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Wilmington NC Payroll Service discusses new 401(k) Disclosures

Wilmington NC QuickBooks training

Gary Bode, CPA: Our payroll service philosophy is make your company as self sufficient as you wish it to be, usually through QuickBooks training and support. For a free consult, please call us at 399-2705.

Three new 401(k) disclosure requirements and a proposed fourth one might increase 401(k) plan administration costs up to 5%, according to an article on CFO.com.  And this at a time when employee benefits are already a huge burden for cash strapped companies pulling out of the recession.  But the requirements have to be balanced against their potential worth and two of them are aimed at providing more information to 401(k) participants.  As a CPA, I know some pension and retirement plan administration costs are essentially hidden, which in my opinion, is unethical.  This is similar to what brokerage houses do, where your sale of securities is shown net of their fees. 

Here the disclosures are:

  • The DOL now requires plan providers to disclose to the government more information on their direct and indirect compensation for administering plans.  OK, the government continues to impose burdens on companies willing to offer employee benefits.
  • Effective on January 1, 2012, a similar rule mandates disclosure of this same information to plan sponsors.   Alright, hiding fees to the employers is just wrong.   Again, as a CPA, I’ve wrangled with some of these 401(k) plan administration folks who sorta kinda, in some cases, claim they don’t know their own fees!
  • Starting November 1, 2011, plan participants must be informed of fees charged to them within the plan’s investment options, and the historical performance and applicable benchmarks for every investment option.  As a CPA, I’ve heard employees gripe about this issue often, and they usually feel the employer is hiding something.  So ironically, animosity is falselyengendered over employee benefits.
  • A proposed 401(k) disclosure involves an annual “annuity equivalent” estimate to plan paticipants.  Apparently this is to help employees understand the future cash flow value of their 401(k) versus buying an Annuity policy now.  Sorta kinda like that Social Security statement that you get in the mail every year does, projecting your monthly Social security benefit under different conditions.

We’re a CPA Wilmington NC firm offering payroll services.  But our underlying philosophy is to make your company as payroll self sufficient as you’d like it to be which usually means QuickBooks training, QuickBooks setup and followup support.  If you’d like a gratis initial consult with a Wilmington NC CPA and payroll tax accountant, please give us a call at (910) 399-2705.

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