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Market Commentary from Ashley Vice, CFA, CFP

2020 is making it harder to talk about “markets” as if they are a common entity and not thousands of individual companies facing dramatically different challenges and opportunities. I could say that “the market” is up through the third quarter, but that would be a poor description of the year so far. What has really happened is that a handful of very large tech-oriented US stocks have had a great year while the other 99% of publicly-traded companies around the world have had a year ranging from unexceptional to awful. The dispersion of returns between the best and worst sectors, sizes...

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Plan Sponsor Guide: Understanding 401(k) Loans

Although not required by law, many 401(k) plans offer a loan provision as a way for plan participants to access money prior to retirement.  The thinking is that more employees will contribute to the plan if they know they can tap into their savings should they incur an unexpected expense while working; conversely, if employees can only access their savings at retirement, employees may decide not to contribute at all. Rates & Loan Amounts The loan rate is determined by the plan (i.e., the plan sponsor or plan fiduciaries) and is usually equal to prime rate plus 1%.  Plans will often set...

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ACA Pay or Play Penalties Increase in 2021

The Adjusted Penalty Amounts for 2021 are $2,700 and $4,060 Under the Affordable Care Act’s employer shared responsibility (pay or play) rules, applicable large employers—generally those who have 50 or more full-time employees (including full-time equivalent employees)—may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees and their dependent children. Two separate penalties can apply under the employer shared responsibility rules—the Section 4980H(a) penalty and the Section 4980H(b) penalty. The Section 4980H(a) penalty can apply when an ALE does not offer coverage to “substantially all” full-time employees (and dependents). The annual...

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President Trump Issues Health Care Plan Executive Order

The America First Health Care Plan aims to Protect People with Preexisting Conditions and Combat Surprise Medical Billing On Sept. 24, 2020, President Donald Trump introduced his plan for affordable, high-quality health care, called the America First Health Care Plan. This plan, issued in an executive order, is primarily aimed at protecting people with preexisting conditions and combating surprise medical billing. The executive order directs the Departments of Health and Human Services (HHS), Labor and the Treasury to maintain and build upon existing actions to: Expand options for affordable health care and access to affordable medicines; Ensure consumers have access to meaningful price and...

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2020 Furnishing Deadline Delayed and Additional Transition Relief Granted

The IRS has delayed the deadlines by which employers must furnish 2020 Forms 1095-C and 1095-B in early 2021. For 2020, the furnishing deadline was Feb. 1, 2021, Since Jan. 31, 2021, is a Sunday. The IRS has provided an additional 30 days for furnishing the 2020 Form 1095-B and Form 1095-C, extending the due date from Feb. 1, 2021, to March 2, 2021. The deadline for filing with the IRS under Sections 6055 and 6056 remains March 1, 2021 (since Feb. 28, 2021, is a Sunday), or March 31, 2021, if filing electronically. The IRS provided additional relief from penalties related to failures...

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IRS issues final regulations on the deduction for meals and entertainment

WASHINGTON — The Internal Revenue Service issued final regulations on the business expense deduction for meals and entertainment following changes made by the Tax Cuts and Jobs Act (TCJA). The 2017 TCJA generally eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation. However, taxpayers may still deduct business expenses related to food and beverages if certain requirements are met. These final regulations address the disallowance of the deduction for expenditures related to entertainment, amusement or recreation activities, including the applicability of certain exceptions to this disallowance.  They also provide guidance to determine whether an activity is...

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What is 401(K) Benchmarking and Why Should You Do It?

Simply stated, benchmarking is the process of reviewing and evaluating your company retirement plan. It involves taking a look at what you are offering your employees today and deciding if it’s appropriate or needs some updating. There are four main areas to focus on when assessing your retirement plan: Plan Design Service Providers Funds Fees Each aspect of your plan requires a slightly different set of questions and documented responses. To go into detail about each section, we will break this into a two-part series, beginning with Plan Design and Service Providers; but don’t worry, we will discuss Funds and Fees...

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IRS Updates Per Diem Rates

The IRS has updated the rules for using per diem rates to substantiate the amount of business expenses paid or incurred while traveling away from home. The full notice from the IRS can be viewed here. Highlights include the following: $66 for any travel locality within the continental United States and $71 for any travel locale outside the continental U.S. for special meal and incidental expenses rates for taxpayers in the transportation industry. $5 per day for any locality of travel within or outside the U.S. for the incidental expenses only deduction For purposes of the high-low substantiation method, the per...

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Payroll Tax Deferral Guidance

President Trump issued an executive order on August 8, 2020 allowing employers to defer employee’s social security taxes for certain employees for the period beginning September 1, 2020 through December 31, 2020. The Department of Treasury and the Internal Revenue Service issued Notice 2020-65 providing additional guidance on August 28, 2020. The executive order defers the employer’s obligation to withhold, deposit and pay the 6.2% Social Security tax for employees. It applies to employees who “generally” make less than $4,000 bi-weekly, calculated on a pre-tax basis, which equates to $104,000 annually. Any deferred Social Security taxes would then be collected from the...

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MLR Rebates Must Be Paid By Sept 30, 2020

The ACA requires health insurers to spend a minimum percentage of their premium dollars, or MLR, on medical care and health care quality improvement.  Issuers that do not meet these minimum requirements must provide rebates to consumers. This percentage is: 85% for issuers in the large group market; and 80% for issuers in the small and individual group markets Effective dates: MLR data was due to HHS by July 31 for the 2019 reporting year. Rebates for 2019 must be provided by September 30, 2020. A full discussion of MLR Rebates can be found here....

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