A number of clients have recently inquired about audits involving employee benefit plans (EBP) so I thought this might be a good time to review the audit requirements and the services our firm provides to help clients in addressing them.

Generally, federal law requires employee benefit plans with 100 or more participants (considered a “large” plan) to have an audit as part of their obligation to file an annual return/report (Form 5500 Series). However, there is an exception for plans that are close to this threshold. The 80-120 Participant Rule allows plans with between 80 and 120 participants at the end of a plan year to report using the same category that was used the previous year.

For example, assume that a plan had 75 participants at the end of 2012 and reported as a “small” plan with no audit requirement. If the plan has 115 participants at the end of 2013, it may choose to report using the same category that was used in 2012, and therefore avoid the audit requirement. However, if the same plan had 125 participants at the end of 2013, it would be required to report as a “large” plan and be audited.

If an EBP is required to have an audit, one of the most important duties of the plan administrator is to hire an independent auditor for the plan.

A quality audit helps ensure the financial integrity of a plan and protect plan assets. A quality audit also will help a plan administrator carry out its legal responsibility to file a complete and accurate annual return/report for the plan each year. In addition, it will provide a greater level of comfort with the information reported by the plan among the employees and management of the plan sponsor as well as key external stakeholders.

Auditors of employee benefit plans may encounter issues related to the Employee Retirement Income Security Act of 1974 (ERISA), and IRS and Department of Labor (DOL) regulations in addition to typical audit concerns. Our firm’s audit team has significant experience with employee benefit plans and commits considerable resources to training each year.

Whalen & Company is a member of the Employee Benefit Plan Audit Quality Center of the American Institute of Certified Public Accountants and, as such, are committed to quality and training standards that set us apart from other service providers.

Throughout the audit process we work closely with our client and the client’s third-party administrators to ensure that their fiduciary responsibilities are fulfilled and that the plan participants are well served while retaining the objectivity and independence expected from an independent CPA firm.

If you have questions about an EBP audit or wish to discuss how we might assist you and your business, please contact me.

On June 26, the U.S. Supreme Court struck down Section 3 of the 1996 Defense of Marriage Act (DOMA) as a violation of the U.S. Constitution’s guarantee of equal protection under the law. Sec. 3 defined marriage for federal benefits purposes as being between a man and a woman, thus denying federal benefits — including many tax benefits — to same-sex married couples.

The ruling means that, in states where same-sex marriage is recognized, same-sex married couples will be able to claim numerous federal tax benefits related to being married. But in some cases, these couples will also be subject to some tax burdens, such as the “marriage penalty.”

Same-sex married couples in states where their marriages are recognized should consult their tax planning advisors to determine what new opportunities may be available to them and whether there are any new burdens they should plan for. Please contact us if you have questions.

Whalen Partner Richard Crabtree is known for providing Five-Star service to clients. Recently he was recognized by a national organization for consistently serving fellow members with the same high level of quality service.

At the annual symposium in June of Enterprise Worldwide (EW), an alliance of independent accounting firms working together to provide the best possible service to clients on a worldwide basis, Richard won the organization’s 2013 Brand Ambassador Award. The award is presented to the individual who gains tremendous benefit from his or her interaction with CPAs and other professionals in the EW network and gives even more back through consistently serving fellow members with Five-Star client service.

Enterprise Worldwide provides a pool of knowledge and experience that is available to member firms whenever needed. Through meetings, conferences, workshops and networking, Whalen’s partners are continually learning information and exchanging ideas.

Membership in EW enables our firm to provide the best possible service to our clients by utilizing the expertise of the professional staff of member EW firms with national and international resources for the benefit of our clients.

Whalen has been the recipient of four other national awards presented by Enterprise Worldwide.

The awards recognize the firm’s focus on providing Five-Star service to clients and for the quality and commitment of the firm’s management and support staff in ensuring oustanding service to clients and colleagues.

In 2010 Linda Nay, the firm’s administrator and associate director since 2008, was selected as the Top Firm Administrator among Enterprise Worldwide’s member accounting firms. The firm also won the national award for top marketing initiative.

The following year Tracy Ceritelli was
 recognized as the Top
 Director of First Impressions, an award honoring an individual who is an integral
 team member and excels at creating a Five-Star client service experience for everyone with whom he or she comes into contact. The firm also won the Five-Star Service Award.

Please be advised of a new and upcoming fee to be reported and paid to the IRS.

The Affordable Care Act includes a provision that requires a fee to be paid by issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans. The purpose of this fee is to help fund the Patient-Centered Outcomes Research Institute (PCOR). This fee is temporary and is slated to end on September 30, 2019.

Who pays the fee:

• Businesses that sponsor self-insured health plans
• Businesses that provide a Health Reimbursement Account (HRA), and/or
• Businesses that provide certain Health Flexible Spending Arrangements (Health FSA)

When to pay the fee:

• If your plan year ends on or after October 1, 2012, the first payment is due July 31, 2013
• If your plan year ends on or after October 1, 2013, the first payment is due July 31, 2014

How much: the amount of the fee for plan years ending on or after October 1, 2012 and before October 1, 2013 is $1.00 multiplied by the average number of lives covered under the plan.  For plan years ending on or after October 1, 2013 the fee is raised to $2.00 multiplied by the average number of lives covered under the plan

How to pay: the fees are to be reported annually on Part II of the second quarter Form 720, which is due July 31 of each year

Where to find additional information: We are available to assist you with any questions you may have on this matter.

Please contact your Whalen business advisor to let us know how we can help!

A special congratulations goes out to partner Richard Crabtree, for winning the 2013 Enterprise Worldwide Brand Ambassador award at the Annual Symposium Five Star Awards Banquet. This award is presented to the individual that exemplifies all that is Enterprise Worldwide, an individual who gains tremendous benefit from their interaction with the network and gives even more back through consistently serving fellow members with Five Star Client Service. Enterprise Worldwide is an international network of independent accounting and consulting firms located throughout the world.