June, 2017 | RKL LLP
Posted on: June 29th, 2017

RKL’s Gilbert Elected PICPA Board Vice President

RKL partner Jill E. Gilbert, CPA, CGMARKL is pleased to announce that firm Partner Jill E. Gilbert, CPA, CGMA, has been named to the board of the Pennsylvania Institute of Certified Public Accountants (PICPA). Gilbert was elected as board Vice President during the recent PICPA 120th Annual CPA Convention held in Lake Buena Vista, Florida.

As Vice President of the PICPA board, Gilbert will play a leading role in PICPA’s governance, strategic management and future advancement.

Gilbert is a Partner in RKL’s Audit Services Group with more than 20 years of assurance experience. She serves a broad range of industries including governmental agencies and not-for-profit organizations, specializing in employee benefit plan audits. Gilbert is a frequent speaker at local and state conferences and seminars.

In addition to her volunteer leadership role with PICPA, Gilbert also is a member of the American Institute of Certified Public Accountants (AICPA), Chartered Institute of Management Accountants and the Pennsylvania Association of School Business Officials, where she sits on the Accounting Committee. Gilbert also serves as Treasurer for Willow Valley Retirement Communities.

Gilbert holds a B.S. in Business Administration from Elizabethtown College. She resides in Elizabethtown with her husband and two children.

To see a complete list of the 2017-2018 PICPA leadership visit www.picpa.org/leadership.


Posted on: June 27th, 2017

Locating Missing Retirement Plan Participants: An Employer’s Responsibility

Locating Missing Retirement Plan Participants: An Employer’s ResponsibilityWhether an employer wants to terminate its pension plan or streamline 401(k) management costs, tracking down older, missing or unresponsive participants is a complex challenge required under the federal Employee Retirement Income Security Act (ERISA). Let’s take a closer look at this employer responsibility, along with location strategies and best practices to maintain contact with current and former employees.

Financial and regulatory impact of forgotten accounts

Under ERISA, all retirement plan administrators have a fiduciary responsibility to find or “make a reasonable effort” to find missing or unresponsive participants. Failing to do so could expose a plan to liability.

Typically, abandoned retirement accounts contain small dollar amounts that are left behind as employees change jobs or move. While an employee may not worry about a small amount of money saved years ago, the employer may face real consequences for losing contact since it could be construed as a violation of their fiduciary responsibilities.

For both defined benefit (pension) and defined contribution (401(k)) retirement plans, administrators must distribute the funds to participants before shutting down the plan itself or closing individual accounts. These payouts are not possible if employee addresses are outdated, which forces employers to absorb the expense of ongoing maintenance.

In addition to the cost of keeping an entire plan open or maintaining dormant accounts, an abundance of unresponsive participants that leave account balances in a 401(k) plan could push an employer to a higher headcount that could trigger a financial statement audit.

Search tips for employers

All employers offering any type of retirement plan must deal with the complexities associated with finding lost participants, but the challenge is greater for those in industries with high turnover or short-term employment like construction and hospitality. The challenge is further complicated as entities and their retirement plans merge or change hands.

To assist employers in fulfilling ERISA’s search obligations, the U.S. Department of Labor (DOL) in August 2014 issued Field Assistance Bulletin No. 2014-01. Since the IRS and Social Security Administration’s letter forwarding options were discontinued several years ago, the DOL recommends using the following tactics:

  • Send notifications via email and U.S. Postal Service to all addresses on file for participant.
  • Use certified mail and request a delivery receipt.
  • Search for the employee on other plan or company records.
  • Compare to the U.S. Postal Service’s National Change of Address (NCOA) database.
  • Check with credit reporting bureaus (Experian, Equifax, Transunion).
  • Conduct manual internet searches or use free electronic search tools.
  • Contact the beneficiary listed on the account.

Using a fee-based commercial locator service may be a worthwhile option for accounts with a larger balance, because ERISA permits using plan assets to pay for searches under certain circumstances.

What to do if search comes up empty

DOL’s August 2014 bulletin also addresses what to do if location attempts are unsuccessful. After conducting the above steps, employers have the fiduciary responsibility to evaluate if additional steps are warranted relative to the account balance.

If participants remain missing after reasonable search efforts, employers have several options permitted by the DOL:

  • Distribute the participant’s benefits into an individual account retirement plan (IRA).
  • Distribute to PBGC’s missing participant program (currently limited to terminated defined benefit plans, but inclusion of defined contribution plans expected in 2018).
  • Open a federally insured interest bearing bank account in name of missing participant to deposit funds.
  • Escheat to unclaimed property program in the state of participant’s last known address.

Best practices to keep in touch with participants

Employers can minimize the occurrence of lost participants by implementing processes and procedures to shore up data and maintain contact, including the below best practices:

  • Scrub employee data at least annually, if not quarterly. Employers with defined contribution plans should also scrub data when a new employee headcount threshold is about to be reached that would trigger new audit requirements.
  • Compare records electronically to the NCOA database and the Social Security Administration Death Index (only updated through March 2014).
  • Maintain multiple points of contact (mailing addresses, phone numbers, emails, etc.).
  • Regularly update contact information for current participants and remind them to advise of any changes.
  • Many plans allow for automatic lump sum distributions if balances are less than $1,000. Take advantage of this option as soon as participants terminate to help limit challenges that results from the passage of time.

Maintaining regular contact with current staff and enlisting them in the effort to keep contact information updated will pay off in the future as employees move on. In the meantime, adhering to ERISA search requirements and permitted distribution methods prevents plan administrators from being exposed to potential liability or running afoul of federal regulations.

RKL’s team of employee benefit plan specialists can provide guidance on this and other ERISA requirements and help plan administrators develop and implement the necessary policies and procedures. Contact one of our local offices today to get started.

Wendy Lakatosh, CPAContributed by Wendy M. Lakatosh, CPA, Partner in RKL’s Audit Services Group. Throughout her more than 19 years of experience in public accounting and auditing, Wendy has gained significant experience serving employee benefit plan clients. She has served a variety of clients from small, private, middle-market entities to large, multi-location companies across many industries.



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Posted on: June 14th, 2017

RKL Partner Wendy Lance Honored as One of Central PA’s “Women of Influence”

Wendy L. Lance, CPA, MST, RKL Tax Services Group PartnerPRESS RELEASE

LANCASTER, PA (June 14, 2017) – RKL LLP today announced that Wendy L. Lance, CPA, MST, Tax Services Group Partner, has been selected by the Central Penn Business Journal as one of its 2017 “Women of Influence.”

“Wendy’s approachable management style, intuitive method of communication and steadfast mentorship of younger colleagues make her a visible and trusted firm leader,” said Edward W. Monborne, RKL CEO. “We’re proud to see Wendy honored for the consistently positive influence she has on her team, her clients and her community.”

Lance is a Partner and leader in RKL’s Tax Services Group and works closely with firm leadership to ensure client service consistency and cohesion and mentor and coach team members across the tax practice.

An experienced certified public accountant and business advisor, Lance manages strategic tax planning and compliance services for corporations, partnerships and individuals. She has extensive experience providing tax services for closely held businesses and their owners. Lance joined RKL in 2005 and was named to the partnership in 2012, in recognition of her client service excellence and contributions to firm growth.

Lance is an engaged member of her community, serving as President and Board member of the Lititz-based Five Star Swim Club, Treasurer of the Warwick High School swim team parent’s organization and member of the Lititz Rec Center’s Aquatics Committee. Her previous community involvement includes leadership and key roles with Big Brothers Big Sisters of Lancaster County, the United Way of Lancaster County Finance Committee and the Lititz Library.

Lance received her B.S. in Accounting from the University of Richmond and her M.S. in Taxation from Villanova University. She lives in Lititz with her husband, Jay, and their four children, Jack, Anna, Oliver and Theo.

With its annual “Women of Influence” program, the Central Penn Business Journal honors 30 established female leaders in the midstate for their professional excellence, business accomplishments and community service. Lance and the rest of the 2017 honorees will receive their awards at a luncheon on June 26, 2017, at the Hilton Harrisburg. Click here for more information on the Women of Influence program.


Posted on: June 13th, 2017

Simplified Net Asset Classification and Reporting Ahead for Nonprofits

Simplified Net Asset Classification and Reporting Ahead for Nonprofits Major changes are ahead for the presentation of nonprofit financial statements, thanks to Accounting Standards Update (ASU) No. 2016-14, Presentation of Financial Statements of Not-for-Profit Entities. Unveiled in August 2016 by the Financial Accounting Standards Board (FASB), ASU 2016-14 streamlines and simplifies requirements related to several aspects of financial reporting to improve consistency among not-for-profit organizations. This update takes effect for fiscal years beginning after December 15, 2017.

In order to help nonprofit leaders digest this significant update and prepare for the changes, we have been breaking out components for closer examination. Earlier this year, we outlined changes related to investment returns and expense reporting. Now, we turn our focus to another area of this ASU: net asset classification.

Simplified net asset classifications

One of the most significant changes from this ASU is reducing the number of net asset classifications. Currently, nonprofits must present net assets in one of these three classes: Unrestricted Net Assets, Temporarily Restricted Net Assets or Permanently Restricted Net Assets.

The current classification structure presents a number of challenges for nonprofits and related third parties (like donors, partner organizations, federal regulators, etc.), including misunderstanding of terminology, confusion around the classes, deficiencies in transparency and more. There is also a lack of information regarding how restrictions imposed by donors, laws and governing boards affect an NFP’s liquidity and classes of net assets.

For these reasons and more, ASU 2016-14 set out to simplify the presentation of net assets, reducing the classes from three to two and changing the basis of classification to address restrictions imposed by donors. This change will reduce complexity and improve understanding of financial statements. The two classes of net assets under the new standard are Without Donor Restrictions and With Donor Restrictions.

Reporting requirements for net assets

Under the new classification structure, the donor-imposed restriction category includes what was previously reported as Permanently Restricted and Temporarily Restricted. Net assets without donor-imposed restrictions, including those that are designated by the board, are those previously reported as Unrestricted. See additional information below related to board-designated net assets.

The change in classification to net assets With Donor Restrictions does not eliminate current requirements to disclose the nature and amounts of different types of donor-imposed restrictions. Additionally, separate line items may be reported within net assets with donor restrictions or in notes to financial statements to distinguish between various types of donor-imposed restrictions, such as those expected to be maintained in perpetuity and those expected to be spent over time or for a particular purpose. This information must be disclosed on the year-end balance of net assets with donor restrictions.

Revised definition and disclosure for board-designated net assets

As mentioned above, net assets that are without donor-imposed restrictions may still be designated by the board. Under current standards, board-designated net assets may be earmarked for future programs, investment or other uses. This remains true with the implementation of ASU 2016-14. Additionally, this ASU allows governing boards to delegate designation decisions to internal management, with those designations also included in board-designated net assets.

Although board-designated net assets exist under current standards, the new ASU adds a requirement to disclose information about the amounts, purpose and type of any board designations included in net assets without donor restrictions.

Underwater Endowment Funds

More minor in scope than the net asset changes, ASU 2016-14 also adds a new entry to the FASB master glossary for “underwater endowment funds,” which it defines as “donor-restricted endowment funds for which the fair value of the fund at the reporting date is less than either the original gift amount required to be maintained by the donor or by law that extends donor restrictions.”

The new underwater endowment fund definition brings with it new disclosure requirements. Nonprofits must now report the entire balance of endowment fund within the With Donor Restrictions class of net assets and, for each period a statement of financial position is presented, outline the information below in the aggregate for all underwater endowment funds:

  • Fair values of the underwater endowment funds
  • Original endowment gift amount or level required to be maintained by donor stipulations or by law that extends donor restrictions
  • Amount of the deficiencies of the underwater endowment funds.

In addition to reporting the financial characteristics of the fund as described above, nonprofits must also disclose the following:

  • An interpretation of the nonprofit’s ability to spend from underwater endowment funds.
  • A description of policy, and any actions taken during the period, concerning appropriation from underwater endowment funds.

It is important to note, however, that this ASU does not contemplate the effects of Pennsylvania’s Act 141 for endowments. It is up to organizations to consider the effect on their financial statements and disclosures, if any.

While the above changes and others contained in ASU 2016-14 will streamline and improve financial reporting for nonprofits, it will be a significant departure from current practice that will require preparation and adjustment. Nonprofit leaders and their finance teams should familiarize themselves with these impending changes prior to the fiscal year the ASU takes effect and work internally or with external practitioners to plan for adoption.

RKL’s team of professionals focused on the nonprofit sector are available to help organizations better understand and prepare for these changes. Contact Douglas L. Berman, CPA, Not-for-Profit Industry Group Leader, with any questions or for more information.

Michelle J. Frye, CPA, Manager in RKL’s Audit Services GroupContributed by Michelle J. Frye, CPA, Manager in RKL’s Audit Services Group. Michelle has over 14 years of experience in public accounting and serves the assurance needs of a wide range of not-for-profit organizations.




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Posted on: June 6th, 2017

PCORI Fee Reminder: 2016 Fee Rates for Self-Insured Plans

PCORI Fee Reminder: 2016 Fee Rates for Self-Insured PlansUnder the Affordable Care Act, employers that sponsor applicable self-insured health and welfare plans are required to pay an excise tax known as the PCORI fee by July 31 each year using Form 720. The IRS does not grant companies extensions, so it is critical for companies with applicable plans to file their PCORI fee in a timely manner.

Sharing a name with the Patient-Centered Outcomes Research Institute it helps to fund, the PCORI fee was first applied to plan years ending on or after October 1, 2012, and will be applied annually through plan years ending October 1, 2019.

Who pays the PCORI fee?

In addition to those with applicable self-insured plans, employers whose plans offer health reimbursement arrangement (HRA) and certain flexible spending account (FSA) options are also charged the PCORI fee. Here is a more detailed breakdown of eligible plans as well as situations where the PCORI does not apply.

How much is the PCORI fee?

The PCORI fee equals the average number of lives covered by the plan during 2016 multiplied by the current fee rate. For 2016 plans, the fee rate is either $2.17 or $2.26 per average covered life, depending on when the plan year ends, as outlined below:

  • $2.17 for plan years that ended on a date between January 1 and September 30, 2016
  • $2.26 for plan years that ended on a date between October 1 and December 31, 2016

Companies can calculate the average number of lives in one of three ways permitted by the IRS: the actual count method, the snapshot method or the Form 5500 method.

The RKL team is here to help companies assess PCORI eligibility, determine the best method to calculate liability and submit timely payment to the IRS. Contact one of our local offices to get started.


Laura S. Rineer, CPAContributed by Laura S. Rineer, CPA, a supervisor in RKL’s Small Business Services Group. Laura specializes in helping small businesses from a wide variety of industries with financial statements, tax returns and related accounting and business needs. 




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