By, Brett Sinsabaugh, CPA, Manager, Business Assurance and Advisory Services
Recently on June 20, 2017, Keiter hosted their latest client knowledge share seminar geared towards updates concerning employee benefit plan accounting. Along with Keiter’s Employee Benefit Team was a lecture on the New Fiduciary Rule with special guest, Jeremy Kuhlen, CFP, CRPS, AIF of The Colony Group.
Matt McDonald, CFF, CPA, CFE, Partner, and Brett Sinsabaugh, CPA, Manager, discussed many important accounting and auditing topics and their impact on Employee Benefit Plans, including:
- Accounting Standards Updates:
- ASU 2015-07: Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the FASB Emerging Issues Task Force) ASU 2015-10: Technical Corrections and Improvements
- ASU 2015-12: Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force)
- ASU 2016-01: Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
- ASU 2016-19: Technical Corrections and Improvements
- ASU 2017-06: Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force)
- Revenue Procedure 2016-37 and its impact on Determination Letters and Opinion Letters
- Timeliness of Remittances
- IRS “Top Ten” List of Most Common Plan Issues
Specifically, timeliness of remittances was discussed in detail with a heavy emphasis placed on the Plan Sponsor’s duty to remit deferrals timely. This continues to be a major action item for the Department of Labor. Plan Sponsors and Administrators should always be aware of the importance of remitting employee deferrals in a timely fashion and the penalties with not complying. For large filers, DOL regulations state, that “amounts withheld by an employer for contribution to an employee benefit plan should be remitted to the plan as soon as they can be reasonably segregated from employer’s general assets, but no later than the 15th business day of the month following the month in which the participant contributions are withheld by the employer” (401(k) Plan Fix-It-Guide).
According to the 401(k) Plan Fix-It-Guide, action items to assist Plan Sponsors should use to avoid this mistake are:
- “Establish a procedure requiring elective deferrals to be deposited coincident with or after each payroll per the plan document. If deferral deposits are a week or two late because of vacations or other disruptions, keep a record of why those deposits were late” (401(k) Plan Fix-It-Guide.
- “Coordinate with your payroll provider and others who provide service to your plan, if any, to determine the earliest date you can reasonably make deferral deposits. The date and related deposit procedures should match your plan document provisions, if any, about this issue” (401(k) Plan Fix-It-Guide.
- “Implement practices and procedures that you explain to new personnel, as turnover occurs, to ensure that they know when deposits must be made” (401(k) Plan Fix-It-Guide.
It’s important to understand the requirements and changes made to your plan’s financial statements as it relates to the updated guidance to ensure your plan’s financial statements are prepared adequately. For more information regarding accounting and auditing issues and the impact of the accounting standard updates on employee benefit plans, please contact a Business Assurance and Advisory member of the Keiter Employee Benefit Plan Niche team.
Source: IRS Website: “401(k) Plan Fix-It Guide – You haven’t timely deposited employee elective deferrals”
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.