Employee Newsletter Helpful Articles

Look at your employee handbook with fresh eyes

For businesses, so much has changed over the past year or so. The COVID-19 pandemic hit suddenly and companies were forced to react quickly — sending many employees home to work remotely and making myriad other tweaks and revisions to their processes. Understandably, you may not have fully documented all the changes you’ve made. But you should; and among the ideal places to do so is in your employee handbook.

Now that optimism is rising for a return to relative normalcy, why not look at your handbook with fresh eyes and ensure it accurately represents your company’s policies and procedures.

Legal considerations

Among the primary reasons companies create employee handbooks is protection from legal challenges. Clearly written HR policies and procedures will strengthen your defense if an employee sues. Don’t wait to test this theory in court: Ask your attorney to review the legal soundness of your handbook and make all recommended changes.

Why is this so important?

A supervisor without a legally sound and updated employee handbook is like a coach with an old rulebook. You can’t expect supervisors or team members to play by the rules if they don’t know whether and how those rules have changed. Make sure employees sign a statement acknowledging that they’ve read and understood the latest version of your handbook. Obviously, this applies to new hires, but also ask current employees to sign a new statement when you make major revisions.

Motivational language

Employee handbooks can also communicate the total value of working for your company. Workers don’t always appreciate the benefits their employers provide. This is often because they, and maybe even some managers, aren’t fully aware of those offerings. Your handbook should express that you care about employees’ welfare — a key point to reinforce given the events of the past year. It also should show precisely how you provide support. To do so, identify and explain all employee benefits. Don’t stop with the obvious descriptions of health care and retirement plans. Describe your current paid sick time and paid leave policies, which have no doubt been transformed by federal COVID relief measures, as well as any work schedule flexibility and fringe benefits that you offer.

Originality and specificity

One word of caution: When updating their handbooks, some businesses acquire a “best in class” example from another employer and try to adopt it as their own. Doing so generally isn’t a good idea. That other handbook’s tone may be inappropriate or at least inconsistent with your industry or organizational culture. Similarly, be careful about downloading handbook templates from the Internet. Chances are you’ll have no idea who wrote the original, let alone if it complies with current laws and regulations.

Document and guide

Your employee handbook should serve as a clearly written document for legal purposes and a helpful guide for your company’s workforce.

Our family of firm company, ATA Employment Solutions, can provide guidance on updating business guidelines and employee handbooks. Click here for more information on ATAES. ATA CPAs can help you track your employment costs and develop solutions to any challenges you face as you look at your human capital with fresh eyes. Visit our website to learn more about ATA’s bookkeeping and client accounting services.  © 2021

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IRS Outlines Procedures for Payroll Tax Credits & Rapid Refunds for Employers

Mark Puckett, CPA




The federal government is trying to get much-needed cash into the hands of employers and employees affected by COVID-19 as quickly as possible. To do so, it is utilizing employers’ existing payroll systems to minimize the employers’ cash flow hardship that might otherwise have occurred from having to pay new, mandatory federal paid sick and child care leave to certain employees. Specifically, the IRS has just clarified that employers can subtract the cost of the new mandated paid leave (plus the cost of keeping affected employees’ health care coverage in place during that leave) from any payroll taxes that are otherwise due to the IRS.

IRS Information Release (IR) 2020-57 (March 20, 2020) outlines the system that will promptly reimburse employers for the benefits required under the Act. IR 2020-57 also states that eligible employers are entitled to an additional tax credit based on costs to maintain health insurance coverage for the eligible employee during the mandated federal paid sick and child care leave period.


Businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick and child care leave through December 31, 2020, under the Families First Coronavirus Response Act (Act) (H.R. 6201), can claim a refundable federal tax credit to recover 100% of those payments. Equivalent credits are available to self-employed individuals based on similar circumstances.

Mechanics of Tax Credit Refunds

Generally, employers are required to withhold federal income, Social Security and Medicare taxes from their employees’ paychecks. Normally, employers must timely remit to the IRS the withheld taxes, along with the employer’s share of Social Security and Medicare taxes. But the IRS will release guidance the week of March 23 allowing employers who pay mandated federal paid sick or child care leave to decrease their federal payroll tax deposit by the cost incurred. The IRS also said that the cost of providing such leave can include the cost of continuing health care coverage during the federally mandated sick and child care leave period.

Source of Tax Credit Refunds

Employers can deduct the cost of providing such leave from their total federal tax deposit amount from all employees (not just from those who take the federally mandated leave). Specifically, employers can deduct the cost of providing such leave from: (1) federal income taxes withheld from all employees’ pay; (2) the employees’ share of Social Security and Medicare taxes; and (3) the employer’s share of Social Security and Medicare taxes.



Equivalent tax credits are available to self-employed individuals for federally mandated paid sick and child care leave. But self-employed individuals will deduct their tax credits from their estimated tax payments or can claim a refund on their federal income tax return (i.e., their 2020 Form 1040).

As a result, employers (including self-employed individuals) will have more cash in-hand (by not remitting taxes that are otherwise due) to cover the cost of providing the federal paid sick and child care leave.

Rapid Refunds

IR 2020-57 also said that if the payroll tax off-set is not sufficient to cover 100% of those costs, employers can request a refund of their tax credit for any remaining amount. The IRS expects to process such refunds within two weeks.

Examples. Here are two examples from IR 2020-57:

Example 1: If an eligible employer paid $5,000 in federally mandated paid sick or child care leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes that it was otherwise going to deposit to make the qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

Example 2: If an eligible employer paid $10,000 in federally mandated paid sick or child care leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes that it was otherwise going to deposit to make qualified leave payments and could file a request for an accelerated refund for the remaining $2,000.

New Small Business Exemption

According to IR 2020-57, small businesses with fewer than 50 employees will be eligible for an exemption from the federally mandated child care leave if complying with those requirements would jeopardize the ability of the business to continue as a going concern. The exemption will be available on the basis of simple and clear criteria, which the U.S. Department of Labor will provide in emergency guidance.

Non-Enforcement Period

IR 2020-57 says that the U.S. Department of Labor will issue a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. For at least the initial 30 days (i.e., through April 20), the Labor Department will not bring any enforcement action against any employer for violating the Act, so long as the employer acted reasonably and in good faith to comply with the Act.


Continue to monitor ATA’s Covid-19 resource page for more information.
Employee Newsletter Helpful Articles Tax

Self-employed? Save more by setting up your own retirement plan

Self-employed? Save more by setting up your own retirement plan

If you’re self-employed, you may be able to set up a retirement plan that allows you to make much larger contributions than you could make as an employee. For example, the maximum 2014 employee contribution to a 401(k) plan is $17,500 — $23,000 if you’re age 50 or older. Look at how the limits for these two options available to the self-employed compare:

1. Profit-sharing plan. The 2014 contribution limit is $52,000 — $57,500 if you’re age 50 or older and the plan includes a 401(k) arrangement.

2. Defined benefit plan. This plan sets a future pension benefit and then actuarially calculates the contributions needed to attain that benefit. The maximum future annual benefit toward which 2014 contributions can be made is generally $210,000. Depending on your age, you may be able to contribute more than you could to a profit-sharing plan.

You don’t even have to make your 2014 contributions this year. As long as you set up one of these plans by Dec. 31, 2014, you can make deductible 2014 contributions to it until the 2015 due date of your 2014 tax return. Additional rules and limits apply, so contact us to learn which plan would work better for you.
© 2014

Employee Newsletter News Tax

Watch out for the Wash Sale Rule

Watch out for the Wash Sale Rule

If you’ve cashed in some big gains this year, consider looking for unrealized losses in your portfolio and selling those investments before year end to offset your gains. This can reduce your 2014 tax liability.

But if you want to minimize the impact on your asset allocation, keep in mind the wash sale rule. It prevents you from taking a loss on a security if you buy a substantially identical security (or an option to buy such a security) within 30 days before or after you sell the security that created the loss. You can recognize the loss only when you sell the replacement security.

Fortunately, there are ways to avoid the wash sale rule and still achieve your goals:

  • Immediately buy securities of a different company in the same industry or shares in a mutual fund that holds securities much like the ones you sold.
  • Wait 31 days to repurchase the same security.
  • Before selling the security, purchase additional shares of that security equal to the number you want to sell at a loss; then wait 31 days to sell the original portion.

For more ideas on saving taxes on your investments, please contact us.

© 2014

Employee Newsletter News

IRS Voluntary Correction Program : The Voluntary Correction Program (VCP) to correct a retirement plans more serious failures.

IRS Voluntary Correction Program

The Voluntary Correction Program (VCP) is available to correct a retirement plan’s more serious failures — specifically plan document failures — as well as certain demographic and operational failures that cannot be corrected under the Self-Correction Program (SCP).

With Revenue Procedure 2013-12, the IRS has streamlined the application procedure and improved the filing process for submitting corrections under VCP.* VCP is not available if a plan sponsor has been notified by the IRS that the plan is subject to an audit or if the plan is already being audited.

Document Failures

One of the most common qualification failures that can be resolved under VCP is a failure to timely restate or amend a plan document for legal and regulatory changes. This is known as a nonamender failure. The IRS has a six-year remedial amendment (restatement) cycle for preapproved plan documents (prototype and volume submitter plans) and a five-year restatement cycle for custom designed plans. The categories of required changes include:

Preapproved Document Restatement

Restatement involves adopting a new plan document in accordance with the IRS%u2019s remedial amendment period. For preapproved plans (prototype and volume submitter plans), the most recent restatement incorporated changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The deadline to restate an EGTRRA preapproved defined contribution plan was April 30, 2010. (The deadline for an EGTRRA preapproved defined benefit plan was April 30, 2012.)

The next restatement cycle for preapproved plans is known as the Pension Protection Act of 2006 restatement. The cycle is expected to begin in 2014 and end sometime in 2016 for defined contribution plans. The IRS will announce the exact dates in early 2014. Defined benefit plans are about two years later.

Individually Designed Document Restatement

Individually designed plans (custom designed plans) also need to be restated on a regular basis. These plans are on a five-year restatement cycle. The last digit of the employer’s EIN (Employer Identification Number) determines the plan’s restatement year. (EINs with a last digit of 3 or 8 are being restated in 2013.) Defined contribution and defined benefit plans are on the same cycle.

Interim Amendment

This type of amendment is required by legal or regulatory changes that impact the plan document. Recent interim amendments include changes required by the Pension Protection Act of 2006 (PPA); the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act); and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). Generally, interim amendments must be made by the later of the last day of the plan year or the due date of the sponsoring employer%u2019s tax return for the tax year the change became effective. Sometimes a new law or regulation requires that an amendment be completed by the end of a specific plan year or by a certain date.

Discretionary Amendment

Employer-level changes, such as amending a plan to allow in-plan Roth conversions or participant loans or adding a hardship withdrawal provision, require discretionary amendments. Generally, discretionary amendments must be made by the end of the plan year in which the amendment becomes effective

If a restatement or an amendment is not made in a timely fashion, the plan is out of compliance with the Internal Revenue Code. To bring it back into compliance, the plan must be submitted to the IRS under VCP along with the applicable fee. Keep in mind that if a plan is not in compliance and it is audited, the resulting fee under the Audit Closing Agreement Program (Audit CAP) will be substantially higher than the VCP fee.

Standard VCP Fees

Number of Plan Participants


20 or fewer














More than 10,000


Standard Fees

When plan sponsors file under VCP, they are required to pay a fee based on the number of participants in the plan (as reported on the plan’s most recently filed annual Form 5500). The IRS provides exceptions to the standard fees for correcting certain mistakes. When one of the following is the sole plan failure, the correction qualifies for the corresponding reduced fee:

– Interim or discretionary amendment failures submitted during the plan’s current remedial amendment period: $375

– Nonamender failure submitted within one year of a remedial amendment period deadline: 50% of the standard fee

– Certain plan loan failures affecting no more than 25% of the participants: 50% of the standard fee

– Required minimum distribution (RMD) operational failure under Section 401(a)(9) affecting 50 or fewer participants: $500

– 403(b) plan failure to timely adopt a written plan document prior to December 31, 2009: 50% of the standard fee if the VCP submission is made prior to December 31, 2013

* Revenue Procedure 2013-12 requires all VCP submissions to include completed Forms 8950 and 8951.

Please contact Jerry Smith at 731.642.0771 for more information.

Employee Newsletter News Tax

Roth IRA Conversion – Transfer or Rollover : Under ATRA, Roth Conversion could be Transfer or Rollover

Roth IRA Conversion: Transfer or Rollover?

Under the American Taxpayer Relief Act of 2012 (ATRA), an in-plan Roth 401(k) conversion now may be made as a transfer rather than as a rollover. This new provision means there does not need to be a distributable event for participants to move pretax 401(k) contributions into a Roth account with the same plan.

In-plan Roth Rollover

The Small Business Jobs and Credit Act of 2010 (SBJCA) created the in-plan Roth conversion, which permits 401(k) plans (and other “applicable retirement plans”) that have Roth account provisions to allow participants (or surviving spouses) to convert non-Roth accounts to Roth accounts within the 401(k) plan. Note that since funds are not distributed from the plan, the income taxes due as a result of the conversion must be paid from a participant’s other assets.

There are some restrictions, however. The in-plan Roth rollover conversion is available only to participants who are eligible for a distribution from the plan. Thus, participants are not eligible to convert elective deferrals, safe harbor 401(k) contributions, qualified nonelective contributions (QNECs), or qualified matching contributions (QMACs) to a Roth account until they reach age 59 1/2. And employer matching and nonelective contributions cannot be converted unless the plan has an in-service distribution provision.

In-plan Roth Transfer

By adding the in-plan Roth transfer, ATRA eliminated the requirement that participants must have a distributable event to move pretax amounts into a Roth 401(k) account. Amounts in non-Roth accounts can now be converted by transfer. As with any Roth conversion, participants who transfer pretax amounts to after-tax Roth 401(k) accounts must pay federal income tax on the transferred amount in the year the conversion occurs.

Amending the Plan

In-plan transfers are permitted only when the plan document contains or is amended to provide a Roth elective deferral feature. A plan sponsor cannot add a Roth account feature solely to allow for Roth rollovers or transfers.

Although the new law permits in-plan Roth transfers as of January 1, 2013, at press time, the IRS had yet to issue guidance on this new law change. However, based on established guidance, if a plan sponsor wishes to permit the in-plan Roth transfer, the plan document must be amended by the end of the plan year in which a Roth transfer is first permitted. Therefore, sponsors of calendar-year plans who wish to permit transfers this year will need to amend their plan by December 31, 2013. Prior to amending their plan, employers wishing to add this feature should draft a board resolution.

Note: Separate recordkeeping of each transfer is needed for reporting purposes and to track the five-year recapture tax rules.

Please contact Jerry Smith at 731.642.0771 for more information.

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Alecia Purtteman Earns CIA Designation : April 29, 2011

Alecia Purtteman Earns Certified Internal Auditor Designation

A Magna Cum Laude graduate of Bethel College, Purtteman joined Alexander Thompson Arnold CPAs in 2004 where she is a manager with the firm%u2019s financial institutions team. Alecia has been a driving force with the firm%u2019s internal audit department and takes a leadership role in the firm%u2019s internal audit engagements. Additionally, she is a Certified Community Bank Internal Auditor (CCBIA) and has an in-depth understanding of banks with eighteen years of community bank internal audit experience.

Alecia Purtteman, a manager with Alexander Thompson Arnold CPAs, was recently named as a Certified Internal Auditor  (CIA ) by the Institute of Internal Auditors (IIA), which is recognized as the internal audit profession%u2019s leader in certification, education, research and technological guidance.

The CIA designation is awarded to internal audit professionals who have met the rigorous requirements of the IIA%u2019s CIA program, including a four-part examination, as well as high standards of character, education and experience. The exam includes current state of the art issues in internal auditing and evaluates technical competence in important subject areas related to internal auditing practices, risks and remedies. The CIA designation is the only globally accepted certification for internal auditors and remains the standard by which individuals demonstrate their competency and professionalism in the internal auditing field.