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Week of Sept. 3, 2010
One IRS attacker goes to prison, others under investigation
August 30, 2010 – Frustration with the Internal Revenue Service is nothing new. But in recent months, acts of violence and inappropriate treatment of agents are escalating.
Convictions upheld, fine reduced in KPMG tax shelter case
September 1, 2010 – A $6 million fine levied against former KPMG LLP senior manager John Larson for selling illegal tax shelters was reduced by half last week by a U.S. appeals court.
Democrats seek to legislate retirement savings
August 31, 2010 – In an effort to increase the number of Americans who are saving for retirement – roughly 50 percent of employees have no retirement savings at all – the Automatic IRA Act of 2010 has been introduced in both houses of Congress.
Recession blues: 401(k) loans and hardship withdrawals on the rise
August 31, 2010 – Fidelity Investments, one of the nation's providers of workplace retirement savings plans, has released its quarterly data on the state of the 401(k) that show positive, steady savings behavior by the majority of participants. However, it also cited an increase in the use of loans and hardship withdrawals by participants.
Laughter can be cure for workplace ills
August 27, 2010 – Employee satisfaction, worker productivity, and customer service continue to be priorities. The challenge for most organizations is to achieve high levels of productivity and customer service while maintaining a satisfied, motivated workforce.
Know thy client
September 1, 2010 – Use what you know to take care of your clients. Ensure that they get the most relevant and timely advice from their proven and reliable source – their accountant.
'Tax Lady' Roni Deutch: Charlatan or political target
August 31, 2010 – You’ve probably seen the hard-hitting advertisements from Roni Deutch advising taxpayers who owe federal taxes to let her help them fight the Internal Revenue Service. Now, California Attorney General Jerry Brown is fighting her.
Employees clamoring for basic workplace financial education
August 31, 2010 – In a recent survey conducted by the Personal Finance Employee Education Foundation with the support of the Employee Benefits News, 91 percent of respondents cited employee financial literacy as being extremely important or important in reducing the vulnerability of the American economy to major economic crises.
IRS looking for feedback on Roth 401(k) regulation
August 31, 2010 – The Internal Revenue Service is seeking comments on an existing regulation that provides guidance on Roth 401(k) arrangements.
One IRS attacker goes to prison, others under investigation
August 30, 2010 – Frustration with the Internal Revenue Service is nothing new. But in recent months, acts of violence and inappropriate treatment of agents are escalating.
For venting his frustrations by ramming his SUV into an IRS building, 50-year-old Ernest Milton Barnett will spend 52 months in prison, another three years on probation, and pay $3,000 in restitution to the IRS and IRS employees who were injured in the attack.
On August 26, 2008, witnesses said Barnett was seen driving back and forth around the IRS building in Birmingham, Alabama, before driving over a curb and onto the grass. Then he turned the SUV around, hit the accelerator, and rammed the vehicle into a window. As employees scattered, he backed the SUV up, aimed, and attacked the building again.
A government sentencing memo stated that Barnett grew angry while talking to an IRS employee that morning on the phone. Soon after the call ended, he left his home in Center Point, Alabama, and headed straight to the IRS building. In March 2010, Barnett pleaded guilty to a two-count indictment of using his Jeep Cherokee as a deadly weapon against IRS employees, and of willfully damaging government property.
"This defendant undertook a senseless and outrageous attack on a government building filled with people in order to protest a long-standing tax debt, and innocent and unsuspecting federal employees were injured," U.S. Attorney Joyce White Vance said in a statement. "Such a premeditated and unwarranted assault against the federal government demands punishment."
Judge Virginia Emerson Hopkins ordered him to report to prison October 12, to begin serving his sentence.
In February, another angry man vented his frustrations in another attack – this one deadly. Andrew Joseph Stack III, age 53, posted online a rambling 3,000-word diatribe against the government. Then he set his house on fire with his wife and daughter inside and drove to where his small private airplane was housed. Eyewitness Susan Whelan told the Austin American-Statesman that Stack flew his Piper Cherokee plane directly into the IRS building in Austin, Texas. "It wasn’t heading into the direction of the building, but all of a sudden it took a right and headed straight into it. It didn’t look like it was in distress. It wasn’t wavering at all."
Peggy Walker, an IRS revenue officer, told the Associated Press, "It felt like a bomb blew off. The ceiling caved in and the windows blew in. We got up and ran."
After fighting the blaze for more than 75 minutes, firefighters found the remains of Stack and an IRS employee who died in the attack.
A month after the plane crash, The Washington Post reported that threats against IRS employees and facilities continued to pour in. Colleen M. Kelley, president of the National Treasury Employees Union, told reporters that more than 70 instances of inappropriate comments made to IRS employees were under investigation. Some of the comments were jokes about Stack or support for him, and other comments were described as serious threats.
These threats are tracked by the Treasury Inspector General for Tax Administration (TIGTA), which serves as an IRS watchdog. "TIGTA is actively and aggressively investigating all threats made against IRS employees, infrastructure, and property," said J. Russell George, the treasury inspector general.
Attacks on the IRS, which are not limited to tax season, have included assaults on employees and attacks on offices. They are nothing new, but are treated with great seriousness, according to Terry Lemons, IRS communications director. "It would be a little naive to think that we don’t get some threats over the course of doing business," Lemons told reporters.
CPA and tax attorney Peter Pappas has witnessed out-of-control taxpayer behavior for a couple of decades. Certain characteristics are typical of what Pappas calls the anti-IRS lunatic. More information on these types of individuals can be found at his Tax Lawyer's Blog.
Convictions upheld, fine reduced in KPMG tax shelter case
September 1, 2010 – A $6 million fine levied against former KPMG LLP senior manager John Larson for selling illegal tax shelters was reduced by half last week by a U.S. appeals court.
The appeals court said Judge Lewis Kaplan’s calculation of the harm caused by Larson’s crimes had been made without a jury finding. Therefore, he was limited under higher court precedent to a maximum of $250,000 per count, or $3 million, according to a Bloomberg report.
The federal appeals court, however, upheld the convictions of Larson, ex-KPMG tax partner Robert Pfaff, and attorney Raymond Ruble. Larson and Pfaff had been convicted of 12 counts of federal tax evasion. Larson was sentenced last year to 10 years in prison and Pfaff was sentenced to eight years. Ruble was sentenced to six and a half years.
The illegal tax shelters allowed clients to falsely claim to have taken large loans to buy stock, thus avoid having to pay millions of dollars in taxes. Pfaff and Larson left KPMG in 1997 to form an investment advisory firm known as Presidio Advisory Services. Their convictions were related to activities undertaken after they left KPMG.
"We're deeply disappointed with the court's decision affirming the conviction and are considering our options for further review," J. Scott Ballenger, a lawyer representing Larson, told Reuters. "Of course, we're gratified by the court's recognition that the fine imposed was unconstitutional."
Hailed as the largest criminal tax prosecution in 2005 when charges were filed, it became much smaller after Judge Kaplan dismissed charges against 13 former KPMG executives. Reuters reported that Kaplan had ruled the government had interfered with their right to counsel.
Democrats seek to legislate retirement savings
August 31, 2010 – In an effort to increase the number of Americans who are saving for retirement – roughly 50 percent of employees have no retirement savings at all - the Automatic IRA Act of 2010 has been introduced in the Senate by Sen. Jeff Bingaman (D-NM) and in the House by Rep. Richard Neal (D-MA). The bill establishes IRA accounts for all employees and sets up automatic payroll deductions.
While employees can participate in IRAs whether they are offered in the workplace or not, only approximately 10 percent do. The rationale for the legislation is the success of the automatic enrollment in 401(k) plans of a few years ago. When these accounts were established by law, there was a dramatic increase in participation, reaching as high as 90 percent of eligible employees. The belief is that, by establishing automatic IRA accounts, tens of millions of workers will be eligible for these plans, and an expected $15 billion will be added to savings annually.
Which businesses will be affected by the Auto IRA Act if it is passed?
The law would be phased in over a period of years, initially applying to businesses that do not already offer a qualified retirement plan and have more than 100 employees. By the fourth year, employers with 10 or more employees (without qualified plans) would be expected to comply. Employees who are counted for this purpose are those who earned at least $5,000 in the prior year. Employers who offer qualified retirement plans but only to certain units or divisions of their workforce will need to make automatic IRA plans available.
Also exempt are businesses that have been in existence for less than two years, as well as government entities and churches.
Which employees qualify?
Employees who have been on the job at least three months and have reached 18 years of age by the beginning of the year are eligible.
What will the cost be to employers?
The only costs to employers should be minimal and administrative in nature. Employers will be able to take a tax credit of up to $250 for each of the first two years the Auto IRA is in operation.
Assuming an employee takes no action, what will happen?
Employees will be offered the ability to opt-out at any time. If they choose to participate, they can select a percentage of their paycheck to be withheld and deposited into their own IRAs, subject to limits. If they do nothing, a payroll deduction of 3 percent (the default amount) will be withheld from paychecks and deposited into the employee’s IRA.
How much can employees contribute?
Auto IRA contributions are subject to limitations of $5,000 per year, or an additional $1,000 for employees 50 years of age and older. Employer contributions are not permitted with Automatic IRAs.
What other rules apply to employee participation?
Employees who make contributions to automatic IRAs also may qualify for the Saver Credit.
Employees can choose between a Roth IRA and a traditional IRA. In the absence of a decision, the default will be a traditional IRA.
Following is a list of additional requirements employers need to know about setting up and maintaining an Auto IRA:
• Accounts must be portable and not bound by employment with a particular employer. Accounts must be able to roll into and out of other IRAs and qualified accounts.
• Fees charged for such IRAs must be reasonable and not inflated when the account has a low balance.
• Currently, small businesses that start new qualified retirement plans may be entitled to a credit for up to three years that is equal to the lesser of $500 or 50 percent of the start-up cost of the plan. The proposed law raises that amount to $1,000.
• Employers are obligated to send all employee contributions to the IRA provider by the end of the month following the month in which the contributions would have been paid if they had not been withheld from paychecks. Failing to send contributions within this time frame could result in an excise tax.
• Employers are prohibited from self-dealing in the establishment and maintenance of IRAs.
• Employers must see to it that employees receive standardized forms explaining the Auto IRA program and the investment decisions available to participants.
• Employers would have no ERISA fiduciary liability if they use government-approved providers or the default investment, which is a principal preservation fund for balances under $5,000 or a lifestyle fund for larger balances.
Must a government preferred provider be selected?
Employers can select a provider on their own. They also can visit Web site that will be made available by the U.S. Treasury to assist employers in finding an Auto IRA provider.
Because there are not a large number of small-business qualified plans to choose from, employers can band together to offer a multiple-employer plan. The Treasury and the Department of Labor will issue guidance to reduce the likelihood that noncompliant members of multiple-employer plans will taint the entire plan.
In addition, employers can allow their employees to find an IRA provider of their own choosing.
What if the employer fails to establish an Auto IRA?
The penalty for failing to establish an appropriate Auto IRA is an excise tax of $100 for each employee who should have been covered. Employers who innocently err have the ability to self-correct and avoid the penalties.
What are industry observers saying about the proposed legislation?
"Anything that facilitates savings is a very, very good thing, but the question in my mind is whether or not participants will receive the fiduciary protection they need," said Matthew Hutcheson in an interview with Investmentnews.com. Hutcheson is the founder of Matthew Hutcheson LLC, an independent fiduciary firm. "What I worry about is that retail brokers and advisers will pretty much own that market."
CFOZone.com expressed several concerns, including:
• The "infinitesimal default deferral rate" of 3 percent, without the possibility of employer contributions, would not result in real savings for anyone.
• Employers "get a measly $250 tax credit to cover administrative costs."
• And, like Hutcheson, CFOZone worries that the major beneficiaries will not be the participants. "Mostly this bill will be a potential goldmine for financial services companies, at least those on the official government list of approved providers."
Jan Jacobson, senior counsel for retirement policy at the American Benefits Council was quoted on Treasuryandrisk.com as saying, "We’d like to see more [generous] coverage in general, and in terms of the auto IRA itself we would prefer to have it voluntary, with incentives for employers to put it in."
While it’s clear many take cautious views of the Auto IRA bill, they also agree that Americans are sorely in need of retirement savings. The success of automatic enrollment in 401(k) plans has provided a model that seems to indicate that Auto IRAs can increase savings.
Recession blues: 401(k) loans and hardship withdrawals on the rise
August 31, 2010 – Fidelity Investments, one of the nation's providers of workplace retirement savings plans, has released its quarterly data on the state of the 401(k) that show positive, steady savings behavior by the majority of participants. However, it also cited an increase in the use of loans and hardship withdrawals by participants.
"The majority of participants continue to make saving through their workplace plans a priority," said James M. MacDonald, president, Workplace Investing, Fidelity Investments. "However, the current economy has forced some workers to borrow from their 401(k) accounts in order to pay for critical living expenses, ultimately jeopardizing their future retirement."
The average 401(k) account balance as of the end of the second quarter was $61,800, up 15% from the same time last year, but down from the end of the first quarter of 2010. The average deferral rate, which refers to the percentage of a participant's salary saved, held steady during the quarter at about 8% with one-in-three (32%) participants deferring at 10% or higher. Similar to the first quarter, more participants increased their deferrals (5.3%) than decreased (2.9%) in the second quarter.
Loans and Hardship Withdrawal Activity Rising Especially Among Middle Aged
While the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased. Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior. The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%. The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years.
"We recognize that for some, taking a loan or a hardship withdrawal from their 401(k) may be their only option because it's their only form of savings," said MacDonald. "However, we want to make sure that before workers tap their retirement accounts prematurely, they are fully educated about both the penalty that may be incurred and the long-term implications for their retirement."
During the second quarter of this year, 62,000 participants initiated a hardship withdrawal, as compared to 45,000 participants who initiated one during the prior quarter. As of the second quarter, 2.2% of Fidelity's active participants took a hardship withdrawal, up from 2.0% one year prior. Additionally, 45% of participants who took hardship withdrawals one year prior also took a hardship withdrawal in the 12 month period ending in the second quarter of this year. Plan sponsors report that the top reasons why participants are taking hardship withdrawals are to prevent foreclosure or eviction, pay for college, and the purchase of a primary residence.
Fidelity has found that the average age of those taking a loan or hardship withdrawal is between 35 and 55 years old - a worker's peak earning years - when individuals often have to deal with multiple, competing, financial challenges. Distributions from a 401(k) or 403(b) are taxed as ordinary income, plus if you are under age 59½ you may be subject to a 10% early withdrawal penalty.
Laughter can be cure for workplace ills
August 27, 2010 – Employee satisfaction, worker productivity, and customer service continue to be priority items for managers, supervisors, and human resource professionals. The challenge for most organizations is to achieve high levels of productivity and customer service while maintaining a satisfied, motivated workforce. Not an easy task, but not impossible either.
Furthermore, these objectives are not mutually exclusive and the solution does not have to drain the bottom line. Certainly, a fair salary and competitive benefits contribute to worker satisfaction, but other parts of the solution cost little or nothing, and having fun at work is no exception.
A survey published by Training and Development magazine revealed that 84 percent of HR managers said employees with a sense of humor do better work and 97 percent of executives agree that humor is valuable in business. Additionally, studies have proven that humor greatly reduces stress. So why don't more companies encourage humor at work?
Statistics aside, most employees would prefer to work at a place where humor is appreciated and encouraged. The benefits are virtually endless! Companies that have taken a proactive approach to having fun at work have found that it facilitates communication, improves productivity, builds relationships, energizes employees, and encourages creativity. If you do not want energized, creative, productive employees, stop reading now. But if you want these benefits for your work environment, read on because the fun starts here!
Let's first dispel some myths:
Work is no place for fun. Considering that most adults spend the bulk of their waking hours at work, why shouldn't work be fun. Reduced absenteeism and tardiness have been some positive side effects of encouraging fun at work.
Having fun is a waste of valuable time. Simply false. Studies show that having fun at work results in increased productivity and more creativity. Sounds like more customers to me.
Laughter equals goofing off. Not so. A good laugh counteracts boredom, reduces personal conflict, and releases tension.
Workplace fun will lead to harassment or other bad things. Only true if not kept in check. As with other initiatives, introducing fun at work must be endorsed, guided, and monitored by management.
So how do you initiate a fun-at-work environment? Here are some ideas:
Celebrate successes. When a new product is a success, revenue goals are achieved, or the new Web site is launched - Celebrate!
Make it a top down approach. Happy managers create happy employees and happy employees create happy customers. And happy customers buy more!
Consider passing out Silly Putty along with the agenda at your next senior staff meeting. It reduces fatigue, minimizes doodling, and prevents that annoying fade-off.
Reserve a go-cart Grand Prix raceway as the venue for your next team-building meeting. Sounds like more fun than a hotel conference room to me.
Have employees post anonymous childhood photos of themselves and have a contest to see who can match the goofy-looking kid with the goofy-looking manager. I did this one time and my co-workers concluded that I looked like Ernie on My Three Sons. The nickname stuck even after I got new glasses.
Encourage role playing in training sessions. There's simply nothing better than witnessing a Robert DeNiro wannabe trying to overcome customer resistance.
Surprise-attack an unsuspecting coworker with Silly String at an awards ceremony. Just make sure there are no candles involved. That would be so not fun.
But remember:
• Fun is not telling ethnic, off-color, or otherwise inappropriate jokes.
• Fun is not practical jokes or pranks.
• Fun is not being sarcastic.
• Fun is not sexual jokes, comments, or innuendos.
• Fun is not making fun of coworkers, management, or the board of directors.
• Fun is not a case of beer on Friday afternoon (especially to someone who enjoys a good Merlot).
And finally, fun should not be mandatory. If for no other reason, it just seems wrong to suspend an employee for refusing to lighten-up.
Submitted by HRN Management Group and reprinted with permission from HR.com.
Know thy client
By Glenn Hunter
September 1, 2010 -
A partner at a client service-focused firm returned from lunch to find a large box on his desk. Upon closer inspection, the partner realized he had a returned gift from a major client.
The partner knew that the client’s CEO was a huge college football fan that had been a prominent leader in the local business community for more than 20 years. The gift was a commemorative football from the local university. Unfortunately, the client was originally from a neighboring state and his allegiance was with the local university’s arch-rival. After the client’s executive team had a good laugh at the CEO’s expense, he returned the gift. Why didn’t the partner know that this major client’s CEO was not a fan of the local university?
I recently looked at our Customer Relationship Management (CRM) system. I saw data fields for names, addresses, phone numbers, and e-mail addresses. I looked closer and saw fields for birthdays, spouse’s names, anniversaries, hobbies, and favorite sports teams. I even saw fields notating areas of expertise and special interests. With all this information, we should know a lot about anyone in our CRM database. But does knowing a lot about my clients mean that I really know my clients?
The crucial question is do you know your clients, or do you just know facts about them? Consider your largest clients. Do you know their motivations, aspirations, or fears? If your client is a golfer, you may know her handicap. But, how many mulligans and foot wedges are in that number? Does your client really have integrity? Is she a risk taker? To truly know your client, accountants must spend quality time with them. Quality time is not just more billable hours accumulating data and compiling reports, but communicating with your clients about how they make decisions. More importantly, analyze why they make decisions. If your accounting work is going to improve the client’s financial position, then an accountant needs to understand why the client is in his or her current position.
To solve the riddle of knowing your client, first you have to care. Not just care because it is your job or so you can get your fees, but care because you want the best for your client. If you don’t want the best for your client, then someone else will. That is called client attrition. Caring extends beyond just a few key individuals, but includes the organization’s well-being. During your time together, ask the type of questions that a trusted friend would be able to answer. Be attentive to the old industry joke that says clients will tell things to their accountants that they won’t tell their wives.
Before your clients believe your solutions, they have to believe that you know what is in their best interest. When asking a client about aspirations and plans, interjecting, "And then what?" following their responses helps deepen the understanding. Truly knowing your client does not happen in one sitting. The information is acquired over time to create a profile. The profile’s purpose is to understand individuals and organizations, not just gather facts to place in the CRM system.
Accountants must regularly connect with their clients to have a loyal, value-driven relationship. This means knowing the stories behind the CRM system’s populated fields. For example, an individual client has kids. As they grow into teenagers are they preparing to go to Harvard or State U? This fact makes a big difference concerning tax strategies. Another client has a boat. Is she spending more time on her boat, or is she planning to die of old age at her desk. This information factors into the analysis concerning a potential acquisition. For accountants to be effective number communicators, their technical skills have to coexist with taking the time to know their clients.
Know thy client means understanding his or her personal and organizational objectives. Longstanding, profitable relationships result from understanding individual character and corporate culture. Furthermore, gathering critical information to create client profiles involves more than just the partner. Intelligence gathering and reporting is the responsibility of everyone in the firm that connects with any aspect of the client.
Also, know thy client means sharing with your client how your firm is growing, and how your people are developing. Growth and development does not just involve making more money. It reflects how you and your team are proactively getting smarter, so that you can, in turn, deliver more intelligent solutions. Tell your clients what you learned at a conference or in training. Then, tell them how your increasing knowledge applies to them directly. It’s not only what you know. It’s not even who you know. It’s what you do with what you know.
Use what you know to take care of your clients. Ensure that they get the most relevant and timely advice from their proven and reliable source – their accountant! Ask so that you know their needs, their desires, their priorities, even their alma mater. And be sure that you send the correct team’s merchandise in the gift box! The little things really are important.
About the author:
Glenn Hunter is the director of Member Development for The APA/ Enterprise Worldwide, a division of Five Star 3, LLC. Glenn focuses on connecting certified public accountants to resources and other professionals so that they get the most value from their association membership and contribute to their firms’ performance improvement results.
'Tax Lady' Roni Deutch: Charlatan or political target
August 31, 2010 – You’ve probably seen the hard-hitting advertisements from Roni Deutch advising taxpayers who owe federal taxes to let her help them fight the Internal Revenue Service. Now, California Attorney General Jerry Brown is fighting her.
Brown has filed a lawsuit claiming Deutch is a swindler. If he has his way, he will force her to stop advertising that she can solve tax problems, and return $34 million to customers.
"Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems," Brown said in a statement. "She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills."
Brown also alleges that Deutch "manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC’s Today, CNN, and CNBC."
Brown claims that taxpayers who were desperate to resolve huge tax problems turned to her for help, based on "misleading ads that feature fictional testimonials." Clients paid up to $4,700 for help, said Brown, and got what he called "a bevy of false promises." He also asserted that Deutch’s firm takes client fees then puts their tax cases into an "endless loop" that eventually pushes up her fees and, because of delay, causes taxpayers to ultimately pay not only their tax debts but also fees and penalties.
Deutch’s tax preparation business, which operates in 21 states, is not included in Brown’s lawsuit.
Brown's news release described how one client from Pico Rivera, California, sought Deutch’s help when she owed a $13,000 tax bill. According to the client, she paid Deutch a retainer of $1,900, but no "effective action" was taken on her behalf by the tax attorney. In the end, she said, her tax bill was increased by hundreds of dollars in additional interest and penalties, and a levy was placed on her Social Security benefits. When she asked for a refund, she said Deutch refused.
Approximately 10 percent of clients get their IRS debts successfully resolved by Deutch’s firm, said Brown, and those who want their money back are shown what he described as "phony billing statements to systematically cheat clients out of refunds by exaggerating amount of time spent on matters." Brown did not explain in the news release how he determined the billing statements were phony.
This is not the first time Deutch has been challenged in court. The Sacramento Bee reported that in 2006, Deutch paid $300,000 to settle a lawsuit filed by the New York City Department of Consumer Affairs concerning her advertising practices. Deutch told reporters that the lawsuit was groundless and she was advised to pay what to her seemed like "a small amount of money to resolve it." In California, the State Bar Web site shows Deutch has no public record of discipline or administrative action.
One day after Brown filed his complaint in Sacramento Superior Court, Deutch said she would fight the $34 million lawsuit. In a statement, she reminded the public that Brown is running for governor in California. She said he is "engaging in election-year politics" by challenging her with a lawsuit, accusing her firm of false advertising, and of misleading the public.
She also stated that, over nearly two decades, she has saved thousands of people tens of millions of dollars by negotiating with the IRS.
Employees clamoring for basic workplace financial education
August 31, 2010 – In a recent survey conducted by the Personal Finance Employee Education Foundation with the support of the Employee Benefits News, 91 percent of respondents cited employee financial literacy as being extremely important or important in reducing the vulnerability of the American economy to major economic crises.
Given the recession, employers were asked whether they noticed an increase in garnishments - 51 percent said yes; emergency loans - 42 percent said yes; and 34 percent have seen an increase in requests for more time off to handle financial issues.
In addition to these results, 70 percent thought that the employer provision of basic workplace financial education is important or extremely important to the overall level of productivity in their organization and a majority (53 percent) thought employers who pass benefit costs on to their employees have a responsibility to provide ongoing financial education to help them make appropriate financial decisions.
While 88 percent of the respondents provide the required investment/retirement education associated with retirement plans, only 28 percent provide basic workplace financial education, defined as including budgeting, debt reduction and credit management. Several barriers were cited for providing basic workplace financial education. The cost is too high for 49 percent; 58 percent said employees would sacrifice work time to attend; and 71 percent noted that there were too many higher priority competing items. An even 50 percent weren't sure they could get upper management to buy into the provision of workplace financial education.
"The value of employee financial education is clear," said Judith Cohart, President & CEO of the Personal Finance Employee Education Foundation. "The challenge is to overcome the barriers that prevent employers from providing this benefit to their employees."
In September 2011, there will be a pre-conference as part of the Employee Benefits News Conference to discuss employer/employee issues related to financial education.
The Personal Finance Employee Education Foundation is a non-profit organization that facilitates financial education in the workplace through showing employers that providing financial education can improve worker productivity and employer profits.
IRS looking for feedback on Roth 401(k) regulation
August 31, 2010 – The Internal Revenue Service is seeking comments on an existing regulation that provides guidance on Roth 401(k) arrangements.
The IRS, as part of an effort to reduce paperwork, wants feedback from the public and federal agencies on continuing to collect information on Roth contributions to cash or deferred arrangements under 401(k) rules.
According to the Federal Register, comments are invited on:
• Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
• The accuracy of the agency's estimate of the burden of the collection of information;
• Ways to enhance the quality, utility, and clarity of the information to be collected;
• Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and
• Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Comments are due by October 8, 2010, and should be directed to Gerald Shields, Internal Revenue Service, Room 6129, 1111 Constitution Avenue, NW, Washington, D.C. 20224.
Learn more at http://federalregister.gov/a/2010-19502.
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