BDO Talks ERISA

In many cases, the people costs are some of the highest costs an organization has — which presents both opportunity and risk. Exploring the opportunity and risk ahead of a merger or acquisition is known as the HR due diligence process. Our co-hosts sit down with Liz Mack, who is the Managing Director, Workforce in Transactions Leader for Global Employer Services at BDO, USA to discuss the process for and benefits of reviewing how a target supports its workforce before the deal is signed.

Key Takeaways:

[03:04] Introduction of Liz Mack

[05:51] How is HR due diligence defined?

[10:21] Review of other terms that fall under the umbrella of “transactions,” including merger of equals, bolt on, tuck in, divestiture, and spin off

[14:29] Real-world examples of successes and failures seen with transactions

[23:59] Benefit of HR communications before and after the close of the transaction

For more information on this topic, read Liz Mack’s article on the 8 Reasons to Do HR Due Diligence here or email us at [email protected].

Resources:

BDO.com

Beth on LinkedIn

Liz Mack on LinkedIn

Insight: Why HR Due Diligence is an Important Step in a Transaction

Are you thinking about offering cryptocurrency in your retirement plan? Continuing our two-part series, our co-hosts are joined by Dave Gray, who is on the Workplace Investing Executive Management Team and serves as the Head of Workplace Retirement Platforms, Workplace Investing for Fidelity, along with Sterling Ingui, who is a Product Area Leader for Next Gen Retirement in Workplace Investing and NC Regional Leader at Fidelity Investments. Get answers to the key questions plan sponsors might have when considering cryptocurrency as 401(k) investment options.

Key Takeaways:

[06:55] What factors influenced Fidelity’s decision to include cryptocurrency in

retirement plans?

[08:42] What should plan fiduciaries consider when deciding whether to add cryptocurrency in their retirement plans?

[11:05] How are cryptocurrency investment options structured?

[14:25] How can these investments be valued?

[16:08] Are there any limitations? If so, what are they?

[17:27] What cybersecurity protocols are available to prevent data breaches and safeguard investments?

[23:16] Are you seeing any trends since making the cryptocurrency option available?

Listen to our prior episode Cryptocurrency – Understanding the Basics for part 1 of these two-part series on cryptocurrency, where Sterling Ingui reviews the basics of cryptocurrencies.

Resources:

BDO.com

Beth on LinkedIn

www.fidelity.com/crypto/overview

Are you thinking about offering cryptocurrency in your retirement plan? Learn the basics. Our co-hosts sit down with Sterling Ingui, who is a Product Area Leader for Next Gen Retirement in Workplace Investing and NC Regional Leader at Fidelity Investments. They discuss the fundamentals of cryptocurrencies, including the definition and different types available, as well as the interesting history behind this digital currency.

Key Takeaways

[05.06] What is cryptocurrency?

[06:50] What does it mean to invest in cryptocurrency?

[09:02] What are the different types of cryptocurrencies?

[11:31] What is the history of cryptocurrency?

Listen to our next episode for part 2 of these two-part series on cryptocurrency, where Sterling Ingui will return with Dave Gray, who is on the Workplace Investing Executive Management Team and serves as the Head of Workplace Retirement Platforms, Workplace Investing for Fidelity.

Resources:

BDO.com

Beth on LinkedIn

www.fidelity.com/crypto/overview

Host Beth Garner talks to Norma Sharara, Managing Director, National Tax Office — Compensation & Benefits at BDO regarding the SECURE 2.0 Act of the House, the RISE & Shine Act of the Senate HELP Committee, and the as-yet-unnamed bill from the Senate Finance Committee, all aiming to supply greater access to workplace retirement. Beth and Norma discuss some of the provisions of each bill and how they differ, including a SECURE 2.0 provision for student loan debt.

Listen in to get information on bipartisan supported expected improvements to workplace retirement plans.

Key Takeaways:

[1:07] On March 29, the U.S. House of Representatives passed Secure 2.0 with a vote of 414-5.

[2:48] The Senate Committee on Health, Education, Labor, and Pensions (HELP) passed the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE & SHINE Act).

[4:34] The Senate Finance Committee is considering over 1,000 changes to the House Secure 2.0.

[7:44] The original SECURE Act became law in December 2019, before COVID-19. It was the biggest change to retirement plan law since the Pension Protection Act of 2006. SECURE 2.0 seeks to add enhancements to the 2019 act.

[8:36] One change is increasing access to workplace retirement plans. Norma explains the differences in the House and Senate bills on mandatory enrollment. Another hot topic is emergency savings. SECURE 2.0 does not have a provision for emergency savings but RISE & SHINE allows a sidecar 401(k) account to build up for emergency use.

[10:10] Norma discusses changing the Required Minimum Distributions from starting at age 72 to rising to start at age 75. There are other provisions like allowing additional catch-up contributions, for those close to retirement age and making all contributions after-tax Roth.

[10:52] Other possible provisions are allowing employees to have their matching contribution be Roth, to pay tax on the matching contribution up front, and not at the withdrawal, electronic plan administration through email, Savers’ Credit being refundable to encourage people to save, and some additional tax credits for small businesses to offset startup costs.

[12:44] SECURE 2.0 (but not RISE & SHINE) allows you to treat student loan payments as elective deferrals for purpose of matching contributions. Students are graduating with too much debt and too few job opportunities.

[14:39] Another SECURE 2.0 provision, not in RISE & SHINE, is a government-run “Lost & Found” for retirement plan assets of people leaving jobs behind.

Resources:

BDO.com

BDO’s ERISA Center of Excellence

BDO.com/talksERISA

Email: [email protected]

House Bill Secure 2.0, “Securing a Strong Retirement Act of 2022”

Senate RISE & SHINE Act

November 2022 Election

SECURE Act of 2019

Pension Protection Act of 2006

Quotes:

“[There are] all sorts of things [in these bills] to encourage people to save more and to really help people have an idea about their retirement.” — Norma Sharara

“It’s very nice to see that there is broad bipartisan support for these rules and it’s exciting to see what comes out of it.” — Beth Garner

“The best parts of RISE & SHINE and SECURE 2.0 and whatever the Senate Finance is going to call their bill, hopefully, that will move and we’ll see even greater access to workplace retirement savings.” — Norma Sharara

Today our co-hosts discuss two hot topics from the 2022 AICPA Employee Benefits Plans Conference in Nashville, TN. These include Environmental, Social and Governance (ESG) investing, as well as cybersecurity.

Key Takeaways:

[0:55] Beth and Joanne attended this year’s conference and had the opportunity to hear directly from regulatory agencies.

[1:59] A broad range of topics were discussed at the conference, which were mainly geared towards CPAs who audit plans.

[2:19] Two key takeaways from the conference though, which are especially relevant for plan sponsors, included ESG investing and cybersecurity.

[3:14] The meaning of ESG investing, along with the implication of the Department of Labor’s (DOL’s) 2021 ruling on it, is examined.

[11:37] What can you do to ensure your ESG investment goals are met?

[14:07] The scope of the DOL issued guidance on cybersecurity is explored.

[15:31] Alarming stats on cybersecurity are reviewed, which underscores the importance of being diligent.

[17:18] What are the five things plans sponsors can do to increase plan security?

Resources:

BDO.com

BDO’s ERISA Center of Excellence

BDO.com/talksERISA

Related Links:

• DOL Alert: Proposed Regulation on ESG Investing and Shareholder Rights (link TBA)
• Spotlight on Human Resources and Cybersecurity
• Building Business Sustainability

Email: [email protected]

In this episode, our co-hosts talk with Michele Burkholder, CFP®, a financial adviser with the Burkholder Team, and Morgan Stewart, a finance professional working with Michele, in a conversation about women and their financial planning. Michele and Morgan have a mission to educate and guide individuals, families, and business owners regarding financial decisions. They want to give sound, personal financial advice for every life stage.

Key Takeaways:

[1:51] 2020 GAO report on retirement security stating that older women reported facing a financially uncertain future.

[3:10] Michele and Morgan share their background.

[4:30] First concern women have regarding their financial planning is making sure they are saving enough and not outliving their income.

[6:00] The ideal time to start working with a financial advisor is when they begin their career.

[7:12] Michele’s explains why she recommends the following: 1. Have credit in your name; 2. Have a separate retirement account; 3. If you’re being supported, make sure you have sufficient life insurance on them; and 4. Make sure you can fund your long-term care.

[9:14] Morgan explains why she recommends whole life insurance.

[12:05] Prioritizing retirement savings over college for children.

[14:18] Some women are more in tune with understanding their financial needs, while others might not have saved as much as their male counterparts.

[14:18] Reasons a lot of women may not have save enough for their retirement.

[16:25] COVID has also disproportionally impacted women.

[17:15] Beth and Michele wraps up by summarizing key takeaways from the episode.

Reference Code: 4618220RLB_Apr24

Resources:

BDO.com

BDO’s ERISA Center of Excellence

BDO.com/talksERISA

Email: [email protected]

Related Links:

STRENGTHENING WOMEN’S FINANCIAL WELLNESS IN THE WAKE OF THE PANDEMIC

FINANCIAL WELL-BEING FOR WOMEN: EMPOWERING EMPLOYEES BY HELPING THEM PREPARE FOR RETIREMENT

U.S. GAO, “Retirement Security: Older Women Report Facing a Financially Uncertain Future”

Quotes:

“Women being prepared for their retirement is a major passion for all of us on the podcast.” — Beth Garner

“[My Dad] had a fatal heart attack at 40. I saw what that did to our family. … I wanted to get into financial services because I wanted to make sure that I could take care of myself but also, the women around me could take care of themselves.” — Michele Burkholder

“As soon as … [people] start a career, they should be working with an advisor … not only to understand their benefits at their job but also to help if they have college debt, how to prioritize that and also how to start saving for their future.” — Michele Burkholder

“It’s a really difficult choice but 100% of the time I would say that retirement should take priority [over your children’s college education]. … Your children can get a college loan. … Once you get to retirement, you can’t take a loan out for retirement.” — Michele Burkholder

Beth Garner talks with David Friedman, founder and CEO of High Performing Culture, LLC and author of Fundamentally Different and Culture by Design: How to Build a High-Performing Culture, Even in the New Remote Work Environment. In today’s episode, David shares why culture is the biggest opportunity for companies to have a competitive and sustainable edge against their competitors and explains how leaders can create and implement their culture plan.

Key Takeaways:

[:50] A little bit about David and his journey towards launching the CultureWise platform in 2020.

[3:45] David shares his experience writing two books.

[4:55] What makes culture a competitive edge?

[6:40] The biggest opportunity we have for differentiation is our people.

[9:15] Most CEOs nowadays agree that culture is very important but not all of them know what to do about it.

[10:50] David explains how culture can be made into a core business process.

[13:30] David shares why most CEOs don’t have a documented culture plan.

[14:40] What does a culture plan look like in the new hybrid/remote working environment?

[17:50] David defines rituals and their importance in sustaining your culture.

[20:05] David shares the steps for building and defining a culture.

[21:25] David discusses the difference between core values and fundamentals.

[27:40] How can companies introduce culture to new employees?

Resources:

Abandoned 401(K) Accounts and The Great Resignation

ERISA Center of Excellence

Email: [email protected]

Culturewise.com

David on LinkedIn

Beth on Linkedin

Quotes:

“Whatever you told me that makes you special and if I were to invite your competitors in the room and ask them the same questions, they’d probably give me the same answer.”

“Culture is the single biggest thing that affects how people show up and do what they do every day.”

Ronii Rizzo is a Managing Director with BDO and the Global Payroll and Employment Tax Services National Leader. Ronii assists her clients with expatriate tax and payroll matters. In this week’s episode, she discusses how international, federal and state governments are aware of the current workforce trends and how they are prepared to audit and enforce tax law. Ronii offers insight into how to keep you, your employees, and your company compliant with the latest regulations.

Key Takeaways:

[2:35] A little bit about Ronii and her background in accounting.

[6:20] The way people are working has shifted, which means new obligations are being created for employers.

[7:10] If an employee moves to a new location, it’s on the employer to be aware and file the correct reporting requirements.

[7:30] States are increasingly more attentive to when companies are not in compliance.

[8:20] New York is seemingly the most stringent.

[9:55] You must look at each state/location to determine what the threshold is.

[11:50] You must have a system in place for tracking the working location of employees.

[12:10] Companies should evaluate their workforce policy. Pre-pandemic policy may no longer be relevant.

[13:34] Requirements are intensified at the global level.

[15:35] Companies must be aware of a ‘tax nexus’. Ronii explains what this means.

[19:10] The way we work is changing and it’s here to stay.

Resources:

What's Next for Employee Mobility?

Working from anywhere: Issues for the Employer - Employment Tax

BDO's ERISA Center of Excellence

Email: [email protected]

Ronii on LinkedIn

Quotes:

“58% of employees desire the option to be full-time remote employees while 39% are looking for a hybrid-work option.”

“It’s the employer’s obligation to know the employee has relocated and do the proper payroll reporting and withholding.”

Episode 16 Key Takeaways

[:55] A recap about the intention of this podcast and the last episode about ESOPs.

[4:45] An update about the National Defense Authorization Act.

[6:40] Laura explains how ESOPs work in comparison to a 401(k).

[10:20] Timing of the contribution is important. What communications throughout the year should you expect from your employer to be aware of the proper timing?

[13:20] Valuations are most of the time the drivers of the timelines but sometimes, there are factors with the company that can also come into play.

[14:05] Laura lays out how the timing works with compliance testing, valuation, etc.

[15:30] Within ESOPs, are there any year-end testing they are excluded from?

[17:45] Sometimes, companies make the contribution after the year’s end, which can cause discrepancies. Laura shares how often that is seen in their audits.

[19:00] Are there any obstacles that Laura anticipates for this year with regard to the form 5500 from 2020 being pushed back?

[21:00] Joanne wraps up by summarizing the key takeaways from today’s episode and asks Laura to share her best practices.

Resources:

BDO.com

Beth on LinkedIn

Laura on LinkedIn

Related Insights:

ESOPs: What Does It All Mean?

100% ESOP-Owned Defense Department Government Contractors Eligible for Sole Source Awards on Follow-On Contracts

Quotes:

“The timing of things, especially on distributions, can be a big difference and hard for participants and ESOP companies when they first get started.”

“We usually have a timeline set up so everyone is on the same page with when to expect each piece to take place.”

Episode 15 Key Takeaways

[2:00] A little bit about Howie.

[5:45] It’s predicted that healthcare costs will increase in 2022. How can employers still expand health benefits, service, and coverage?

[7:05] What is a dependent eligibility audit or dependent verification process? Howie expands on this.

[9:10] How is this different from confirming your dependents upon open enrollment?

[10:25] Howie shares a story about a time he was carded at IHOP as an example.

[12:20] Is there a separate process for working spouses? Howie shares what can be the provisions.

[17:00] What are the cost savings related to these audits?

[20:35] Howie talks a little about employee self-funding.

[24:35] Howie also shares his biggest audit finding that reaped the largest savings.

[27:55] What documentation would be needed through an audit?

Resources

BDO.com

Beth on LinkedIn

Howie on LinkedIn

Hrbestpractices.com

Related Insights:

ERISA Requirements Calendar

Quotes:

“If there’s teeth in the process, whether it be open enrollment or during a dependent audit, that will help confirm the eligibility of the dependents.”

“Everybody loves the idea of cost savings. But does a plan really need to be as invasive as collecting supporting documentation from each subscriber or is there a better way?”