July Issue of Greater Charlotte Biz Features Articles by Elliott Davis Shareholder, Senior Manager

The July issue of Greater Charlotte Biz magazine featured articles by Keith Hendrix, shareholder, and Jack Schmoll, senior manager. Hendrix’s article “Ten Considerations When Selecting an Auditing Firm” provides ten factors for business owners and executives to keep in mind when hiring a new auditing firm. Schmoll’s article, “Being audited by the state? Be sure your use tax is paid” focuses on the importance of paying use tax and having the processes in place to address it on an ongoing basis.

Requesting Extensions for Form 5500 Filings

Do you need a time extension to file your Form 5500? If so, you will need to complete Form 5558 and mail it prior to July 31.

This action will extend the due date of the form for 2 ½ months, or until October 15, 2010 for calendar year filers. Although plans must file Form 5500 using the Department of Labor’s EFAST2 system, please note that Form 5558 cannot be filed electronically and must be mailed to the IRS center in Ogden, Utah.

Elliott Davis’ Employee Benefits Practice is ready to assist you with your Form 5500 and the new electronic filing requirements. Please contact Terri McNaughton at 864.552.4740 or .(JavaScript must be enabled to view this email address) if you have questions or would like assistance.

Year End Deadline for Employer-Sponsored Cafeteria Plan Amendments

Employers have until Dec. 31, 2010 to amend cafeteria plans to incorporate new provisions related to adult children and over-the-counter drugs.

Expanded Health Plan Coverage for Adult Children
Under the Affordable Care Act, health plans that provide coverage for employees’ children are required to continue coverage until age 26, regardless of the child’s tax dependent status, employment, residency, student status, marital status or eligibility for other health coverage.

This provision applies to insured and self-insured health plans and is effective for plan years beginning on or after Sept. 23, 2010. However, plans in existence on March 23, 2010 can restrict coverage until 2014 if the adult child has access to health coverage through an employer’s plan (other than a parent’s plan).

In addition, the IRS has issued Notice 2010-38, which provides that employers may permit pretax salary reductions for adult children effective after March 30, 2010, even if the cafeteria plan is not yet amended for this provision. Employers have until Dec. 31, 2010 to amend the cafeteria plan language to incorporate this change.

You will want to note, under the Notice, health plan premiums and medical expenses for an adult child under a health plan and health flexible spending account (FSA) are exempt from federal income, FICA and FUTA taxes. For this purpose, an adult child is: a child, stepchild, adopted child, or eligible foster child who is under age 27 during the entire calendar year, even if the child does not qualify as the employee’s tax dependent. The IRS is expected to issue additional guidance in the near future.

Over-the-Counter Drugs
Also under the new law, reimbursements cannot be made for over-the-counter medicine or drug expenses incurred after Dec. 31, 2010 without a prescription (except for insulin). This includes medicine or drug expenses incurred in 2011 for plan years starting in 2010 or which have grace periods for run out claims in 2011. Therefore, health FSAs which currently allow reimbursement of over-the-counter medicines or drugs will need to be amended by Dec. 31, 2010 to comply with the new rules.

Your Next Steps
As an employer, you will need to amend your cafeteria plan document and summary plan description prior to Dec. 31, 2010. Also, be aware of the federal and state tax reporting rules since tax laws vary from state to state. Please contact us if you need assistance or would like more information.

Step-by-Step Instructions for Filing Form 5500 Electronically

Do you have questions about filing your Form 5500 electronically? Elliott Davis has created step-by-step instructions to make this process as easy as possible for you.

Effective January 1, 2010, all Form 5500 Annual Returns/Reports of Employee Benefit Plan and all Form 5500-SF Short Form Annual Returns/Reports of Small Employee Benefit Plan for 2009 and 2010 plan years, and any required schedules and attachments, must be completed and filed electronically using EFAST2-approved third-party software or using iFile.

The Elliott Davis team is here to assist you with Form 5500 preparation as well as submitting your e-filing. Please contact us if you need assistance.

Form 5500 Filing Now Electronic for Plan Sponsors

This time of year, your audit is top of mind. But is your business prepared to file its Form 5500 electronically?

For the first time, plan sponsors with calendar year plans must file Form 5500 using the Department of Labor’s (DOL) electronic ERISA Filing Acceptance System (EFAST2). This filing change, which began on January 1, 2010, is aimed at increasing the DOL’s review and processing efficiency. The change is accompanied by new requirements which are outlined below.

• Electronic Signature Credentials: Plan sponsors/administrators must sign up for electronic signature credentials in advance in order to submit a Form 5500 filing. To obtain EFAST2 credentials, please visit www.efast.dol.gov. Note that there are five user types under EFAST2 and you may check as many as apply to you (filing author, filing signer, schedule author, transmitter, and third party software developer).

• Contact Your Auditor: The report of an Independent Qualified Public Accountant needs to be included with the Form 5500 filing, if your plan is required to be audited. Your audit report along with all schedules and attachments must be attached with your submission or you could face penalties of up to $50,000. Failure to provide complete filings will cause the EFAST2 system to indicate an error with the entire filing and may prompt further review or rejection.

Here : for you
Elliott Davis’ Employee Benefits Practice is ready to assist you with your Form 5500 and these new electronic filing requirements. Please contact Terri McNaughton at 864.552.4740 or .(JavaScript must be enabled to view this email address) if you have questions or would like assistance.

SEC Delays Plan to Adopt IFRS

The Securities and Exchange Commission (SEC) confirmed plans this week to move ahead with International Financial Reporting Standards (IFRS) for U.S. companies. However, the SEC now says it needs more time to make the transition.

On Feb. 24, the SEC unanimously approved a new timeline with a target date of 2015 for the required use of IFRS by public companies. The former roadmap stated a 2014 deadline. The delay came after the SEC said it needed more time to study IFRS. A vote is expected in 2011 on whether to move forward with a mandate to use IFRS.

Click here to read the full article from the Journal of Accountancy.

Click here to read more about IFRS and its far-reaching impacts.

Please contact Kay Biscopink, International Tax Services Practice Chair, if you would like more information.

New Department of Labor Rule Prompting Employers to Review 401(k) Deposits

The Department of Labor (DOL) recently issued a safe harbor rule aimed at protecting employee contributions to benefit plans subject to ERISA with fewer than 100 participants.

Effective January 14, 2010, employee 401(k) contributions and loan repayments to these “small” plans must be deposited by plan sponsors no later than the seventh business day following the payroll date.

Currently, this ruling does not extend to plans with more than 100 participants. However, large plans must still comply with the prior deposit rule and plan sponsors may be subject to a faster deposit requirement.

Elliott Davis is here to help you evaluate, interpret and implement this new requirement. Please contact Terri McNaughton, Employee Benefit Plan Practice Chair, at 864.552.4740 or .(JavaScript must be enabled to view this email address) for assistance.

To read the press release from the Department of Labor, click here.