Archive for March, 2012

Global Cash Card Announces Mobile Web

Monday, March 26th, 2012

Global Cash Card02/21/2012

Global Cash Card, the proven specialist in customized paycard solutions, announces the launch of Mobile Web, a website formatted specifically for mobile devices allowing cardholders to securely login to their account anytime, from anywhere and access important information on demand.

“The primary driver to develop this function was that smartphones and tablets are growing in popularity,” said Danny Jung, Senior Systems Architect at Global Cash Card.

Based on a recent study conducted by Global Cash Card, 30% of the company’s website traffic comes from mobile devices. This is a 150% increase over last year’s findings. Global Cash Card anticipates mobile device traffic to increase dramatically as smartphones and tablets saturate the market.

“It is very important to be as inclusive as possible, and to that end, we support all devices, iPhones, iPads, iPods, Android, Blackberry, and even Kindle,” said Jung. “The goal of the Mobile Web is to make the experience easier for users; we don’t want them to have to go home to use their computer or find an ATM to check their balance, or even have to call our customer service.”

Cardholders simply log on to www.globalcashcard.com from a mobile device and are automatically directed to the user-friendly mobile site, which is tailored to their specific device, to view their balance, transaction history, and/or paystub information, as well as transfer funds to another card, bank account, or payee.

In addition to Mobile Web, Global Cash Card offers Two-Way Texting. By sending simple text commands, account information such as balances, purchases, pay amounts, and debited transactions are responded back instantly.

Mobile Web is a free service offered through secure connections, encrypted data transfers and other best practices that provide users with the utmost security for their mobile devices.

For more information visit our website or contact:

John De Leeuw
Business Development Manager
763.746.1938 Direct
Email John

About Global Cash Card

Payroll Control Systems has partnered with Global Cash Card™ to provide PayCards for our Clients and their employees.

Global Cash Card™ is the proven specialist in customized paycard solutions that are simple to implement and easy to use. The company is a wholly owned subsidiary of World Processing, Ltd, a leader in electronic financial transaction technology. Global Cash Card is a direct processor that offers Debit MasterCard cards and Visa Prepaid cards. The company develops and owns the proprietary software, which enables the products and services it offers.

Final Ruling to Improve Transparency of Fees and Expenses in 401(k)-Type Retirement Plans

Monday, March 26th, 2012

401k FeesFebruary 2012

The Department of Labor’s Employee Benefits Security Administration (EBSA) released a final rule that will help America’s workers manage and invest the money they contribute to their 401(k)-type pension plans. The rule will ensure: that workers in this type of plan are given, or have access to, the information they need to make informed decisions, including information about fees and expenses; the delivery of investment-related information in a format that enables workers to meaningfully compare the investment options under their pension plans; that plan fiduciaries use standard methodologies when calculating and disclosing expense and return information so as to achieve uniformity across the spectrum of investments that exist among and within plans, thus facilitating “apples-to-apples” comparisons among their plan’s investment options; and a new level of fee and expense transparency.

Background

  • EBSA is responsible for administering and enforcing the fiduciary, reporting, and disclosure provisions of Title I of ERISA.
  • The agency oversees approximately 708,000 private pension plans, including 483,000 participant-directed individual account plans such as 401(k)-type plans.
  • A “participant-directed plan” is a plan that provides for the allocation of investment responsibilities to participants or beneficiaries.
  • An estimated 72 million participants are covered by these participant directed plans, which contain nearly $3 trillion in assets.
  • While workers in these plans are responsible for making their own investment decisions, current law does not adequately ensure that all workers are given the information they need or ensure that information, when provided, is furnished in a format useful to workers, particularly information on investment choices including associated fees and expenses.
  • In April 2007, EBSA published in the Federal Register a Request for Information (72 FR 20457) soliciting the views, suggestions and comments from participants, plan sponsors, plan service providers and members of the financial community, as well as the public in general, on whether and to what extent rules should be adopted or modified, or other actions should be taken, to ensure that participants and beneficiaries have the information they need to make informed decisions about the management of their individual accounts and the investment of their retirement savings.

Overview of Final Rule

  • The final rule provides that the investment of plan assets is a fiduciary act governed by the fiduciary standards in ERISA section 404(a)(1)(A) and (B), which require plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries.
  • The final rule also provides that when a plan allocates investment responsibilities to participants or beneficiaries, the plan administrator must take steps to ensure that such participants and beneficiaries, on a regular and periodic basis, are made aware of their rights and responsibilities with respect to the investment of assets held in, or contributed to, their accounts and are provided sufficient information regarding the plan and the plan’s investment options, including fee and expense information, to make informed decisions with regard to the management of their individual accounts.
  • A plan administrator must provide to each participant or beneficiary certain plan-related information and certain investment-related information. These categories of information are described below.

Plan-Related Information

The first category of information that must be disclosed under the final rule is plan-related information. This general category is further divided into three subcategories as follows:

General Plan Information

  • General plan information consists of information about the structure and mechanics of the plan, such as an explanation of how to give investment instructions under the plan, a current list of the plan’s investment options, and a description of any “brokerage windows” or similar arrangement that enables the selection of investments beyond those designated by the plan.

Administrative Expenses Information

  • An explanation of any fees and expenses for general plan administrative services that may be charged to or deducted from all individual accounts. Examples include fees and expenses for legal, accounting, and recordkeeping services.

Individual Expenses Information

  • An explanation of any fees and expenses that may be charged to or deducted from the individual account of a specific participant or beneficiary based on the actions taken by that person. Examples include fees and expenses for plan loans and for processing qualified domestic relations orders.

The information in these three subcategories must be given to participants on or before the date they can first direct their investments, and then again annually thereafter.

Statements of Actual Charges or Deductions

In addition to the plan-related information that must be furnished up front and annually, participants must receive statements, at least quarterly, showing the dollar amount of the plan-related fees and expenses (whether “administrative” or “individual”) actually charged to or deducted from their individual accounts, along with a description of the services for which the charge or deduction was made. These specific disclosures may be included in quarterly benefit statements required under section 105 of ERISA.

Investment-Related Information

The second category of information that must be disclosed under the final rule is investment-related information. This category contains several subcategories of core information about each investment option under the plan, including:

Performance Data

  • Participants must be provided specific information about historical investment performance. 1, 5 and 10-year returns must be provided for investment options, such as mutual funds, that do not have fixed rates of return. For investment options that have a fixed or stated rate of return, the annual rate of return and the term of the investment must be disclosed.

Benchmark Information

  • For investment options that do not have a fixed rate of return, the name and returns of an appropriate broad-based securities market index over 1-, 5-, and 10-year periods (matching the Performance Data periods) must be provided. Investment options with fixed rates of return are not subject to this requirement.

Fee and Expense Information

  • For investment options that do not a have a fixed rate of return, the total annual operating expenses expressed as both a percentage of assets and as a dollar amount for each $1,000 invested, and any shareholder-type fees or restrictions on the participant’s ability to purchase or withdraw from the investment.
  • For investment options that have a fixed rate of return, any shareholder-type fees or restrictions on the participant’s ability to purchase or withdraw from the investment.

Internet Web site Address

  • Investment-related information includes an internet Web site address that is sufficiently specific to provide participants and beneficiaries access to specific additional information about the investment options for workers who want more or more current information.

Glossary

  • Investment-related information includes a general glossary of terms to assist participants and beneficiaries in understanding the plan’s investment options, or an Internet Web site address that is sufficiently specific to provide access to such a glossary.

Comparative Format Requirement

Investment-related information must be furnished to participants or beneficiaries on or before the date they can first direct their investments, and then again annually thereafter. It also must be furnished in a chart or similar format designed to facilitate a comparison of each investment option available under the plan. The final rule includes, as an appendix, a model comparative chart, which when correctly completed, may be used by the plan administrator to satisfy the rule’s requirement that a plan’s investment option information be provided in a comparative format.

Miscellaneous

  • The rule provides plan administrators protection from liability for the completeness and accuracy of information provided to participants if the plan administrator reasonably and in good faith relies upon information provided by a service provider.
  • After a participant has invested in a particular investment option, he or she must be provided any materials the plan receives regarding voting, tender or similar rights in the option.
  • Upon request, the plan administrator must also furnish prospectuses, financial reports and statements of valuation and of assets held by an investment option.
  • The general disclosure regulation at 29 CFR § 2520.104b-1 applies to material furnished under this regulation, including the safe harbor for electronic disclosures at paragraph (c) of that regulation.
  • The final rule would also make conforming changes to the disclosure requirements for plans that elect to comply with the existing ERISA section 404(c) regulations.

Economic Benefits of the Final Rule

  • The Department estimates that the rule will be economically significant.
  • The anticipated cost of the rule is $425 million in 2012 (2010 dollars), arising from legal compliance review, time spent consolidating information for participants, creating and updating Web sites, preparing and distributing annual and quarterly disclosures, and material and postage costs to distribute the disclosures.
  • A significant benefit of this rule is that it will reduce the amount of time participants spend collecting fee and expense information and organizing the information in a format that allows key information to be compared; this time savings is estimated to total nearly 54 million hours valued at nearly $2 billion in 2012 (2010 dollars).
  • Over the ten-year period 2012-2021, EBSA estimates that the present value of the benefits provided by the final rule will be approximately $14.9 billion and the present value of the costs will be approximately $2.7 billion.

Effective and Applicability Dates

  • The July 1 effective date of the final regulation relating to service provider disclosure under section 408(b)(2) will impact when disclosures must first be furnished under the final rule on fee disclosures for participants. The transitional rule for the final rule on fee disclosures for participants was revised in July 2011 so that the first disclosures would follow the effective date of the 408(b)(2) regulation.
  • Consequently, for calendar year plans, the initial annual disclosure of “plan-level” and “investment-level” information (including associated fees and expenses) must be furnished no later than August 30, 2012 (i.e., 60 days after the 408(b)(2) regulation’s July 1 effective date).
  • The first quarterly statement must then be furnished no later than November 14, 2012 (i.e., 45 days after the end of the third quarter (July through September), during which initial disclosures were first required). This quarterly statement need only reflect the fees and expenses actually deducted from the participant or beneficiary’s account during the July through September quarter to which the statement relates.

Contact Information

For questions about the rule, contact EBSA’s Office of Regulations and Interpretations at 202-693-8500.

This fact sheet has been developed by the U.S. Department of Labor, Employee Benefits Security Administration, Washington, DC 20210. It will be made available in alternate formats upon request: Voice telephone: 202-693-8664; TTY: 202-501-3911. In addition, the information in this fact sheet constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

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Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

What You Need to Know about the Small Business Health Care Tax Credit

Monday, March 26th, 2012

Heath Care Tax CreditIRS Newsroom Article #223666

How will the credit make a difference for you?

For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities. An enhanced version of the credit will be effective beginning Jan. 1, 2014. Additional information about the enhanced version will be added to IRS.gov as it becomes available. In general, on Jan. 1, 2014, the rate will increase to 50 percent and 35 percent, respectively.

Here’s what this means for you. If you pay $50,000 a year toward workers’ health care premiums – and if you qualify for a 15 percent credit, you save … $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $12,000 a year.

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return there’s still time to file an amended return.

Click here if you want more examples of how the credit applies in different circumstances.

Can you claim the credit?

Now that you know how the credit can make a difference for your business, let’s determine if you can claim it.

To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 a year.

Let us break it down for you even more.

You are probably wondering: what IS a full-time equivalent employee. Basically, two half-time workers count as one full-timer. Here is an example, 20 half-time employees are equivalent to 10 full-time workers. That makes the number of FTEs 10 not 20.

Now let’s talk about average wages. Say you pay total wages of $200,000 and have 10 FTEs. To figure average wages you divide $200,000 by 10 – the number of FTEs – and the result is your average wage. The average wage would be $20,000.

Also, the amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000, the amount of the credit you receive will be less.

If you need assistance determining if your small business or tax exempt organization qualifies for the credit, try this step-by-step guide.

How do you claim the credit?

You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit.

If you are a small business, include the amount as part of the general business credit on your income tax return.

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don’t ordinarily do so.

Don’t forget … if you are a small business employer you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.

Links to Prior Articles:

January, 2011 Article

September, 2010 Article

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

How to Calculate and Make Estimated Tax Payments

Monday, March 26th, 2012

Calculate and Pay Estimated Taxby Caron Beesley, Community Moderator, SBA.GOV

As a new business owner, understanding your tax obligations is critical and one of the first requirements you’ll need to understand are estimated tax payments.

What are estimated taxes? Who must pay them and how? Below are some facts from the IRS Estimated Tax Guide to help new small business owners understand their estimated tax obligations.

What Are Estimated Taxes?

The IRS and your state’s treasury department require that individuals and businesses pay taxes almost as quickly as they earn income. If taxes aren’t withheld from wages or other payments, then you will likely need to pay estimated tax payments each quarter.

Think of estimated taxes as a “pay-as-you-go” tax. Four times a year (quarterly), you are required to send Uncle Sam enough of your revenues to cover your income tax and your self-employment tax (Social Security and Medicare) obligations.

If you don’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. However, the IRS knows that calculating earnings isn’t easy, so it offers a safe harbor rule – if you pay at least as much as your previous year’s liability or pay within 90 percent of your actual liability, there’s no penalty for underpayment.

Who Pays Estimated Taxes?

If you are self-employed and expect to owe $1,000 or more when you file your annual return, then you must pay estimated taxes on income.  If it’s not through withholding, then it has to be done by quarterly estimated taxes. If your business is structured as a corporation, you’ll need to pay estimated taxes if you expect to owe $500 when you file.

How Much Should You Pay in Estimated Taxes?

Calculating what you owe each quarter requires figuring out your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. Each business situation is different, especially if you are a new business owner, so it’s worth spending some time with a tax advisor to understand the best calculation method for your situation.

You have a number of options when it comes to calculating what you owe each quarter:

  • Use Form 1040-ES – You can calculate your quarterly estimated tax payment using Form 1040-ES (the same form used to pay estimated taxes), which includes a worksheet that helps you estimate how much you owe for the current year. Corporations should use Form 1120-W to calculate estimated taxes.
  • Refer to Last Year’s Return – If you have been in business for a while, you can refer to your previous year’s federal tax return. Include all the income and deductions you expect to take on your current year’s tax return and refer to the total tax you paid so that your estimated tax payments are in the same range as last year’s taxes (100-110 percent is the range to shoot for to avoid underpayment problems).
  • Make a Quarterly Calculation – If you are a freelancer or independent contractor and face fluctuating or cyclical income, you might prefer to calculate your estimated taxes on a quarterly basis.

The IRS offers more advice in its Estimated Taxes Guide on how to calculate your payment and adjust estimates if you think you are paying too much – or too little – as the year progresses.

When Are Payments Due?

For estimated tax purposes, the year is divided into four payment periods. Payments for each year are due on the 15th day of April, June, September and the following January. You should try to pay at least the minimum owed by the due date (with the remainder paid on April 15), or risk incurring penalties from the IRS or your state.

How To Pay Estimated Taxes

Paying your estimated taxes is an easy process. If you are filing as a self-employed individual, use Form 1040-ES, which includes quarterly payment vouchers to submit with your payment. Corporations can deposit the payments by using the Electronic Federal Tax Payment System for deposit coupons (Forms 8109). Once you are in the system, the IRS will send you payment vouchers at the end of each tax year so you won’t have to worry about downloading the latest forms.

Paying Estimate Taxes to Your State?

You need to pay your estimated state income taxes at the same time you pay your federal taxes. Find links to your state’s tax office for the appropriate forms here.

Talk to a Tax Specialist

Spend an hour with a tax specialist to help you understand what the best calculation methods are, how to appropriately track and deduct expenses, and how to maintain good records. Many will provide this initial consultation for free simply because they hope you will return and use them come filing season.

Additional Resources

 

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

It May Be Time To Evaluate Buy vs. Lease

Tuesday, March 6th, 2012

SBA504 LoanOur economy is turning the corner, albeit slowly and cautiously.   Even so, as a result of these economic times, now may be the best financing available to businesses –

Does your business currently lease its operating facility?  Ever thought of buying, instead?  There’s no better time than now.  Let’s take a look at one option; the Small Business Administration (SBA) 504 loan program.  In partnership with local banks, the Small Business Administration (SBA)504 loan is a three-way partnership that includes the Business Borrower, The Bank, and the Small Business Administration.  It is available to help a business either purchase or refinance commercial real estate, as well as other long-term assets, such as manufacturing equipment.

Currently, 20-year fixed rates are 4.711%!.  Historically low rates, coupled with the recent allowance to refinance existing commercial real estate under this program, makes the SBA504 loan one of the most attractive financing options available.  Rather than traditional bank financing, this loan structure requires a much lower down payment (10%) along with a fixed, below-market interest rate. Not only can a Borrower afford the financing they need to buy, build or refinance, but they also keep more cash for business expansion. A real estate purchase with a fixed-rate SBA504 loan also mitigates inflationary rate risk and offers a lower, more predictable occupancy cost.

With SBA504, a Borrower will have two permanent mortgages: one with The Bank for 50% of the total financed amount and one with the SBA for 40% of the total financed amount.  Hence, the Borrower’s contribution to the entire project is limited to the remaining portion of 10%, which, if refinancing, may even be in the form of existing equity.  If you’ve ever considered owning your own building, now may just be the time for your business to give a look!

Submitted By:

Michelle F. Lureen
VP Business Banking
The Business Bank
Direct: 952.847.1108
Email Michelle

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.