November, 2016 | RKL LLP
Posted on: November 23rd, 2016

Now What? What to Do Now in Response to Ruling on DOL Overtime Changes

court of lawThe late-breaking court order announced yesterday involving the DOL’s expansion of overtime eligibility is leaving businesses in limbo after months of preparation for the new rules. A federal judge in Texas issued the nationwide injunction this week, ruling that the Obama administration exceeded its authority in raising the overtime limit so significantly.

While business groups have lauded the ruling which suspends the December 1 rules from going into effect, the reality is that many companies have already taken significant steps to comply. Business owners, HR leaders and those responsible for workforce administration now need to weigh their options – and fast.

While the injunction may only be only a temporary measure and the future of the regulations remains unknown, the central question today becomes whether businesses should move forward with their plans or suspend them. The answer to that question is specific to each organization and the risks and rewards of each scenario. Some considerations that should be part of your conversation around next steps include:

  • Are we changing the status of an employee because their responsibilities warrant non-exempt status? If so, you may want to move forward with the change.
  • Are we changing the status and wage of an employee based on their current salary? If so, you may want to consider holding steady.
  • How have we communicated these changes to our employees and what are the risks inherent in adjusting our plans?
  • Will implementing the salary changes have a negative impact on employee morale?

Over the past several months, RKL has been providing guidance regarding the rules, and we’ll continue to help prepare clients for the impact of these recent developments. Have questions regarding the suspension of the new overtime rules? Contact Danielle J. Hoffer, Director of Human Resources, at dhoffer@rklcpa.com, or Lindsay Heist, HR Consultant, at lheist@rklcpa.com, or at 717.394.5666.

RKL Human Resources DirectorContributed by Danielle J. Hoffer, SPHR, Director of Human Resources for RKL. Danielle provides strategic leadership by working closely with the CEO, Partners in Charge and Functional Leaders to support the firm’s overall business plan and strategic direction. She is also responsible for Human Resources consulting services for clients.

 

 

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Posted on: November 15th, 2016

Qualified Charitable Distributions from IRAs Here to Stay

IRA strategy that allows eligible taxpayers to direct up to $100,000 per year to a qualified charity and avoid income tax on that amount is now permanent. Since 2006, taxpayers age 70½ or older have been able to make tax-free “qualified charitable distributions” (QCDs) from their IRAs. This provision survived through the years thanks to periodic, short-term extensions until it was made permanent under the Protecting Americans from Tax Hikes (PATH) Act of December 2015. With QCDs here to stay, let’s take a look at the tax benefits individuals can reap by making these contributions.

What QCDs mean for RMDs

To understand the benefit of QCDs, it is essential to first understand another tax component of IRAs: required minimum distributions (RMDs). RMD is the minimum annual amount the IRS requires individuals age 70½ or older to withdraw from their traditional IRA (not Roth IRA) or employer-sponsored retirement plan, such as a 401(k).

RMD amounts are added to taxable income and failure to take an RMD by the end of the year can result in a tax penalty of up to 50 percent of the RMD amount.

QCDs meet RMDs at the intersection of tax savings because unlike RMDs, QCDs are excluded from gross income. Therefore, eligible taxpayers can direct up to $100,000 per year to a qualified charity and avoid income tax on that amount.

How QCDs work

As mentioned above, only taxpayers 70½ or older are allowed to make QCDs. Another requirement is that the distribution must be otherwise taxable. Taxpayers filling jointly are each permitted to make a QCD of up to $100,000, for a total exclusion of $200,000 from gross income.

The IRS prohibits QCDs from going to private foundations, donor-advised funds or supporting organizations (as described in IRC Section 509(a)(3)). Furthermore, a QCD cannot be made in exchange for a charitable gift annuity or to a charitable remainder trust.

Here are some more important points to keep in mind regarding QCDs:

  • QCDs are only excluded from taxable income; they cannot also be taken as a charitable contribution deduction on an itemized federal income tax return.
  • Distributions taken from an IRA (including RMDs) and then subsequently donated to charitable causes do not qualify as QCDs.
  • For multiple IRAs, QCDs are aggregated for calculation purposes related to taxable and nontaxable portion of a distribution from any one IRA.

QCD tax benefits

Some may wonder what is the advantage of using a QCD instead of taking a charitable contribution deduction. The answer is that QCDs streamline the process and likely result in greater tax savings versus taking an RMD, donating those funds to charity and then writing it off as a charitable deduction. The impact of including the RMD in taxable income could be more than the tax deduction from the donation, due to IRS limits on charitable contribution deductions. For taxpayers who don’t itemize deductions on their tax returns, the exclusion from gross income for QCDs is a tax-effective way to make charitable contributions.

QCDs are a convenient, and now permanent, method to support a charitable cause, get a tax break and satisfy annual RMD requirements. Your RKL tax professional or RKL Wealth Management advisor can demonstrate the benefits of QCDs and assist you executing this tax strategy.

 

Laurie M. Peer, CPA, CFP®, partner in RKL’s Tax Services Group and Executive Vice President of RKL Wealth Management LLCContributed by Laurie M. Peer, CPA, CFP®, partner in RKL’s Tax Services Group. She also serves as Executive Vice President of RKL Wealth Management LLC, the registered investment advisory subsidiary of RKL LLP. With 25 years of experience in taxation and financial planning, Laurie focuses on helping her clients achieve financial and life goals through clearly defined and customized plans with ongoing monitoring.

 

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Posted on: November 9th, 2016

RKL Names Myers to Partnership

RKL LLP today announced that G. Scott Myers, CPA, CSEP, will be admitted to the firm’s partnership, effective January 1, 2017. PRESS RELEASE

YORK, PA (November 9, 2016) – RKL LLP today announced that G. Scott Myers, CPA, CSEP, will be admitted to the firm’s partnership, effective January 1, 2017.

“We are pleased to welcome Scott to the RKL partnership in recognition of the instrumental role he plays in RKL’s success and the consistently outstanding service he delivers to his clients,” said Edward W. Monborne, RKL CEO.

Currently a manager in RKL’s Tax Services Group, Myers provides individual and fiduciary tax services for high net worth individuals and their families. He also serves many closely held businesses in a wide variety of industries.

Myers is a member of the firm’s Real Estate Development & Construction Services Group, helping to develop strategies to better meet the needs of this industry, and is actively involved in RKL’s Estate and Trust Planning Group, aimed at staying on the cutting edge of issues affecting clients. He joined RKL in 2012, bringing with him more than 13 years of tax accounting experience. 

Myers is a 2011 graduate of the Leadership York program, a board member of the York County Estate Planning Council and a 2015 recipient of the Central Penn Business Journal’s “Forty Under 40” award.

He is an active participant in several community benefit organizations, including Big Brothers Big Sisters of York & Adams Counties and Leg Up Farm. Myers is a graduate of Lebanon Valley College and resides in York with his wife and three daughters.

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Posted on: November 8th, 2016

Non-Residential Properties Can Now Recover More Improvement Costs

RKL’s tax team explains why businesses may be eligible for greater tax deductions for commercial or rental property improvements thanks to 2015’s PATH Act.Businesses may now be eligible for greater tax deductions related to improvements made to commercial or rental properties, thanks to one of the many provisions included in the Protecting Americans from Tax Hikes (PATH) Act of December 2015. We’ve talked about various aspects of the PATH Act over the past year on Working Capital, but today we take a closer look at the legislation’s impact on bonus depreciation and cost recovery.

Recovery period threshold lowered

Previously, the cost of buildings and various improvements could only be recovered over 39 years. This prevented companies from receiving bonus depreciation on newer properties. Legislation in 2004 provided for use of a lower, 15-year depreciation threshold, for qualified leasehold improvements made to the interior portion of non-residential real property. The use of this shorter depreciable life was on a year-to-year basis, subject to annual extender legislation typically passed right at the last possible moment by Congress.

Like so many other annually renewed provisions, the PATH Act made the shorter, 15-year recovery period permanent. Now businesses can reliably use this depreciation schedule for long-term tax planning, and more improvements can qualify sooner. The permanent 15-year recovery period applies to Qualified Leasehold Improvements (QLI), Qualified Retail Improvements (QRI) and Qualified Restaurant Property (QRP).

New recovery category

In addition to making the 15-year recovery period permanent for QLI, QRI and QRP, the PATH Act also created a new recovery category: Qualified Improvement Property (QIP). This new category allows companies to use bonus depreciation for qualifying non-residential interior improvements with a 39-year life. This allows companies greater flexibility in recovering costs for non-residential building improvements.

QIP went into effect on December 31, 2015, so 2016 marks the first year companies can use this category. QIP is considered any improvement to an interior portion of a non-residential building as long as the construction or installation takes place after the building is in use. It is similar to QLI, minus the requirements that the building must be in service at least three years before the expenditure, minus the expenditures must be made in accordance with a lease agreement, and plus the expanded eligibility to common area interior improvements.

Examples of QIP-eligible improvements include:

  • Tenant improvements made during the first three years of a building’s life
  • Interior components such as common area improvements to stairways, hallways and lobbies

The IRS continues to explicitly exclude three improvements from this category: the enlargement of a building, the installation of elevators or escalators or alterations to the internal structural framework of a building.

Extended Bonus Depreciation

The PATH Act also extended bonus depreciation through 2019 and introduced a gradual reduction as provided below:

  • 2015 – 2017 = 50%
  • 2018 = 40%
  • 2019 = 30%
  • 2020 to later = currently set to expire

Recovering costs earlier in the life of a building can result in significant tax savings for businesses. Your RKL advisor is available to explain these changes and examine how they might apply to a specific situation. Contact one of our local offices today to get started.

Contributed by Samuel E. Gantz, a supervisor in RKL’s Tax Services Group. Sam provides tax planning and compliance services to corporations, businesses and individuals, specializing in multi-state compliance and pass-through entity taxation. He works with clients in a variety of industries including manufacturing and distribution, construction and real estate. Sam is also active in RKL’s various training initiatives.

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Posted on: November 1st, 2016

“Ask Ed: The Firm, the Team and the Future” Video

Today, our firm officially adopts the RKL LLP name. In the video below,  CEO Ed Monborne discusses the firm’s evolution, his pride in RKL’s dedicated, community-minded team and what to expect in our next chapter.

 

Ask Ed: The Firm, the Team and the Future from RKL on Vimeo.

Posted on: November 1st, 2016

Reinsel Kuntz Lesher Rebrands Under Streamlined “RKL”

Reflects the firm’s evolution from traditional CPA firm to professional services leader

Reinsel Kuntz Lesher Rebrands Under Streamlined “RKL”PRESS RELEASE

LANCASTER, PA (November 1, 2016) – Reinsel Kuntz Lesher LLP (RKL), Certified Public Accountants and Consultants, today announced that it has adopted the legal identity of RKL LLP, effective November 1, 2016. Already widely referenced and recognized as RKL in the marketplace, the firm formalized the RKL name as it continues to pursue geographic growth and diversification.

“The RKL brand represents the future of the firm. Over the years, the RKL name has become synonymous with innovation, outside-the-box thinking and cutting edge capabilities, and we plan to continue to build and expand that reputation through our entrepreneurial approach and instinct for emerging demand,” said RKL CEO Edward W. Monborne.

In the 11 years since the firm’s founding, the firm has earned regional and national recognition for its exceptional growth. Since 2005, RKL has doubled its workforce, achieved average annual growth in double digits, launched four specialized subsidiaries, expanded its presence coast-to-coast and earned national accolades from Accounting Today, Inside Public Accounting and other industry media.

“We are incredibly proud of our history and of the people who have made this firm who are today. I truly believe the best days for this firm are yet to come, and I look forward to working alongside our talented and dedicated team to write the next chapter in the firm’s history as RKL,” Monborne said.

The legal name change underscores the significant growth and innovation taking place at RKL. As the challenges facing its clients increase in complexity, RKL has strategically expanded its capabilities and expertise in areas like operational process improvement, transaction advisory services, software implementation and networking, state and local taxation and HR consulting.

Most recently, RKL positioned itself as a leading provider of risk management services for financial institutions, banks and credit unions in the Mid-Atlantic with its October 1 acquisition of Radnor, Pennsylvania-based GTM Risk Management, now known as RKL Risk Management. Focused on helping financial services organizations reduce risk, RKL Risk Management offers internal audit, compliance and information technology audit services, all of which complement RKL’s existing risk management practice.

The official name change to RKL LLP also brings the firm into consistency with its portfolio of four subsidiaries: RKL Wealth Management, an investment advisory firm; RKL eSolutions, an IT consulting firm; RKL Capital Advisors, an investment banking firm; and RKL Risk Management.

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