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Working Capital Blog

Posted on: July 18th, 2017

The Changing Landscape of Nursing Home Five-Star Ratings

The Changing Landscape of Nursing Home Five-Star RatingsNursing homes that participate in the federal Medicare or Medicaid programs are measured against a set of quality ratings, collectively referred to as the Five-Star Quality Rating. Established by the Center for Medicare & Medicaid Services (CMS) in December 2008, the Five-Star rating is an important tool for the facility itself to earn government reimbursements, insurance payments and patient referrals, and also for families researching nursing homes for their loved ones. There are changes on the horizon for how certain aspects of the Five-Star rating are reported and calculated, but first let’s recap the existing model.

Current rating system for nursing homes

Currently, there are three categories of measures that are rated individually on a scale of one to five stars, and then combined into an overall star rating for the facility.

  • Health inspections: Ratings in this category are drawn from the number, scope and severity of deficiencies reported in the three most recent annual state inspection and the most recent 36 months of complaint surveys. The fewer deficiencies, the higher the star rating for this category.
  • Nurse staffing: In this category, more Registered Nurse and overall nursing staff equals a higher star rating.
  • Quality measures: This third category was based, until 2016, on the results of 11 distinct measures of quality reported using a standardized form. An example of one of these 11 quality measures is the percentage of residents falling one or more times with major injury.

New measures added to rating system

In recent years, several U.S. Senators, including Robert P. Casey, Jr. of Pennsylvania, began to question the methodology of the Five-Star Quality Rating System. Since then, several changes have been implemented to make the rating process more vigorous and dependable.

CMS added five new measures to the quality measures rating in July 2016, three of which are based on hospital Medicare claims. This is significant because the measures rely on data instead of self-reported information from nursing homes.

Another change expected as we move through 2017 is how the nurse staffing rating is calculated. Instead of the current self-reporting system, CMS intends to instead base this staffing rating on actual payroll data for the nursing home. This will enhance the nurse staffing rating by reflecting the level of staffing throughout the year, rather than what is currently being captured only at the time of the annual health inspection.

Financial and operational impact to facilities

Taken together, these changes will help improve the accuracy and reliability of the Five-Star Quality Rating, which is important to families selecting a nursing home and for hospitals and physicians referring patients. Beyond the reputational aspect, there are serious financial and operational impacts as well. As Pennsylvania transitions to a Managed Care model with Medicaid payments administered by insurance companies, it is expected that nursing homes rated beneath an overall three-star rating may not be eligible to contract with the insurer. If this is the case, a number of nursing homes throughout the Commonwealth may face significant financial challenges.

Families interested in reviewing current Five-Star Quality Ratings can visit the Nursing Home Compare website, where they can search by name or location, compare up to three facilities side by side and drill down into reported deficiencies.

The role of the Five-Star Quality Rating System will play an increasingly significant role in the financial success and sustainability of nursing homes, as the cost of caring for our aging population grows and places more demands on governmental support systems. With ratings potentially dictating which facilities will survive and which could be at risk of shutting down or being forced to merge with another provider, the move toward empirical, claims-based data instead of self-reported data will provide more assurance of accuracy and instill more confidence into the families, health care partners and government agencies that use it.

James M. Spencer, CPA, MBA, Manager in RKL’s Senior Living Services Consulting GroupContributed by James M. Spencer, CPA, MBA, Manager in RKL’s Senior Living Services Consulting Group. Jamie specializes in the preparation of financial models and analysis, including projections and forecasts, financial feasibility studies and transaction due diligence.




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Posted on: July 6th, 2017

Employers: Is Your Health and Welfare Plan Compliant with ERISA?

Employers: Is Your Health and Welfare Plan Compliant with ERISA?Providing health and welfare benefits to employees is a powerful recruitment and retention tool, but it also involves many responsibilities and requirements for the employer. Employers that offer these benefits must comply with the full range of reporting deadlines and fiduciary obligations that accompany them.

An often overlooked or misunderstood aspect of health and welfare benefit reporting is fiduciary responsibilities required by the federal Employee Retirement Income Security Act (ERISA). Missing these documentation and reporting requirements or failing to carry out these responsibilities can leave an employer at risk for liability, fine or penalty. Below, we provide an overview of just some of the fiduciary and filing requirements for health and welfare plans under ERISA.

Examples of Health and Welfare Benefit Plans Subject to ERISA

Most employers generally understand how ERISA impacts the retirement plans they offer to employees, but many are unaware that ERISA also applies to health and welfare benefit plans. Just like employer-sponsored retirement plans, ERISA sets minimum reporting and disclosure standards for health and welfare benefit plans, whether they are insured or self-insured.

Examples of health and welfare benefit plans that are subject to ERISA include, but are not limited to:

  • Medical and prescription drug plans
  • Health Reimbursement Arrangements (HRAs) and health Flexible Spending Accounts (FSAs)
  • Dental and vision plans
  • Disability plans
  • Life and accidental death and dismemberment (AD&D) plans
  • Severance pay plans

ERISA Requirements for Employer-Sponsored Health and Welfare Plans

Exceptions to ERISA are limited, so it is important to be aware of ERISA reporting and disclosure requirements. Outlined below are just some of the documentation and reporting requirements:

Plan Document and Summary Plan Description

Employers have the option of designing their benefits program so that each insurance contract or type of benefit is considered a separate plan or grouping several insurance contracts or benefits together under one plan. Regardless of plan design or size, under ERISA, each separate health and welfare benefit plan must have a Plan Document in writing. The Plan Document supplements the insurance contract(s) to meet ERISA disclosure requirements. This document must identify and describe the plan name, plan sponsor, plan administrator, benefit(s), eligibility, benefit funding and administration procedures for the plan, among other details.

ERISA also requires that employers provide a Summary Plan Description (SPD) to participants and beneficiaries that explains in plain language the plan’s basic information and features. ERISA requires the SPD to be distributed to participants automatically within 90 days of becoming covered by the plan. ERISA also requires an updated SPD to be distributed within a certain number of years based on if and when changes are made or the plan is amended.

It is important to note that insurance policies or Certificates of Insurance do not meet ERISA standards and are not permitted to be submitted in place of Plan Documents and Summary Plan Descriptions.

Annual Form 5500 and Summary Annual Report

Any health and welfare benefit plan, whether it is insured or self-insured, that covers 100 or more participants at the beginning of the plan year must file Form 5500 annually with the U.S. Department of Labor. Form 5500 is due by the last day of the seventh calendar month after the plan year end date. For plans with a calendar year end date, the form is due by July 31.

Since Form 5500 is required to be filed for each plan that meets the filing requirements, it is important for employers to have proper plan documentation identifying its plan(s), as explained above. If proper plan documentation is not in place, each insurance contract or type of benefit is considered a separate plan by default and subject to separate Form 5500 reporting.

In a previous post, we took a closer look at different types of plans and the filing and audit requirements that go along with these categorizations.

Employers should also be aware that beyond the Form 5500 requirement, self-insured medical plans (including HRA arrangements and certain FSA arrangements) have additional IRS filing requirements under the Affordable Care Act.

The Summary Annual Report (SAR) provides a narrative recap of the Form 5500. The SAR must be distributed annually to participants and beneficiaries within nine months after the end of the plan year or two months after the Form 5500 filing.

RKL’s team of small business and tax advisors is available to help employers file the required Form 5500 and prepare the Summary Annual Report or answer questions related to ERISA fiduciary responsibilities. Contact your RKL professional or one of our local offices for more information on this and other financial topics impacting employers.

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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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 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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Posted on: May 16th, 2017

ESOP 101: What is an ESOP and Is It Right for Your Business Succession Plan?

ESOPs 101: What is an ESOP and Is It Right for Your Business Succession Plan?There are more than 6,700 employee stock ownership plans (ESOPs) across the country, which cover 14 million participants and hold assets of more than $1.3 trillion, according to the U.S. Department of Labor’s most recently available data.

Despite these statistics, however, many family owned or privately held business owners have no direct experience with an ESOP and only a basic understanding of how one could benefit their companies. Given this limited awareness of ESOPs, we rounded up some of the most common questions about the structure, details and advantages of this business transition and employee benefit tool.

What is an ESOP?

An Employee Stock Ownership Plan, or ESOP, is a qualified defined contribution employee benefit plan authorized under the Employee Retirement Income Security Act (ERISA).

An ESOP is similar to a profit-sharing plan, but a key difference is that the ESOP invests primarily in the stock of the sponsoring employer. It can be a beneficial transition strategy to help exiting owners achieve their retirement goals and give back to loyal employees.

What kind of company is right for an ESOP?

ESOPs are used across a variety of industries and business types, but there are some overarching characteristics of companies that implement them. While there is no minimum size or annual revenue requirement to set up an ESOP, companies with approximately 20 or more employees and annual revenues of at least $10 million generally fare best with this model.

The key to ESOP success is spreading out the formation and annual administration costs over a broad employee base. Reasonably consistent profitability, the ability to leverage the business with debt and a strong management team are other important factors.

What are the tax advantages of an ESOP exit strategy?

An Employee Stock Ownership Plan can provide a ready market for the shares of an exiting owner of a privately held company. While limited by adequate consideration rules (the ESOP can pay no more than fair market value), ESOPs have tax advantages that benefit the selling shareholder and the corporation.

For instance, the owner of a C Corporation can defer capital gains taxes on the sale indefinitely provided that they elect and meet the provisions of section 1042 of the Internal Revenue Code. While S Corporations do not have this benefit, they can essentially operate income tax free if the ESOP owns 100 percent of the stock. Consult your tax advisor for guidance related to your particular tax situation.

How much stock can an ESOP own?

An ESOP may own a portion or all of the stock in a company. Partial ownership by an ESOP is a great option for family owned businesses that wish to retain family control but also want to reward and build additional incentives for an employee base considered to be part of the family.

Do the employees actually own the company?

No, the ESOP is structured as a trust, which has governance requirements. The employees are beneficiaries of that trust. A trustee administers the plan and makes the majority of shareholder decisions; however, major corporate actions have pass-through voting rights to participants.

Are there other benefits of using an ESOP?

Beyond the financial advantages an ESOP offers, there are also cultural and motivational benefits. Forming an ESOP allows the company’s ownership to reward or invest in its employees. Giving employees an ownership stake ties them directly to the company’s overall performance, which is often a motivating factor to improve their personal job performance.

Employee Stock Ownership Plans also provide stability to the other stakeholders of a company by limiting the transition disruption to customers, suppliers and the community in which the business is located.

For more information on ESOPs or to decipher if it is the right tool for your family owned or privately held business, contact me at or 610.376.1595.

Ryan P. Hurst, ASA, Manager in RKL's Business Consulting Services GroupContributed by Ryan P. Hurst, ASA, Manager in RKL’s Business Consulting Services Group. Ryan serves the valuation, investment banking and consulting needs of clients in a wide variety of industries. His expertise includes performing valuations for gifting, estate planning and administration, employee stock ownership plans (ESOPs), buying or selling a business, buy/sell agreements, fair value accounting and GAAP reporting, litigation support for shareholder disputes and strategic alternatives analyses.




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Posted on: May 9th, 2017

The Nonprofit’s Guide to Tax-Smart International Giving

The Nonprofit’s Guide to Tax-Smart International GivingIn the course of philanthropic business or collaborative efforts, nonprofits based in the U.S. may wind up donating funds to a foreign tax-exempt organization. Transnational donations are, by default, subject to a 30 percent withholding in accordance with the Foreign Account Tax Compliance Act (FATCA). Though FATCA was enacted in 2010, the IRS in recent years has increased scrutiny of any foreign transactions. Nonprofits that give grants or donations to foreign charities must follow specific guidelines and maintain thorough documentation in order to avoid the 30 percent levy.

Proof needed for exemption

Through proper documentation, nonprofits can avoid FATCA’s withholding penalty via IRS Form W-8BEN-E by demonstrating that the foreign organization qualifies to be supported by a domestic nonprofit. Here are some important points to keep in mind about completing this form.

  • The foreign organization receiving the funds completes Form W-8BEN-E and provides it to the donating U.S. nonprofit, which keeps it on file.
  • Much like the Forms W-4 employers retain for each employee, Form W-8BEN-E is not filed with the IRS.
  • Once completed, the Form W-8BEN-E is valued for three years.
  • The IRS requires that organizations include the following with the signed Form W-8BEN-E:
    • IRS determination letter of 501(c)3 status if the foreign group was based in the U.S., or
    • A copy of an opinion from U.S. counsel certifying that the recipient of the donation is a section 501(c)3 organization (without regard to whether the payee is a foreign private foundation).
      • Tip: Providing copies of bylaws, articles of incorporation, copy of the country’s exemption status/law to support the confirmations listed above will help form an opinion to accompany the form.

Assistance Completing Form W-8BEN-E

Substantiating donations to fellow tax exempt organizations is always important for nonprofits, but with recent IRS focus on foreign transactions, it is particularly important that the proper forms are completed and documentation maintained. RKL has a team of tax professionals focused exclusively on the needs of nonprofits, and they are ready to answer questions about the process or help organizations complete Form W-8BEN-E and gather the correct documentation. Contact one of our local offices for guidance or assistance.


Stephanie E. Kane, CPAContributed by Stephanie E. Kane, CPA, Supervisor in RKL’s Tax Services Group. Her client responsibilities include serving clients in a wide variety of industries with a focus on not-for-profit entities.





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Posted on: May 2nd, 2017

4 Money Musts for Recent College Grads

RKL Wealth Management offers four tips you can share with the recent college graduates in your life to help them start off on the right financial foot. It’s college graduation season, which means a new crop of young adults will transition from the dorm room to the conference room. This new phase of life offers many exciting opportunities, but it also brings new financial responsibilities like student loan repayment, taxes and more. As new grads navigate the uncharted waters of adulthood, here are some tips to start off on the right foot and pave the way for a successful financial future.

Build a budget and track expenses

As students, most young adults lived pretty frugally. As recent grads, keeping that frugal mindset is a huge advantage. This doesn’t mean sticking to the ramen noodle diet, but it does mean creating a budget and tracking expenses. Those new paychecks may be tempting to spend, but living within your means and spending money intentionally sets the financial foundation for young adults to tackle other financial challenges, like student debt. There are a number of budgeting and expense tracking apps that can help with this process.

Start saving for retirement

For recent grads who consider making weekend plans a long-term commitment, retirement can definitely seem like a remote and distant concept. Thanks to the power of compounding interest, however, saving early and often pays off exponentially down the line. Many employers auto-enroll their employees in a retirement plan, but if yours does not, make sure to sign up on your own. When setting a contribution amount, try to reach any employer match limits. Otherwise, you’re leaving free money on the table, so it is definitely worth skipping a few dinners with friends to find room in your budget. Most importantly, avoid taking this money out early and use caution if you are considering it, because it could have major tax implications and can hurt future investment potential.

Set up an emergency fund

Despite the best budgeting intentions, unexpected or emergency expenses do happen. Young adults can prepare to absorb these financial blows by setting up an emergency fund. This should be a dedicated item in your budget, and be sure to keep this money separate from other savings or checking accounts so it is not spent until absolutely necessary. The ideal emergency fund should be approximately six times your monthly income, but for now, starting small can save your bank account or credit card from the aftermath of car troubles or unexpectedly high medical bills.

 Manage debt wisely

Few students make it through higher education without student debt, and those bills come due not long after graduation. Income-based repayment, which links monthly loan payments to income, not total debt, is one way to manage debt payments. Young adults with numerous loans should explore consolidation for convenience and potentially lower payments. With student loan obligations hanging over them, recent grads should proceed with caution when it comes to taking on other consumer debt. It’s all too easy to rack up credit card debt furnishing a new apartment or adding to your debt load with a loan for a new car. Stick to your budget and develop a plan to set aside the funds for these purchases.

The transition from college to the working world can be daunting, but following these steps can help recent grads form good financial habits that will pay dividends throughout their lifetimes.

Visit to learn about all the ways the financial planning team at RKL Wealth Management helps individuals and families invest achieve their unique goals.


Thomas D. Reardon, CFP®, Wealth Advisor for RKL Wealth ManagementContributed by Thomas D. Reardon, CFP®, Wealth Advisor with RKL Wealth Management. Tom is responsible for creating and implementing customized financial plans for clients and their families. He specializes in helping clients identify and prioritize their goals for retirement, educational funding and estate planning.




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Posted on: April 18th, 2017

Can PA Tax Amnesty Program Benefit You or Your Business?

Can PA Tax Amnesty Program Benefit You or Your Business? Pennsylvania’s budget for Fiscal Year 2016-17 included the chance for delinquent or non-filers to come into state tax compliance through a 60-day amnesty period. Last fall, the Pennsylvania Department of Revenue (DOR) set the official dates and guidelines for the 2017 Tax Amnesty Program, which begins Friday, April 21 and concludes Monday, June 19.

As the start date for the Commonwealth’s 2017 Tax Amnesty Program nears, we rounded up some key questions taxpayers may have about the process and highlight important points to keep in mind.

How will the PA Tax Amnesty Program work?

Starting on April 21, businesses and individuals that have delinquent tax liabilities as of December 31, 2015, may come into compliance with DOR until June 19. Eligible program participants can file back taxes with penalties waived and pay only half of the interest that has accrued over time. This could represent a significant reduction in interest charges for certain taxpayers.

What tax types are eligible for amnesty?

According to program guidelines, all taxes owed to the Commonwealth administered by DOR – whether it is gross receipts, corporate net income or sales and use – are eligible for the Amnesty Program. DOR notes that taxes, interest and penalties collected under the International Fuel Tax Agreement owed to other states or provinces are not eligible for the Amnesty Program. The program fact sheet issued last year by DOR provides a full listing of eligible tax types.

Who can participate?

Business and individual taxpayers that have not paid or underpaid state taxes as of December 31, 2015, are eligible for amnesty during this time period. This also includes taxpayers that recognize an error in reporting or payment on a previously filed return and want to correct it. For taxpayers currently appealing a tax liability, this amount may be included in the 2017 Tax Amnesty Program, but keep in mind that the administrative or judicial appeal will be withdrawn before amnesty is granted by DOR.

Keep in mind, if delinquent or unpaid taxes after December 31, 2015, exist, they must be filed before admittance to the 2017 Amnesty Program is granted, even though these delinquencies are not eligible for the preferential treatment.

Who cannot participate?

Individual and business taxpayers who participated in the previous 2010 tax amnesty program are not eligible to take part in the 2017 program. Taxpayers that are currently under investigation, currently being prosecuted or have been convicted for violating any tax law (local, state or federal) are also excluded from participation. Other exclusions include taxpayers in bankruptcy (unless permission is granted by the Bankruptcy Court) and those with an existing voluntary disclosure agreement with DOR already covering tax liability during the eligibility period.

What happens to eligible taxpayers that do not enroll?

This program is a limited time opportunity created by the General Assembly and offered through DOR with the intent of increasing compliance with and payment of a wide variety of state taxes. At the conclusion of this tax amnesty period, DOR will impose an additional five percent penalty on eligible taxpayers that did not enter the program.

The only situations in which eligible yet nonparticipating taxpayers will be spared the additional DOR penalty are:

  • Currently in bankruptcy protection
  • Have proof of an active deferred payment plan
  • Timely administrative or judicial appeal covers the state tax liability

How can taxpayers apply?

According to the DOR, between April 21 and June 19, 2017, taxpayers must do three things to apply for the program: file an amnesty application, file all necessary returns and pay all back taxes and interest by the close of the amnesty program on June 19.

Need to determine if you are eligible for amnesty? Want to calculate anticipated penalty and interest payments? Seeking assistance to enroll in the program? RKL’s state and local tax team is here to help. Contact me at or 717.525.7447.


Jason C. Skrinak, CPAContributed by Jason C. Skrinak, CPA, State and Local Taxes (SALT) Practice Leader for RKL’s Tax Services Group. Highly regarded throughout the region for his deep knowledge and expertise in SALT consulting, Jason has significant experience representing taxpayers before Pennsylvania’s Board of Appeals and Board of Finance and Revenue.



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Posted on: April 11th, 2017

Ongoing ERISA Requirements for Employers Offering Retirement Plans

Ongoing ERISA Requirements for Employers Offering Retirement PlansWhether it is a defined benefit plan or a 401(k) account, retirement plans are an important part of the benefits package a company uses to attract and retain top talent. Managing a plan that helps employees save for their future is a significant responsibility, so it is important that employers are compliant with the rules that govern the administration of retirement plans.

The Employee Retirement Income Security Act (ERISA) is a key federal provision outlining the minimum standards a retirement plan must meet. To that end, ERISA assigns certain responsibilities to plan managers and administrators (also known as fiduciaries). Failure to comply with these responsibilities could result in penalties and fines against an employer.

Fiduciary Responsibilities Under ERISA

In the interest of protecting employees and their nest eggs, ERISA outlines a number of requirements for fiduciaries, including:

  • Administering the plan solely in the interest of plan participants and their beneficiaries with the exclusive purpose of providing benefits to them;
  • Acting in a prudent manner;
  • Diversifying plan investments to minimize risk;
  • Following plan documents, which must also be ERISA-compliant;
  • Avoiding conflicts of interest; and
  • Paying only reasonable plan expenses.

Drilling down into these responsibilities, fiduciaries may find that compliance requires expertise in certain areas like investing and financial management. Fiduciaries that do not have such expertise in-house are permitted under ERISA to hire an external party to build and manage a diversified investment portfolio. It is important that all actions taken by the fiduciary related to investment management, record-keeping and use of third-party vendors are well-documented and justified to avoid conflicts of interest and demonstrate ERISA compliance.

The document in which these terms and conditions are contained serves as a foundation for retirement plan operations. In order to adhere to ERISA’s requirement to follow the plan document, employers should regularly review and update as needed to keep it current and compliant.

Ways to Reduce Fiduciary Liability

A thorough and updated plan document is not only a responsibility of fiduciaries, it can also be a strong defense against potential liabilities related to investment losses or imprudent actions. There are other ways employers can reduce personal liability to restore any plan losses, like increasing participant control over investment choices or outsourcing complete or selected fiduciary responsibility.

Most common for 401(k)s or profit-sharing plans, setting up a plan to give the participant more control over their personal investment portfolio will limit the fiduciary’s liability for losses resulting from those decisions. Keep in mind, however, that under this model the fiduciary remains responsible for selecting and monitoring the investment options from which plan participants may choose.

When a fiduciary outsources all or certain functions, it is accountable for the hiring decision and selection of the third-party manager. For example, if a fiduciary selects an investment manager, they are only responsible for that choice, not the investment decisions the manager goes on to make. In this case, the ongoing responsibility of the fiduciary after initial selection would be routine monitoring to ensure that the manager is acting in a prudent manner with regard to the plan’s investments. In addition, fiduciaries must ensure that every person who handles funds or other property of an employee benefit plan is bonded as required under ERISA, unless covered under one of the exemptions.  A fidelity bond is a type of insurance to protect the retirement plan and its participants from losses incurred by dishonest or fraudulent activity of those who handle funds on behalf of the plan.

It is critical that employers understand their fiduciary responsibilities and potential liabilities under ERISA, both to protect themselves from fines and penalties and to preserve the integrity and stability of their company retirement plans. RKL has a team of professionals dedicated to conducting employee benefit plan audits and helping employers maintain compliance and improve plan administration. Contact one of our local offices today for help determining or improving your plan’s ERISA compliance.

Jill E. Gilbert, CPA, CGMA, Partner in RKL's Audit Services GroupContributed by Jill E. Gilbert, CPA, CGMA, Partner in RKL’s Audit Services Group. Jill serves a broad range of industries including governmental agencies and not-for-profit organizations. She also specializes in employee benefit plan audits.




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