HR & Compliance

Add SBAM offers a full spectrum of human resources services to keep you compliant and help your business run more efficiently and profitably....


Human Resources Solutions

ASE LogoLooking for help with tough HR issues? 

SBAM partner ASE has the answers about hiring, firing, FMLA, ADA and more! Get access to a FREE HR hotline, affordable and cost-effective research consultation services, discounted employee handbooks and workplace posters, and more.


Section 125 Plan, FSA, HSA & HRA Administration

 

KUSHNER & COMPANY LogoLooking for ways to contain health care costs?
With the cost of health insurance continuing to rise, most employers require their employees to contribute to the cost of health insurance premiums. SBAM partner Kushner & Co. can help you put a tax-favored, consumer-directed plan in place that benefits you and your employees.

 


COBRA Administration

Personalized, affordable administration for your business. 

If you have 20 or more employees, your company is required by federal law to offer continued health insurance coverage via COBRA and will face huge fines if it's not administered correctly.  Let SBAM help you stay compliant for only $30 per month. 

Has Your Company 401(k) Plan Made These 11 Mistakes?

Article courtesy of SBAM Approved Partner AdvanceHR

The IRS released a list of 11 potential 401(k) plan errors. Has your company's plan made any of them? Ignoring these mistakes can lead to costly penalties and even disqualification of a plan's tax-favored status. The good news is you may be able to correct errors before the IRS comes calling.

It is critical to keep your company's 401(k) plan in compliance with numerous federal laws and regulations. Plans that are found to be in violation risk expensive penalties and disqualification.

The IRS recently issued this list of 11 potential errors:
  1. Has your 401(k) plan document been updated within the past few years to reflect recent law changes?
  2. Are the plan's operations based on the terms of the plan document?
  3. Is the plan's definition of compensation for all deferrals and allocations used correctly?
  4. Were employer matching contributions made to all appropriate employees under the terms of the plan?
  5. Has your plan satisfied the nondiscrimination tests? Traditional 401(k) plans must be regularly tested to ensure that the contributions made by, and on behalf of, rank-and-file employees are proportional to contributions made for owners and managers.
  6. Were all eligible employees identified and given the opportunity to make an elective deferral election?
  7. Are elective deferrals limited to the amounts allowed under the tax code for the calendar year and have any excess deferrals been distributed?
  8. Have you deposited employee elective deferrals on time? Plan documents generally contain language about the timing of these deposits. There are also federal laws and regulations regarding deposits of elective deferrals, as well as matching employer contributions. Failing to follow the terms of the plan could lead to "prohibited transactions."     
  9. If the 401(k) was top-heavy (favoring highly compensated executives), were the required minimum contributions made to the plan?
  10. Were hardship distributions made properly? These distributions may be allowed by a 401(k) plan in the event an employee has an immediate financial need, such as medical bills or college tuition.
  11. Have you filed a Form 5500 series return with the IRS and have you distributed a Summary Annual Report to all plan participants this year?
Abusive or prohibited transactions can put the tax-favored status of your company's 401(k) plan in jeopardy and result in expensive penalties.

Keep in Mind: The IRS is not the only government agency overseeing employee benefit plan compliance. The Labor Department's Employee Benefits Security Administration and the Pension Benefit Guaranty Corporation also scrutinize benefit plans and have their own compliance processes.

The good news is that 401(k) plan errors can often be voluntarily corrected. Your tax adviser or employee benefits professional can determine if changes should be made to your company's plan to achieve and maintain compliance.

Staying current with numerous complex requirements is challenging for business owners and executives. With professional help, you can identify and correct any problems associated with qualified plans ... before the IRS comes calling.

Steven Strauss: Working With Family

Question:
My wife convinced me to hire her nephew. He did a good job for us – until he started dating my assistant. They broke up last month. Now there is tension in the air, he’s heartbroken, he’s not concentrating at work, and he is missing work. But how do I fire him without getting divorced? Help!

Answer:
I think this brings up two interrelated issues. The first is whether it is wise to work side-by-side with family members in the first place, and the second is whether you should consider hiring family members to do work for you or having them hire you. My experience, and that of many readers I have heard from over the years, is that hiring family is fraught with danger.

I recall when I was a young pup in college, I got a speeding ticket and I needed a lawyer (yes, I was really speeding.) So I hired my cousin Louis. Lou represented me very well. Afterwards, I got his bill, which was, in retrospect, very fair. But at the time, I was young and dumb and made a stink about the bill – “but we’re family!” I cried.

It eventually got cleared up, but I will say when I practiced law I remembered my youthful mistake and made it a practice to try and not represent family members when I could avoid it.

But that leads us to the second issue, namely, should one work with family, and if so, how do you do so without going crazy? There are pros and cons of course; some people love working with family members and other can’t bear the thought of it.

Let’s consider both sides.

On the positive side of the ledger, one of the best things about working with family (and maybe one of the worst too) is the familiarity you have with one another. There is a shorthand that you have with family that you do not have with the world at large, and when you get along well with that person, that can really work to your benefit. Working with a family member you like can really be fun.

By the same token, family members know your strengths and weaknesses, and that too can come in very handy in the workplace. Especially if you work with a family member who has different strengths than you, then that give and take can save time and hassle since you have already spent years together.

Another great thing about working with family is that you will have someone around whom you can really trust. Not that you cannot trust your regular employees or partners of course, but there is just something about family that kicks that to a higher level.

Now lets consider the downsides, and they are not insignificant.

The first is that mixing business and family can hurt both entities. On the business side, if things don’t work out with the family member, disciplining (not to mention firing) that person is very difficult. Similarly, your loved one may not show you the respect that you deserve and need in the workplace; they may think that you are still jolly Uncle Joe at work and not the boss that you are. And that, in turn, can either hurt morale or invite similar disrespect among others in your organization.

In fact, family members may even feel that the normal rules do not apply to them, or they may resent your authority, or they may goof off, or they may not understand when you can’t or don’t give them a raise. And, like the question above, what do you do if they do a poor job? Or what if they miss too much work, or call in sick when you know that they are not sick? Of course you will have to take action, and that is where working with family can hurt the family. Family relationships can be challenging to mend after a rift at work.

The bottom line is that, unless you have an incredibly good fit, and everyone understands the rules and you have set up some guidelines, working together runs the very real risk of damaging all sorts of family relationships if things go south. And the problem there is that if things do go so

Get great tips for small business success! Listen to our free Business Next audio seminar

HR expert Julie Mann discusses how to help job seekers fit in to small business job opportunities; Rob Trube, author of the business planning book “The Simple Focus Plan”; Athena Trentin, program director of the Global Talent Retention Initiative, discusses the role of talented immigrants in growing Michigan’s small business economy; Shelley Lowe, director of career services of Davenport University, talks about training resources for complying with state and federal regulations; James Muffett on the Student Statesmanship Institute Business Track program.

Listen today at 10 a.m., 3 p.m. and 8 p.m. on the 
Michigan Business NetworkSBAM members can log in and listen to archived programs anytime on a PC or mobile device by going to the Business Next show page

Get Business Next audio seminars delivered three times a week automatically to your iPhone or other mobile device. Subscribe in iTunes using this URL.      

Is Your Ex Going to Inherit Your 401(k) Plan Account? Are You Sure?

Article courtesy of SBAM Approved Partner AdvanceHR

There have been tragic stories about people forgetting to update their retirement plan or life insurance beneficiaries after a life-changing event. It is not uncommon for retirement plan assets to go to the ex-spouse instead of the current spouse, noted Kim Saunders, a tax analyst for Thomson Reuters. There are a few simple steps that retirement plan participants can take to make sure they aren't part of this story.

"Most of us in the U.S. are on the go from early in the morning until well into the evening-six or seven days a week," said Saunders. "It's no surprise that we may let some important things slide. We know we need to get to them, but it seems like they can just as easily wait until tomorrow or the next day or whenever."

A recent U.S. Supreme Court decision reminds us that "whenever" might never arrive and the results can sometimes be tragic, noted Saunders. The case involved a $400,000 employer-sponsored retirement account, owned by William, who had named Liv as his beneficiary back in 1974, shortly after they married. The couple divorced 20 years later in 1994. As part of the divorce decree, Liv waived her rights to benefits under William's employer-sponsored retirement plans. However, William never got around to changing his beneficiary designation form with his employer.

When William died in 2001, Liv was still listed as his beneficiary; therefore the plan paid the $400,000 to Liv. William's estate sued the plan, saying that because of Liv's waiver in the divorce decree, the funds should have been paid to the estate. The Court disagreed, ruling that the plan documents (which called for the beneficiary to be designated and changed in a specific way) trumped the divorce decree. William's designation of Liv as his beneficiary was handled in the way the plan required, Liv's waiver was not. Therefore, the plan rightfully paid the $400,000 to Liv.

The tragic outcome of this case was largely controlled by its unique facts. If the facts had been slightly different (such as the plan allowing a beneficiary to be designated on a document other than the plan's beneficiary form), the outcome could have been quite different. However, it still would have taken a lot of effort and expense to get there.

This leads to a couple of important take away points. "The first is that if a plan participant wants to change the beneficiary for a life insurance policy, retirement plan, IRA, or other benefit, he or she needs to use the plan's official beneficiary form rather than depending on an indirect method such as a will or divorce decree," said Saunders. "The second point is that it is important to keep beneficiary designations up-to-date. Whether it is because of divorce or another life-changing event, beneficiary designations made years ago can easily become outdated."

Taxpayers should consult with a personal tax adviser before applying these or other tax strategies.

Tax Records: What Can You Throw Away?

Article courtesy of SBAM Approved Partner AdvanceHR

Maybe it's a good thing that the April 17th federal tax deadline coincides with the urge to spring clean. It feels good to throw out some of the financial records stuffing your filing cabinets. But before you head for the dumpster, make sure you're not disposing of records you may need. You don't want to be caught empty-handed if an IRS auditor contacts you.

Important:  Before tossing out financial documents, shred them thoroughly. Identity thieves can obtain account numbers and other data by rummaging through trash.

In general, you must keep records that support items shown on your individual tax return until the statute of limitations runs out -- generally, three years from the due date of the return or the date you filed, whichever is later. That means that now you can generally throw out records for the 2008 tax year, for which you filed a return in 2009.

In most cases, the IRS can audit your return for three years. You can also file an amended return on Form 1040X during this time period if you missed a deduction, overlooked a credit or misreported income.

So, does that mean you're safe from an audit after three years? Not necessarily. There are exceptions. For example:
  • If the IRS has reason to believe your income was understated by 25 percent or more, the statute of limitations for an audit increases to six years.
  • If there is suspicion of fraud or you don't file a tax return at all, there is no time limit for the IRS.
How Long to Keep Documents

Like most issues involving the IRS or other government agencies, there's no easy answer to that question. The IRS does not require you to keep records in any particular way. But here are some basic guidelines to follow for individuals (Guidelines for businesses are in the right-hand chart):

Completed tax returns. Many tax advisers recommend that you hold onto copies of your finished tax returns forever. Why? So you can prove to the IRS that you actually filed. Even if you don't keep the returns indefinitely, you should hang onto them for at least six years after they are due or filed, whichever is later.

Backup records. Any written evidence that supports figures on your tax return, such as receipts, expense logs, bank notices and sales records, should generally be kept for at least the three-year period.

Exceptions. There are some cases when taxpayers get more than the usual three years to file an amended return. You have up to seven years to take deductions for bad debts or worthless securities, so don't toss out records that could result in refund claims for those items.

Real estate records. Keep these for as long as you own the property, plus three years after you dispose of it and report the transaction on your tax return. Throughout ownership, keep records of the purchase, as well as receipts for home improvements, relevant insurance claims, and documents relating to refinancing. These help prove your adjusted basis in the home, which is needed to figure the taxable gain at the time of sale, or to support calculations for rental property or home office deductions.

Securities. To accurately report taxable events involving stocks and bonds, you must maintain detailed records of purchases and sales. These records should include dates, quantities, prices, dividend reinvestment, and investment expenses, such as broker fees. Keep these records for as long as you own the investments, plus the statute of limitations on the relevant tax returns.

Individual Retirement Accounts (IRAs
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