure to complete the questionnaire. We appreciate the opportunity to serve you better.
By Darlene Finzer, CPA, QKA, CSA (New Philadelphia office)