Author: Austin Eichacker

KT Insights
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BOI Reporting Requirement

If you have an established company or are planning on starting a new company in 2024 or beyond, please read this article carefully. 

What Is FinCEN BOI Reporting?

BOI (Beneficial Owner Information) reporting is a mandatory NEW business filing requiring most U.S. companies to submit their BOI to the Financial Crimes Enforcement Network (FinCEN) in 2024. This requirement comes from a new law called the Corporate Transparency Act that was passed to enhance the government’s efforts to combat money laundering, terrorist financing, and other financial crimes.

This reporting requirement started in 2024, and it is enforced by potential penalties including fines of $500 per day up to $10,000. 

Who Is Affected?

Entities required to report under this regulation include corporations, limited liability companies, S-corps, LLPs, and other entities created by filing a document with any U.S. state. The majority of for-profit business entities will be required to file this report unless they qualify for an exemption.

To find out if you have an exemption, visit fincenfetch.com/boi-report-exemptions.

Can We File Your FinCEN report?

Yes, our firm can file your report. Please email [email protected] if you would like help with this mandatory filing.

We use a specialized web platform, FincenFetch, to make this process easy for you. This platform will securely and quickly collect your filing information for our firm to let us complete your report. 

What Are the BOI Due Dates?

1) Entities created before Jan. 1, 2024, will have until Jan. 1, 2025, to submit the report.

2) Entities created on or after January 1, 2024, and before Jan 1, 2025, will have 90 days from creation or registration to submit the report.

3) Entities created on or after Jan. 1, 2025, will have 30 days from creation or registration to submit the report. 

What next steps should I take?

For more information or to get started, please email [email protected].

Pricing for this service will be $400 per reporting entity + $25 per beneficial owner. If a beneficial owner has multiple reporting entities, a discount of $100 will be given for each additional reporting entity.

October 1, 2024
| Austin Eichacker
KT Insights
 |

BOI Reporting Scam

BOI (Beneficial Owner Information) reporting is a new mandatory business filing requiring most U.S. companies to submit their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) in 2024.

While the actual requirement to report the BOI information is very real, the reporting has led to the latest scam by fraudsters. Businesses are beginning to receive by mail a fraudulent “Mandatory Beneficial Ownership Reporting” form. Be leery as these forms appear to be very real.

Example of BOI form from fraudsters:

FinCEN reporting can be done either online through their website at https://www.fincen.gov/boi or you can have us assist with your reporting process.

If you are interested in learning more about the BOI reporting process, please contact [email protected].

August 14, 2024
| Austin Eichacker
KT Insights
 |

BOI Reporting Assistance

If you have an established company or are planning on starting a new company in 2024 or beyond, please read this blog carefully.

What Is FinCEN BOI Reporting?

BOI (Beneficial Owner Information) reporting is a new, mandatory, NEW business filing requiring most U.S. companies to submit their BOI to the Financial Crimes Enforcement Network (FinCEN) in 2024. The BOI requirement comes from a new law called the Corporate Transparency Act that was passed to enhance the government’s efforts to combat money laundering, terrorist financing, and other financial crimes. This reporting requirement started in 2024 and is enforced by potential penalties including fines of $500 per day, up to $10,000.

Who Is Affected?

Entities required to report under this regulation include corporations, limited liability companies, S-corps, LLPs, and other entities created by filing a document with any U.S. state. The majority of for-profit business entities will be required to file this report unless they qualify for an exemption.

Find out if you have an exemption HERE.

Can We File Your FinCEN report?

Yes, our firm can file your report. Please email [email protected] if you would like help with this mandatory filing.

We use a specialized web platform, FincenFetch, to make this process easy for you. This platform will securely and quickly collect your filing information for our firm to assist us in completing your report.

When are the Filing Dates?

1) Entities created before Jan. 1, 2024, will have until Jan. 1, 2025, to file the report.

2) Entities created on or after January 1, 2024, and before Jan 1, 2025, will have 90 days from creation or registration to file the report.

3) Entities created on or after Jan. 1, 2025, will have 30 days from creation or registration to file the report.

What next steps should I take?

For more information or to get started, please contact [email protected]

Pricing for this service will be $400 per reporting entity + $25 per beneficial owner. If a beneficial owner has multiple reporting entities, a discount of $100 will be given for each additional reporting entity.

August 13, 2024
| Austin Eichacker
KT Insights
 |

Employee Benefit Plans – Agreed Upon Procedures

What is an AUP?

An Agreed Upon Procedures (AUP) engagement is designed for a practitioner to perform specific procedures over a specified subject matter. For employee benefit plans, this would encompass us testing select transactions, processes, and procedures over the employer sponsored employee benefit plan.

Once the procedures are complete, we report the findings to the plan manager but do not provide an opinion or conclusion on the engagement. While we have a standardized set of procedures for employee benefit plan AUP engagements, the procedures performed can be customized and tailored to the employers’ needs and desires.

What’s the difference between an employee benefit plan audit and an AUP?

Under most circumstances, defined contribution plans (401k, 403b, ESOP, etc.) require audits if the plan has 100 participants with balances. Audits are required to follow specific guidelines to cover all facets of the employee benefit plan audit and conclude with financial statements and an independent auditor’s report.

AUP engagements can be finetuned to only focus on areas of concern or areas at higher risk for failures. Under both an audit and AUP, we are required to report the findings to management. An AUP is not required by a regulatory body but would be an election of plan management to help improve the plan and identify potential issues.

Why do I need one?

Employee benefit plans such as 401(k) and 403(b) plans are required to follow numerous rigid plan provisions. Plans are also subject to various Internal Revenue Service (IRS) and Department of Labor (DOL) regulations. These provisions and regulations are established to protect the rights and benefits of the plan’s participants.

Plan sponsors and administrators have a fiduciary responsibility to protect the participant’s benefits. If a plan is not being operated appropriately, the plan’s participants may be negatively impacted which could cause the plan to be susceptible to unnecessary corrections made by the plan sponsor, fines, and/or penalties for non-compliance.

AUP engagements over employee benefit plans are designed to help uncover common plan failures. An AUP engagement can better ensure plan participants’ assets are being administered appropriately, participants are treated properly, and potential current plan issues are identified and resolved before becoming an even greater problem.

How can KT help?

Whether the plan has been in place for decades or just getting started; whether the plan has suspected issues or it’s simply time to do an annual checkup; whether you have 5 employees or 100 employees, we can help make sure the plan is operating effectively.

Our team of specialized employee benefit plan professionals have the experience and training to help take care of your employee benefit plan needs. We work hand-in-hand with your employee benefit plan administrators to make sure you receive timely, dependable, and constructive guidance to help improve your plan processes and procedures.

What does an AUP engagement entail?

An AUP engagement requests us to test a selected number of plan participants, their transactions during a given period (such as during a specific plan year) and verify the participants contributions were done in accordance with the plan provisions and IRS/DOL regulations. This would likely focus on the testing of participant eligibility, compensation, and annual employee and employer deferrals. However, the testing can also include the testing of other types of transactions such as distributions, loans, and expenses. The great part of AUP engagements is that the procedures can be tailored to you and your plan needs.

Contact us Today!

If you are interested in learning more about having an AUP engagement performed for your benefit plan, or would like to know more details, please contact me, Austin.

June 17, 2024
| Austin Eichacker
KT Insights
 |

Exploring Employee Benefit Plans

Part 1: Eligible Compensation

Part 2: De Minimis Balances of Terminated Employees

Part 3: Maintaining Documentation

Part 4: Timely Remittance

Part 5: Long-Term Part-Time Employees

Part 6: Secure Act 2.0 Changes

Of Note:

The 401(k) 2024 IRS contribution limits for employees is $22,500, with a $7,500 catch-up contribution if over the age of 50.

Secure Act 2.0 Changes

Mark your calendars! Secure Act 2.0 amendments must be made by the last day of the plan year beginning on/after January 1, 2025, or January 1, 2027, for governmental plans.

Required Minimum Distributions

Beginning Jan 1, 2023 – the age requirement increases to 73.

Beginning Jan 1, 2023 – the age requirement increases to 75.

Additionally, the penalty decreases from 50% to 25% for failing to take the required minimum distributions, effective for taxable years beginning after December 29, 2022.

Catch-up Contributions

For years beginning after December 31, 2023: Catch-up Contributions must be made on a Roth basis for employees with compensation greater than $145,000.

For years beginning after December 31, 2024: for employees ages 60-63 the limit for catch-up contributions increases to $10,000 or 150% of the regular catch-up amounts for 2024.

For more on how KT can help your organization’s Employee Benefit Plan

April 2, 2024
| Austin Eichacker
KT Insights
 |

Exploring Employee Benefit Plans

Part 1: Eligible Compensation

Part 2: De Minimis Balances of Terminated Employees

Part 3: Maintaining Documentation

Part 4: Timely Remittance

Part 5: Long-Term Part-Time Employees

The long-term part-time employee is a SECURE Act and SECURE 2.0 Act change which goes into effect after December 31, 2024.

Long-term, part-time employees that complete two consecutive years of service with 500+ hours worked must be offered participation into a company’s 401k Plan. In addition, Plans that have had employees work three consecutive years of 500 – 1000 hours since 2021 should also be allowed to participate in the Plan. This could mean that the part-time employee is eligible in 2024.

This change will impact Plans who have eligibility provisions requiring employees to work a certain number of hours per year to become eligible to the retirement plan. Typically, Plans set a 1000-hour requirement to exclude part-time employees from the Plan. The new requirement will particularly be of interest to those who have many part-time employees, such as in the hospitality or construction industries.

If your Plan does have an hour’s requirement and employs part-time employees who work between 500 – 1000 hours, it’s important to reach out to your Third-Party Administrator (TPA) as soon as possible and determine how your Plan will track these hours. Once employees meet the service requirement, the Plan must permit the part-time employee to participate in the Plan no later than the following January 1st or July 1st (whichever is sooner), after the employee reaches the 500-hour requirement. Minimum age and class of employee requirements are still permitted when determining eligibility.

Another option Plans should consider is a potential amendment to the Plan. If your Plan currently excludes employees working under 1000 hours, the Plan could consider amending the Plan provisions to include such employees. The amendment would help alleviate the burden of tracking hours and the risk of the Plan improperly excluding eligible participants.

March 28, 2024
| Austin Eichacker
KT Insights
 |

Exploring Employee Benefit Plans

Part 1: Eligible Compensation

Part 2: De Minimis Balances of Terminated Employees

Part 3: Maintaining Documentation

Part 4: Timely Remittance

Common Finding

Per the IRS and DOL, retirement plan withholdings should be remitted to the Third-Party Administrator (TPA) or Custodian/Trustee as soon as “administratively feasible.” Administratively feasible is considered to be approximately the same time it takes to remit payroll taxes. This timing varies from employer by employer; however, the typical timeline is somewhere between 0 – 5 business days from the payroll pay date.

Recommendation

Schedule the day you make remittances to be the same each pay period and set a calendar reminder for the day the remittance needs to be made. For example, Company X has a bi-weekly payroll and payday is every other Friday. The following Monday, the payroll clerk has a calendar reminder to remit retirement plan withholdings. Make sure that more than one employee is trained and able to make the retirement plan remittances. Just because your payroll employee is on vacation does not mean you get a pass on the administratively feasible time limit.

If you find that you did have late remittances, you should contact your TPA representative and consider going through the DOL’s Voluntary Fiduciary Correction Program. This involves making a corrective contribution to lost earnings to the participants. Late remittances are required to be disclosed on the annual financials (if large employer) and Form 5500. The amounts must be disclosed until the lost earnings to the participants are corrected.

March 22, 2024
| Austin Eichacker
KT Insights
 |

Exploring Employee Benefit Plans

Part 1 – Eligible Compensation

Part 2 – De Minimis Balances of Terminated Employees

Part 3: Maintaining Documentation

Common Finding

There are several documents that Plan Sponsors must retain. Examples include, but are not limited to, enrollment forms, declination forms, change in election forms, management’s approval of pay rates, new hire and birth date documentation such as I-9’s, termination paperwork, and support for hardship distributions. Plan Sponsors must maintain this documentation until the participant no longer has funds in the Plan. This means the Plan Sponsor must maintain documentation for terminated employees who still have balances within the retirement plan.

If a plan does not offer the ability to update their deferral percentages online, paper forms should be maintained for all employees for any elections or changes they make. Declination forms should be obtained for all eligible participants, even if they elected not to contribute to the Plan. This declination form helps prove that all participants have been properly offered enrollment into the Plan.

Recommendation

Management should obtain and maintain documentation in personnel files as a record of any changes and support retirement plan transactions and processes. Documentation is vital to ensuring the Plan is operating in accordance with participant elections and that Plan documents are in compliance.

Make sure you are following up with employees that have not returned the Plan’s enrollment form. Just because they did not return the form does not necessarily constitute a declination. If participants are allowed to make changes online, it is good practice to keep loan and election change correspondence received from the Third-Party Administrator in the employees’ personnel files.

March 14, 2024
| Austin Eichacker
KT Insights
 |

Exploring Employee Benefit Plans

Read Part 1

Part 2: De Minimis Balances of Terminated Employees

Common Finding

De Minimis distributions should occur when balances are below a certain threshold, as defined by the Plan document. Most plans have a requirement for balances less than a determined value of $1,000 or $5,000. The maximum can be increased to $7,000 during 2024 with the change in the Secure 2.0 Act.

Terminated employees with balances below these thresholds should be distributed in cash or rolled over into an individual IRA account outside of the Plan.

Recommendation

Management should implement a process to review balances of terminated employees on a regular basis, such as quarterly or bi-annually, and distribute balances that meet the Plan’s requirement. This process can be delegated to your Third-Party Administrator (TPA).

One common issue when De Minimis distributions are not occurring is due to the participant not having an updated address with the TPA. It is the responsibility of the Plan Sponsor to ensure all current and past employees have updated addresses with the TPA.

How KT Can Help with Your Employee Benefit Plan

March 7, 2024
| Austin Eichacker
KT Insights
 |

Exploring Employee Benefit Plans

Part 1: Eligible Compensation

Common Finding

Plans have the ability to define the Plan’s eligible or ineligible compensation. It is vital that those involved in payroll are well aware of these delineations. The Company’s payroll calculations for employee retirement withholdings and employer match or profit-sharing benefit need to agree with the Plan’s definition of compensation.

For example, Company A added a new compensation code for $1 shift differential for working weekends. When setting up this earning type in the payroll software, management should verify that the new pay code is or is not utilized in retirement calculations. Additionally, when processing payroll after this change is made, it is a great idea to verify it is working properly by reperforming the calculation.

Most Plan’s choose W-2 earnings or 415 wages. These choices include nearly all taxable earnings. However, some Plans have chosen to exclude certain types of earnings such as bonuses, commissions, or fringe benefits (such as employer paid health insurance, allowances, or certain types of reimbursements), just to name a few.

Recommendation

When a new compensation type is created or new payroll software is used, it is important to verify whether it is eligible compensation as defined by the Plan to ensure deferrals are calculated correctly. It may benefit your Company to verify compensation types are correctly classified as eligible or ineligible compensation as defined by the Plan in your payroll software on a regular basis, or as needed when the Plan is amended, or changes are made to your payroll software.

If you are unsure what qualifies as eligible compensation, refer to the Plan’s adoption agreement or contact your Third-Party Administrator (TPA).

February 29, 2024
| Austin Eichacker