sbca archives
The SBCA believes the details of the Senate Health Care reform bill will not only harm small businesses and their ability to provide health care to their employees, but could lead to the ultimate demise of this country’s private health care system. As discussed below, the SBCA supports health care reform, but not as proposed in the House and Senate bills. The SBCA is working to bring certainty to the current estate tax system now. The 2001 Tax Act created a legal landscape that makes it impossible for small business owners and other taxpayers to plan their estates with any predictability. This unpredictability has undermined taxpayer confidence in the estate tax system. (2008 Version: Proposed Estate Tax Changes for 2008). July 2007 401(k) Advisor SEC Targets 12b-1 Fees and Disclosures Tax Benefits for Roth not Fully Settled Apparently an open issue still exists relating to qualifying for tax free distributions from a Roth 401(k). The issue arises if EGTRRA -- the 2001 pension reform legislation that, among other things, created Roth 401(k) accounts -- is not extended and relates to the question of whether a distribution from a Roth 401(k) may not meet the five-year requirement for a tax-free withdrawal. Read this article by SBCA Director and employee benefits expert, Greg Matthews of the Matthews Benefit Group, Inc., St. Petersburg, Florida, to learn more about this issue and what IRS speakers at the recent ABA Tax section meeting in San Diego had to say about the issue. Estate Tax Reform Needed Now - SBCA Wants Small Businesses to be Effectively Exempt from Estate Taxes: Small business owners and the businesses they operate are a driving force in our country's economy. Contrary to popular belief, repealing the federal estate tax in many instances would actually cause businesses to pay more tax than if the law was frozen in 2009. Should Congress repeal the federal estate tax, the families of many small business owners could face much higher taxes if and when the children sell the business or the assets of the business after the owner's passing because these assets would lose a significant portion of the step-up in basis at the time of the owner's death. Many families of small business owners would fare much better under the estate tax system as it would stand in 2009 than under the proposed repeal. Congress never intended for the estate tax to reduce the estates of hard-working Americans who have built up a family business or a small business - this can be accomplished by increasing the estate tax exemption and keeping the step-up in basis. Section 529 Plans - The Definitive Education Savings Vehicle - In 1996, Congress passed a law that allowed families to set aside substantial assets to pay for college education. Named after a section of the Internal Revenue Code (much like the familiar 401(k) retirement plan), the Section 529 Plan is more flexible than a pre-paid tuition plan, provides for more control than a custodial account, and permits greater contributions than any other college savings device. Read this article by Aresh Homayoun, Esq., to understand the significant tax benefits afforded by the Section 529 plan. Physicians caught in the Enron Net - Todd Freeman, Larkin Hoffman Daly & Lindgren Ltd., Bloomington, MN explains how new Section 409A can entrap physicians. Read why it is essential for physicians to make sure that plans which alow them to receive accounts receivable when they leave the practice or new owners are brought in do not run afoul of this new tax code section - this new Section 409A imposes devastating consequences for failure to comply. 401(k) Update In June, the IRS released guidance blocking one corporate tax strategy to accelerate the deductibility of 401 (k) salary deferrals and matching contributions that are attributable to compensation paid after the end of the tax year. But another strategy was given the "okay." Read this article by SBCA Director and employee benefits expert, Greg Matthews of the Matthews Benefit Group, Inc., St. Petersburg, Florida to find out about this new strategy. PBGC Woes - Greg Matthews, Matthews Benefit Group, Inc. St. Petersburg, FL, gmatthews@eERISA.com, discusses what steps should be taken to make sure PBGC will be able to pay retiree benefits. More Sand(ers) in the Pension Machinery – Al Lurie, Esq., Special Counsel to the SBCA, explains why Congressman Bernie Sanders’ amendment which prevents Treasury from arguing in any court proceedings against alleged age discrimination violations with respect to cash balance plans is so misguided. This is an expanded version of an article originally posted on the internet as a LISI commentary on Sept. 21, 2004. The Small Business Council of America believes that Congressman Sanders’ amendment is detrimental to the retirement security of small business employees. Not only is a cash balance plan not age discriminatory as Al Lurie so clearly explains, but it is perhaps the BEST plan available to small business employees since it not only allows employees to “see” what they are accumulating in their own account but it also guarantees an interest rate. Moreover, it is not unusual for employees who work for small to mid-size businesses to receive annual contributions as high as 7.5% of their compensation in a new cash balance plan – this is a high percentage of compensation to receive as a retirement plan contribution. We are hopeful that as more members of Congress understand the issue, Congress will explicitly recognize that new cash balance plans are not age discriminatory. Bush Administration's Proposals To Alter Saving For Retirement -On January 31, 2003, the Bush Administration proposed two new tax-advantaged savings programs plus a reorganization of the defined contribution plan rules. This follows the Administration's earlier proposal to end the double taxation of dividends. The savings proposals, if enacted, would rewrite many of the rules under which employers and employees save for retirement. Read this article by Al Martin to learn more about the Administration's new savings programs. Al also discusses how Cross-Tested Plans may need to be amended when they are Top Heavy or using the 3% 401(k) Safe Harbor. Finally, Al Martin discusses the new Black Out Notices and penalties for late notices. Alson R. Martin, Shook, Hardy & Bacon L.L.P, Overland Park, KS, amartin@snb.com Pension Enron Legislation impacts small business unexpectedly. Read this article to find out how Pension Enron Legislation may cost small businesses unnecessary dollars. Read this article by SBCA Director and employee benefits expert, Greg Matthews of the Matthews Benefit Group, Inc., St. Petersburg, Florida to find out how this legislation has the potential to wreak havoc with retirement plans sponsored by small businesses. October, 2001 Handling the group medical rate increase. At least three months prior to your group policy’s renewal date, you should engage an independent group actuarial consultant to work with you in reviewing your current plan, determining your objectives and developing a program for the negotiation of a renewal package with your current carrier or, through proposals, with other carriers. Read this article by our Board Member, Larry Mitchell from California to learn valuable tips on how to keep your insurance costs in line. Larry is an expert on health insurance and an outstanding actuary. larrymitchell@att.net September, 2001 Preparing to Sell Your Business - Opportunities remain in the current mergers and acquisitions marketplace. With the right team, planning and strategy, sellers can overcome the obstacles present in the marketplace and successfully sell their businesses. Read this article by Scott E. Adamson, Esq. and Anthony J. Marks, Esq., members of the Corporate and Securities practice group of the Los Angeles office of Jenkens & Gilchrist, LLP The Case For Continued Estate Planning - President Bush’s signature on The Economic Growth and Tax Relief Reconciliation Act of 2001 did not -- and, of course, could not -- change the fundamentals of human nature. Before he signed the Act, it was possible to leave your children too much money. It still is. Before he signed, there was an amount -- no matter how small -- that carried with it the potential for discord among your heirs. That amount is probably no different today from what it was on June 6, 2001, the day before the signing ceremony. The core reasons for estate planning -- many of which have to do with human nature -- still apply. Read this fascinating article by Matt Kadish, Esq. with the Cleveland, Ohio, firm of Kadish, Hinkel & Weibel. July, 2001 New Pension Legislation Read about the new pension provisions contained in the new tax law, EGTRRA. This excellent article highlighting the major retirement plan provisions was prepared by Ron E. Merolli, JD, National Director, Qualified Plans, Estate & Business Planning, Allmerica Financial, Worcester, MA. June, 2001 Rehired Participant: Most plan documents will specify that a rehired former employee who had been a participant in the plan will reenter the plan upon rehire. This generally doesn’t pose a problem for profit sharing and pension plans where the employer’s allocation is made at the end of the plan year. It can cause a problem for 401(k) plans. Benefits expert, Gregory E. Matthews, CPA, of Matthews Benefit Group, Inc., St. Petersburg, Florida, gmat@eerisa.com explores this issue. February, 2001 IRS Issues Final Regs. on Retirement Plan Payout Options. The newly-released final regulations allow defined contribution plans to basically eliminate all optional benefit forms and offer only lump-sum distributions. Read this article by Gregory E. Matthews, CPA, Matthews Benefit Group, Inc., St. Petersburg, Florida, gmat@eerisa.com to learn the new rules. October, 2000 This ESOP is No Fable... Andy was approaching his 69th birthday and had struggled with this issue for at least four or five years now. Thus, the big issue: How can Andy turn his business into liquidity for retirement? What is his best exit strategy, tax-wise, without ruining the lives of his long-term employees? Read about Leveraged ESOPs by Thomas Yearian, CLU, ChFC, Vice President and Director of Estate & Business Planning Services for J. Smith Lanier & Company August, 2000 Long Term Care Insurance - Whether to purchase long-term care insurance may be one of the most important decisions a person makes during his or her life time. Long-term care provides the help an individual needs in the unlikely event they are unable to care for themselves because of a prolonged illness or disability. Long-term care differs from traditional medical care in that medical care serves to rehabilitate or correct certain medical problems, where as long-term care helps to maintain a person’s lifestyle. Read this article by Al Martin, Esq. and Michael D. Carson, Esq. to learn more about this increasingly valuable insurance. Shook, Hardy & Bacon, LLP, www.shb.com, Overland Park, Kansas, amartin@shb.com. January, 2000 "Carve out" plans have become the latest rage in the design of pension and profit sharing plans targeted to meet specific funding goals of an employer. The design strategy basically limits the employer’s contribution to a select group of employees (the "carved-out" group). The group will generally include a limited number of highly compensated (HC) and nonhighly compensated employees. Read about this new plan design by Gregory E. Matthews, CPA, Matthews Benefit Group, Inc., St. Petersburg, Florida, gmat@eerisa.com September, 1999 Intellectual Property and Technology Issues: Health Law - "Intellectual property" is the broad term for the area of law that involves the protection of proprietary rights and includes patents, trademarks, copyrights, trade secrets, and other forms of exclusive rights in intangible property. This area of law is the primary method to protect against the theft of intangible rights and technology. The various kinds of protection are not mutually exclusive. Examples of health care related intellectual property are: (1) patents on chemical compounds for pharmaceutical use; (2) trademarks on brand names for drugs; (3) trade secret protected and privacy rights in patient lists. By Jeff Marcus, Esq., Saul, Ewing, Remick & Saul, LLP, berwyn@saul.com Gainsharing is illegal; Fixed Fee Service Contracts Okay- On July 8, 1999 the Office of Inspector General (the "OIG") of the Department of Health and Human Services issued a special advisory bulletin which declared that hospital-physician gainsharing arrangements are illegal. Gainsharing arrangements involve a hospital splitting part of its revenues with physicians based on cost-savings generated by physicians. By Ron Waldheger, Esq., Mike Coyne, Esq. Waldheger, Coyne & Associates, Co., L.P.A., August,1999, www.healthlaw.com May, 1999 For our Healthcare Provider Members: False Claims by Ron Waldheger, Esq., Mike Coyne, Esq. Waldheger, Coyne & Associates, Co., L.P.A., May, 1999, www.healthlaw.com Do You Need a Will? and Why You May Want a Trust. - Jeff Kolender, Esq, Paley Rothman, jkolender@paleyrothman.com, May, 1999 www.paleyrothman.com. New 15 day notice on reducing benefits or terminating Pension Plans, by Al Martin, Esq., Shook, Hardy & Bacon, May, 1999, www.shb.com

sbca archives

The SBCA believes the details of the Senate Health Care reform bill will not only harm small businesses and their ability to provide health care to their employees, but could lead to the ultimate demise of this country’s private health care system. As discussed below, the SBCA supports health care reform, but not as proposed in the House and Senate bills.

The SBCA is working to bring certainty to the current estate tax system now. The 2001 Tax Act created a legal landscape that makes it impossible for small business owners and other taxpayers to plan their estates with any predictability. This unpredictability has undermined taxpayer confidence in the estate tax system. (2008 Version: Proposed Estate Tax Changes for 2008).

July 2007 401(k) Advisor

SEC Targets 12b-1 Fees and Disclosures

Tax Benefits for Roth not Fully Settled Apparently an open issue still exists relating to qualifying for tax free distributions from a Roth 401(k). The issue arises if EGTRRA -- the 2001 pension reform legislation that, among other things, created Roth 401(k) accounts -- is not extended and relates to the question of whether a distribution from a Roth 401(k) may not meet the five-year requirement for a tax-free withdrawal. Read this article by SBCA Director and employee benefits expert, Greg Matthews of the Matthews Benefit Group, Inc., St. Petersburg, Florida, to learn more about this issue and what IRS speakers at the recent ABA Tax section meeting in San Diego had to say about the issue.

Estate Tax Reform Needed Now - SBCA Wants Small Businesses to be Effectively Exempt from Estate Taxes: Small business owners and the businesses they operate are a driving force in our country's economy. Contrary to popular belief, repealing the federal estate tax in many instances would actually cause businesses to pay more tax than if the law was frozen in 2009. Should Congress repeal the federal estate tax, the families of many small business owners could face much higher taxes if and when the children sell the business or the assets of the business after the owner's passing because these assets would lose a significant portion of the step-up in basis at the time of the owner's death. Many families of small business owners would fare much better under the estate tax system as it would stand in 2009 than under the proposed repeal. Congress never intended for the estate tax to reduce the estates of hard-working Americans who have built up a family business or a small business - this can be accomplished by increasing the estate tax exemption and keeping the step-up in basis.

Section 529 Plans - The Definitive Education Savings Vehicle - In 1996, Congress passed a law that allowed families to set aside substantial assets to pay for college education. Named after a section of the Internal Revenue Code (much like the familiar 401(k) retirement plan), the Section 529 Plan is more flexible than a pre-paid tuition plan, provides for more control than a custodial account, and permits greater contributions than any other college savings device. Read this article by Aresh Homayoun, Esq., to understand the significant tax benefits afforded by the Section 529 plan.

Physicians caught in the Enron Net - Todd Freeman, Larkin Hoffman Daly & Lindgren Ltd., Bloomington, MN explains how new Section 409A can entrap physicians. Read why it is essential for physicians to make sure that plans which alow them to receive accounts receivable when they leave the practice or new owners are brought in do not run afoul of this new tax code section - this new Section 409A imposes devastating consequences for failure to comply.

401(k) Update In June, the IRS released guidance blocking one corporate tax strategy to accelerate the deductibility of 401 (k) salary deferrals and matching contributions that are attributable to compensation paid after the end of the tax year. But another strategy was given the "okay." Read this article by SBCA Director and employee benefits expert, Greg Matthews of the Matthews Benefit Group, Inc., St. Petersburg, Florida to find out about this new strategy.

PBGC Woes - Greg Matthews, Matthews Benefit Group, Inc. St. Petersburg, FL, gmatthews@eERISA.com, discusses what steps should be taken to make sure PBGC will be able to pay retiree benefits.

More Sand(ers) in the Pension Machinery – Al Lurie, Esq., Special Counsel to the SBCA, explains why Congressman Bernie Sanders’ amendment which prevents Treasury from arguing in any court proceedings against alleged age discrimination violations with respect to cash balance plans is so misguided. This is an expanded version of an article originally posted on the internet as a LISI commentary on Sept. 21, 2004. The Small Business Council of America believes that Congressman Sanders’ amendment is detrimental to the retirement security of small business employees. Not only is a cash balance plan not age discriminatory as Al Lurie so clearly explains, but it is perhaps the BEST plan available to small business employees since it not only allows employees to “see” what they are accumulating in their own account but it also guarantees an interest rate. Moreover, it is not unusual for employees who work for small to mid-size businesses to receive annual contributions as high as 7.5% of their compensation in a new cash balance plan – this is a high percentage of compensation to receive as a retirement plan contribution. We are hopeful that as more members of Congress understand the issue, Congress will explicitly recognize that new cash balance plans are not age discriminatory.

Bush Administration's Proposals To Alter Saving For Retirement -On January 31, 2003, the Bush Administration proposed two new tax-advantaged savings programs plus a reorganization of the defined contribution plan rules. This follows the Administration's earlier proposal to end the double taxation of dividends. The savings proposals, if enacted, would rewrite many of the rules under which employers and employees save for retirement. Read this article by Al Martin to learn more about the Administration's new savings programs. Al also discusses how Cross-Tested Plans may need to be amended when they are Top Heavy or using the 3% 401(k) Safe Harbor. Finally, Al Martin discusses the new Black Out Notices and penalties for late notices. Alson R. Martin, Shook, Hardy & Bacon L.L.P, Overland Park, KS, amartin@snb.com

Pension Enron Legislation impacts small business unexpectedly. Read this article to find out how Pension Enron Legislation may cost small businesses unnecessary dollars. Read this article by SBCA Director and employee benefits expert, Greg Matthews of the Matthews Benefit Group, Inc., St. Petersburg, Florida to find out how this legislation has the potential to wreak havoc with retirement plans sponsored by small businesses.

October, 2001

Handling the group medical rate increase. At least three months prior to your group policy’s renewal date, you should engage an independent group actuarial consultant to work with you in reviewing your current plan, determining your objectives and developing a program for the negotiation of a renewal package with your current carrier or, through proposals, with other carriers. Read this article by our Board Member, Larry Mitchell from California to learn valuable tips on how to keep your insurance costs in line. Larry is an expert on health insurance and an outstanding actuary. larrymitchell@att.net

September, 2001

Preparing to Sell Your Business - Opportunities remain in the current mergers and acquisitions marketplace. With the right team, planning and strategy, sellers can overcome the obstacles present in the marketplace and successfully sell their businesses. Read this article by Scott E. Adamson, Esq. and Anthony J. Marks, Esq., members of the Corporate and Securities practice group of the Los Angeles office of Jenkens & Gilchrist, LLP

The Case For Continued Estate Planning - President Bush’s signature on The Economic Growth and Tax Relief Reconciliation Act of 2001 did not -- and, of course, could not -- change the fundamentals of human nature. Before he signed the Act, it was possible to leave your children too much money. It still is. Before he signed, there was an amount -- no matter how small -- that carried with it the potential for discord among your heirs. That amount is probably no different today from what it was on June 6, 2001, the day before the signing ceremony. The core reasons for estate planning -- many of which have to do with human nature -- still apply. Read this fascinating article by Matt Kadish, Esq. with the Cleveland, Ohio, firm of Kadish, Hinkel & Weibel.

July, 2001

New Pension Legislation Read about the new pension provisions contained in the new tax law, EGTRRA. This excellent article highlighting the major retirement plan provisions was prepared by Ron E. Merolli, JD, National Director, Qualified Plans, Estate & Business Planning, Allmerica Financial, Worcester, MA.

June, 2001

Rehired Participant: Most plan documents will specify that a rehired former employee who had been a participant in the plan will reenter the plan upon rehire. This generally doesn’t pose a problem for profit sharing and pension plans where the employer’s allocation is made at the end of the plan year. It can cause a problem for 401(k) plans. Benefits expert, Gregory E. Matthews, CPA, of Matthews Benefit Group, Inc., St. Petersburg, Florida, gmat@eerisa.com explores this issue.

February, 2001

IRS Issues Final Regs. on Retirement Plan Payout Options. The newly-released final regulations allow defined contribution plans to basically eliminate all optional benefit forms and offer only lump-sum distributions. Read this article by Gregory E. Matthews, CPA, Matthews Benefit Group, Inc., St. Petersburg, Florida, gmat@eerisa.com to learn the new rules.

October, 2000

This ESOP is No Fable... Andy was approaching his 69th birthday and had struggled with this issue for at least four or five years now. Thus, the big issue: How can Andy turn his business into liquidity for retirement? What is his best exit strategy, tax-wise, without ruining the lives of his long-term employees? Read about Leveraged ESOPs by Thomas Yearian, CLU, ChFC, Vice President and Director of Estate & Business Planning Services for J. Smith Lanier & Company

August, 2000

Long Term Care Insurance - Whether to purchase long-term care insurance may be one of the most important decisions a person makes during his or her life time. Long-term care provides the help an individual needs in the unlikely event they are unable to care for themselves because of a prolonged illness or disability. Long-term care differs from traditional medical care in that medical care serves to rehabilitate or correct certain medical problems, where as long-term care helps to maintain a person’s lifestyle. Read this article by Al Martin, Esq. and Michael D. Carson, Esq. to learn more about this increasingly valuable insurance. Shook, Hardy & Bacon, LLP, www.shb.com, Overland Park, Kansas, amartin@shb.com.

January, 2000

"Carve out" plans have become the latest rage in the design of pension and profit sharing plans targeted to meet specific funding goals of an employer. The design strategy basically limits the employer’s contribution to a select group of employees (the "carved-out" group). The group will generally include a limited number of highly compensated (HC) and nonhighly compensated employees. Read about this new plan design by Gregory E. Matthews, CPA, Matthews Benefit Group, Inc., St. Petersburg, Florida, gmat@eerisa.com

September, 1999

Intellectual Property and Technology Issues: Health Law - "Intellectual property" is the broad term for the area of law that involves the protection of proprietary rights and includes patents, trademarks, copyrights, trade secrets, and other forms of exclusive rights in intangible property. This area of law is the primary method to protect against the theft of intangible rights and technology. The various kinds of protection are not mutually exclusive. Examples of health care related intellectual property are: (1) patents on chemical compounds for pharmaceutical use; (2) trademarks on brand names for drugs; (3) trade secret protected and privacy rights in patient lists. By Jeff Marcus, Esq., Saul, Ewing, Remick & Saul, LLP, berwyn@saul.com

Gainsharing is illegal; Fixed Fee Service Contracts Okay- On July 8, 1999 the Office of Inspector General (the "OIG") of the Department of Health and Human Services issued a special advisory bulletin which declared that hospital-physician gainsharing arrangements are illegal. Gainsharing arrangements involve a hospital splitting part of its revenues with physicians based on cost-savings generated by physicians. By Ron Waldheger, Esq., Mike Coyne, Esq. Waldheger, Coyne & Associates, Co., L.P.A., August,1999, www.healthlaw.com

May, 1999

For our Healthcare Provider Members:
False Claims by Ron Waldheger, Esq., Mike Coyne, Esq. Waldheger, Coyne & Associates, Co., L.P.A., May, 1999, www.healthlaw.com

Do You Need a Will? and Why You May Want a Trust. - Jeff Kolender, Esq, Paley Rothman, jkolender@paleyrothman.com, May, 1999 www.paleyrothman.com.

New 15 day notice on reducing benefits or terminating Pension Plans, by Al Martin, Esq., Shook, Hardy & Bacon, May, 1999, www.shb.com