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In This Issue
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1. Open Enrollment
2. Year-End Tax Tips
3. Retirement Education
4. Employers and Plan
Sponsors
5. 401(k) Plan
Compliant
6. Form 5500 Info
7. It’s Flu Season
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IRS TAX NEWS AND INFO
Safeguarding Taxpayer Information. Putting data security safeguards in place helps prevent fraud and identity theft, and enhances customer confidence and trust. IRS Pub 4557 helps businesses, organizations, and individuals that handle taxpayer data understand and meet their responsibility to safeguard taxpayer information.
Treasury Updates Homepage. The U.S. Treasury's homepage has a new look. For more information, click here or visit www.treasury.gov.
Taxpayer Advocacy Panel Makes 58 Recommendations to the IRS for Reducing Taxpayer Burden and Improving Taxpayer Service in its Annual Report.
More Tax Ideas and News from the IRS
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Spotlight on: Open Enrollment Season
Don't Hide From Open Enrollment
Life Foundation Offers Five Tips To Help People Get The Most From Their Employee Benefits
For many companies, this time of year is open enrollment season, when most employers offer their employees the daunting task of reviewing and updating their benefits package. To help simplify the process, the nonprofit Life and Health Insurance Foundation for Education (LIFE) has released five tips to help people weigh their options and ensure they are getting the most out of their employee benefits.
"Open enrollment is the perfect opportunity to make sure you are taking advantage of all the benefits offered by your employer. Use this time of year to update your plans to accommodate any new needs you have," said Matt Tassey, CLU, LUTCF, past chairman of the LIFE Foundation. "Amid rising benefit costs, you should carefully evaluate all your options and not overlook benefits that could be an important part of your financial security plan."
LIFE offers the following five tips to simplify open enrollment and help people make sure they are getting the most out of their employee benefits.
1. Don't assume that doing nothing will maintain your status quo: When faced with a myriad of open enrollment choices, the easiest decision is to put off the task of evaluating your options altogether. Not taking the initiative to enroll in a benefit program could mean missing out on new options offered by your employer or could leave you in a program that no longer meets your particular needs.
2. Re-evaluate your insurance coverage: If you've had a child or gotten married or divorced this year, make sure your insurance policies and beneficiary designations are up to date. When the number of people who depend on you changes, so should your health, life and disability insurance coverage. While you typically have 30 days to change your benefits after a life-changing event occurs, open enrollment is a good time to make sure that all of your major insurance coverage's are properly structured.
3. Look for cost-effective ways to increase your life and/or disability insurance: In addition to health insurance benefits, many companies offer their employees group life and disability insurance. Sometimes employers will provide a basic life or disability insurance benefit at no cost to their employees, and there will be an option to supplement that coverage through voluntary payroll deduction. It is important to carefully review all that is offered and maximize the opportunities where you can to save money. In some cases it might make sense to buy or increase life or disability insurance coverage through your employer's group insurance plans, whereas other times it may be more sensible to purchase coverage on your own by contacting a local insurance professional. The best place to start is by speaking with your human resources administrator to learn what your employer offers and whether you have the option to increase your coverage through work.
4. Calculate your out-of-pocket healthcare expenses: According to Hewitt Associates, healthcare costs are expected to increase by 8.7% in 2008. Thus, an important component to consider during open enrollment is a flexible spending account (FSA) or healthcare spending account (HSA). An FSA allows you to set aside a portion of your pre-tax earnings to pay for qualified expenses, such as doctor co-pays, prescriptions, daycare or even mass transportation and parking. If you haven't already enrolled in this benefit, you should strongly consider it. If you currently contribute to your FSA, you may want to increase or decrease your contribution depending on your needs.
5. Ask for help: Talk to your human resources representative or your company's employee benefits advisor about your benefit options during open enrollment. In addition, review your options with your spouse—some benefit packages are better than others, so you may want to consider being added to your spouse's plan as a dependent or vice versa.
For additional information, go to LIFE's website at www.lifehappens.org.
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Year-End Tax Tip
Did you owe taxes last year? Or, did you get a big refund? Either way, now's a good time to check your W-4 withholding!
Use the IRS Withholding Calculator to check whether you are having too much or too little income tax withheld from your pay.
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Employee Retirement Education
"Timing is Everything" is a one-page newsletter designed for employers to share with their employees, and provides plain-language, bullet-point information about retirement.
Each issue has been developed by the IRS, and has important tips for employees on retirement topics. Employers may want to use "Timing is Everything" in company e-mails or newsletters or print the issue and include it in their employees' pay envelopes or post it on a bulletin board. The following issues are currently available:
For more information, visit the Retirement Plans section in BenefitsEssentials.com.
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Information for Employers and Plan Sponsors
Navigating Retirement Plan Options
The Navigator is a full-color, 11-page PDF document, developed by the IRS. It is a logically-organized graphical display of Retirement Plan products. Follow the Navigator's path to find the publications that will help you choose, establish and operate a retirement plan, and even correct plan errors if mistakes are found.
Types of Retirement Plans
This document includes information on starting and maintaining a retirement plan, including types of plans, how they work and the benefits of having a retirement plan.
Retirement Plan FAQs, FYIs, Tips and Tools
Includes Frequently Asked Questions (FAQs), retirement plan "check-ups," tips on saving for retirement and helpful information on "How Do I…"
Retirement Forms, Publications, Newsletters and More
Here, you'll find an excellent range of IRS forms and publications, including Form 1099-R, Pub 590 (on IRAs), newsletters, handy "check-up" lists and so much more.
For more information, visit the Retirement Plans section in BenefitsEssentials.com.
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New Tool Helps Keep Your 401(k) Plan Compliant
Have you seen the IRS' cool new compliance tool yet? The IRS has launched a new web-based tool to help 401(k) plan sponsors identify, correct, and avoid common errors.
The tool (a 40-page PDF chart), "401(k) Plan Potential Mistakes," identifies 11 problem areas in retirement plans, including: Plan Document Updates; Plan Operation; Definition Of Compensation; Nondiscrimination Test Failures; and Excess deferrals.
The chart leads you to a series of questions, tips, and examples that can help you pinpoint potential errors. And if you uncover a mistake, it describes the various correction programs available under the Employee Plans Compliance Resolution System and includes an explanation of how to correct the mistake. The chart also provides tips on avoiding the mistake to facilitate ongoing and future plan compliance
For additional information, please access the newsletter file or visit the Current Edition of the Employee Plans News page in the Retirement Plans Community section of the IRS.gov Web site. Information on the IRS' 2007 - 2008 Priority Guidance Plan is available here. See also: IRS Retirement News for Employers, Summer 2007 newsletter.
For more information, visit the 401(k) section in BenefitsEssentials.com.
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Taxpayer Delinquency Investigation Notices for Forms 5500 and 5500-EZ
In February 2007, the IRS began mailing Taxpayer Delinquency Investigation (TDI) Notices to employers that failed to timely file Forms 5500 and 5500-EZ for the plan year ending December 31, 2004. The first delinquency notice, CP 403, is normally sent 15 months after an employee plan return was due. The second delinquency notice, CP 406, is sent 15 weeks after the issuance of the CP 403 if the filer did not respond with a completed return or an acceptable explanation as to why it did not need to file a return.
For several years prior to 2007, the IRS had suspended mailing TDI notices. The reinstatement of these notices is allowing IRS to obtain missing returns and allowing nonfilers to become compliant. In addition, the responses received to the notices have helped identify and correct EIN, plan number, and return posting discrepancies, and update records.
We recognize that some of these notices will be received by employers that fully complied with their Form 5500 or Form 5500-EZ filing obligations and IRS asks that these employers allow them to correct their records by responding to the notice as requested.
Additional information on these notices is posted on the "Retirement Plans Community" web page.
2007 Form 5500 is Ready
Informational copies of the 2007 Form 5500 Annual Return/Report of Employee Benefit Plan and related instructions have been released and can be accessed at the Department of Labor's website. The Form 5500 Instructions contain a "Changes to Note" section, which incorporates revisions made by the Pension Protection Act of 2006 (PPA):
- A simplified reporting option for eligible plans with fewer than 25 participants
- Revised Schedule B instructions to reflect updated mortality tables and the list of codes used for valuation purposes and for calculating current liability
- Reporting on Schedule B, line 12g the amortization of the "unfunded mortality increase" combined with any outstanding balance of unfunded old liability
- The increased plan asset limit ($250,000) for determining whether a one-participant plan is exempt from filing Form 5500-EZ
For additional information, see:
For more information, visit the Forms section in BenefitsEssentials.com.
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It’s Flu Season – Is Your Workplace Ready?
Check out OSHA's Guide on Preparing Workplaces for Influenza
Employers are responsible for providing a safe and healthful workplace for their employees. OSHA's role is to assure the safety and health of America's employees by setting and enforcing standards; providing training, outreach and education; establishing partnerships; and encouraging continual improvement in workplace safety and health. In furtherance of its role, OSHA has prepared a handbook, Guidance on Preparing Workplaces for an Influenza Pandemic.
A pandemic is a global disease outbreak. An influenza pandemic
occurs when a new influenza virus emerges for which there is little or no immunity in the human population, begins to cause serious illness and then spreads easily person-to-person worldwide. A worldwide influenza pandemic could have a major effect on the global economy, including travel, trade, tourism, food, consumption and eventually, investment and financial markets. Planning for pandemic influenza by business and industry is essential to minimize a pandemic's impact. Companies that provide critical infrastructure services, such as power and telecommunications, also have a special responsibility to plan for continued operation in a crisis and should plan accordingly. As with any catastrophe, having a contingency plan is essential.
In the event of an influenza pandemic, employers will play a key role in protecting employees' health and safety as well as in limiting the impact on the economy and society. Employers will likely experience employee absences, changes in patterns of commerce and interrupted supply and delivery schedules. Proper planning will allow employers in the public and private sectors to better protect their employees and lessen the impact of a pandemic on society and the economy. As stated in the President's National Strategy for Pandemic Influenza, all stakeholders must plan and be prepared.
It is important to note that (as of press time) there is no current pandemic; thus, this guidance is intended for planning purposes only. Employers and employees should use this planning guidance to help identify risk levels in workplace settings and appropriate control measures that include good hygiene, cough etiquette, social distancing, the use of personal protective equipment, and staying home from work when ill. Up-to-date information and guidance is available to the public through the www.pandemicflu.gov website.
For Additional Information
Federal, state and local government agencies are your best source of information should an influenza pandemic take place. It is important to stay informed about the latest developments and recommendations.
Below are several OSHA-recommended websites that you can rely on
for the most current and accurate information:
- www.pandemicflu.gov (Managed by the Department of Health and Human Services; offers one-stop access, including toll-free phone numbers, to U.S. government avian and pandemic flu information.);
- www.osha.gov (Occupational Safety and Health Administration website);
- www.cdc.gov/niosh (National Institute for Occupational Safety and Health website);
- www.cdc.gov (Centers for Disease Control and Prevention website);
- www.fda.gov/cdrh/ppe/fluoutbreaks.html (U.S. Food and Drug Administration website)..
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