[12] full disclosure - rehmann€¦ · thinking. of course, our resident book worm has some great...

BWDA RehmAnn PublicAtion Vol. 11 | iSSue 2 | SummeR/FAll 2011

Business Wisdom Delivered

Rehmann Retirement Builders team leaders

Retirement PlansFor the unique needs of medical Practices

[14]

Are Your Plans IN FOCUS?

Estate Planning and the use of a Power of Attorney

[16]

[12]

Full Disclosure Retirement Plan Participant Fees

days

1,500+ artists

Enjoy Fun, Food

Join us for an

event

42 statesfrom

competing for

the World’s largest

prize for art.

And YOU can help

choose the winners!

36 countriesand

& Great Art

Grand RapidsArt Museum101 Monroe Center • Grand Rapids, MI 49503

Take a break from the action and stop in for refreshments. We’ll have maps to help you locate all the entries and a kiosk so you can vote for your favorite.

RSVP by September 16 to Julie Malcolm: [email protected]

Friday, September 23, 2011 • 4pm – 8pm

Saturday, October 1, 2011 • 1pm – 5pm

Saturday, October 8, 2011 • 1pm – 5pm

*ArtPrize is a trademark of ArtPrize Grand Rapids LLC in the United States

SM

ShARPening YouR

FOCUS

A letter From The Publisher

have you ever stumbled across a stack of old photos? i mean actual photographs shot on film – not videos or digital images on your Smartphone. these are the kind of photographs you find in the desk drawer and get distracted looking through when you’re supposed to be cleaning the den.

the nice thing about photographs is that they capture what is important to you. they often help us remember something or someone or someplace important enough that we were compelled to capture it for posterity. Photographs focus on what’s important because the truth is, sometimes we lose our focus.

Planning for retirement is one of those things that sometimes gets forgotten. With work, family and all the day-to-day things we have to handle, often the last thing we think about is planning for the future. but that’s why they call it PlAnning. it’s important — no essential — to focus on our retirement. in this issue of bWD, we focus in on the importance of retirement planning. our Rehmann Retirement builder (RRb) group has some great information on plan participant fee disclosure regulations. And we focus on the unique retirement plan needs of medical practices.

We also have great information on making charitable contributions from an iRA and some discussion on whether the addition of a Power of Attorney is right for your estate Plan. We’ve loaded our “nuggets of Wisdom” section with “retirement” facts and to have a little fun, we’ve included a “Where are you?” page to get you thinking. of course, our resident book worm has some great reading suggestions as well.

With everything that fills our busy lives, it’s easy to lose sight of our goals; but making and sticking to a plan can make them a bit easier to see. here’s hoping we can help you get a clearer picture of where you’re headed.

Sincerely,

Steven D. Kelly, cPA

chairman & ceo

Carol Wright, CPA

Is a Tax Principal with Rehmann. Carol has more than 30 years of industry experience in both public and private accounting, serving a wide range of middle-market businesses, including professional services, real estate, manufacturing and distribution, as well as non-profit organizations.

Ryan Sullivan, cfp®, aifa®

As the Director of Retirement Plan Administration for

Rehmann Retirement Builders, Ryan works

extensively with business owners and their employees, in an effort to establish and maintain the most effective

group retirement plan solutions possible.

Tony DiVito, ms, cpa, cfe

Tony’s professional efforts have been focused on small

business consulting with an emphasis on software

support, accounting, fraud investigation, and

tax preparation. Tony is a Certified Fraud Examiner and a Certified Advanced

QuickBooks ProAdvisor.

Kirk Balcom, cia cisa

As a Certified Internal Auditor and a Certified Information

Systems Auditor, Kirk is very experienced in the

use of the Committee of Sponsoring Organizations

(COSO) Internal Control-Integrated Framework to

help SEC clients and other organizations assess and

enhance their internal control systems.

Erickson Braund, cfp®, crpc®

A financial advisor with Rehmann Financial, Eric

views financial planning as an ongoing and constantly

evolving process because as goals and situations change,

plans must be adapted to meet those challenges.

Gerald Wernette, cpa, cebs, aifa®

Is a Principal and the Director of Rehmann Retirement Builders Consulting Services. In 2010, Gerald was voted by the DCP Institute as one of 300 Most Influential Advisors in the Defined Contribution Market. This year, Gerald was named one of the 60 Most Influential Advisors in the Defined Contribution Market by The 401k Wire.

James Schafer, mpa

Is the Managing Principal of Rehmann’s Healthcare Management Advisors. With more than twenty seven years in the healthcare industry, he provides consulting services to independent physicians, hospital-based practices, ambulatory surgical centers, mental health organizations and Native American tribes.

notable Contributors *certified Financial board of Standards inc. owns the certification marks cFP®, ceRtiFieD FinAnciAl PlAnneR™ and federally registered cFP in the u.S., which it awards to individuals who successfully complete cFP board’s initial and ongoing certification requirements.

17

12

6IN THIS ISSUE

BWDA RehmAnn PublicAtion Vol. 11 | iSSue 2 | SummeR/FAll 2011

Business Wisdom Delivered

BWD Staff:Publisher: Steve KellyAssistant Publisher: mitchell Renomanaging editor: nancy Adams Associate editor: casee WilloughbyWeb editor: claudia brim creative Director: ingenuity marketing groupcover Photography: mitch Ranger Photography

Contributors:nancy Adams Kirk balcom erickson braundclaudia brim Jim carpp tony DiVito James Schafer Ryan Sullivan gerald Wernette casee Willoughby carol Wright

Subscriptions & Circulation:madelyn manleySend inquiries to: Rehmann – bWD5750 new King Street, Suite 200troy, mi 48098248.952.5000 | www.rehmann.com

[06][10][12][14][16][17][18][20][21][22]

Nuggets Of Wisdom: Bites of business knowledge

EHR: A healthy change in the system

Full Disclosure: retirement plan participant fees

Retirement Plans for Medical Practices

Power of Attorney

Charitable Contributions From IRAs

Service Organizations Controls Reports

Funding Small Business: SBA loan programs

Carpp’s Book Corner

You Are Here

20

nuggets of Wisdom

$6,306Average retirement account of Americans under the age of 35

$43,747Average retirement account of Americans between the ages of 45 and 54

Retirement By the Numbers

67 – Men’s average age for retirement

75.7 years – Life expectancy of American men80.8 years –

Life expectancy of American women

2 – Projected number of workers paying into one retiree’s Social Security benefits in 2025

16 – Number of workers paying into one retiree’s Social Security benefits in 1950

57 Percentage of

households who report having at

least one retirement account in the home.

10,000 Baby Boomers will reach

the age of 65 each day for the next 19 years

35 – Percentage of Americans over the age of 65 relying solely on Social Security

51 – Percentage that the average, retired American will have to reduce their standard of living by to avoid outliving their financial assets. (2009 E&Y study)

80 – Percentage of people between the ages of 30 and 54 who believe they won’t have enough money put away for retirement

$2,000 Amount of money that approximately 1/2 of all American workers report having in their retirement fund

7Summer/Fall 2011 | in Focus BWD

Based on factors such as cost of living and

tax rates on pensions and social security,

combined with access to recreation, climate

and culture, AARP Magazine named the

following cities their Top 10 Most Affordable

Places to Retire.

Taking into consideration cost of

living, crime rates, climate and

life expectancy, MoneyRates.com

has determined the following Ten

Worst States for Retirement.

1.

2. Portland, Maine

3. Gainesville, Georgia

4. Wenatchee, Washington

5. Tulsa, Oklahoma

6. Cheyenne, Wyoming

7. Columbus, Indiana

8. Harrisburg, Pennsylvania

9. Ithaca, New York

10. Midland, Texas

10. Arkansas9. Missouri8. North Carolina7. Ohio6. Tennessee5. Maryland4. South Carolina3. Alaska2. Michigan1. Nevada

Worst States for Retirement

Retirement: It’s nice to get out of the rat race, but you have to learn to get along with less cheese. – Gene Perret.“ ”QUOTE

# 1Winchester, Virginia Most Affordable

Cities to Retire

nuggets of Wisdom

BWD

ONLINEIn May of this year, the Michigan Business Tax (MBT) was repealed. The new law includes many changes that affect both businesses and individuals, including a new tax levied on businesses organized as traditional corporations (a C-corporation) under Federal tax rules. The law makes substantial revisions to the income tax levied on individuals by amending the Income Tax Act, eliminating numerous credits, deductions and exemptions, as well as changing future tax rates.

So what does it all mean to you? Visit our website at rehmann.com/MI-CIT to find out.

Despite the cost, Americans are expected to

travel more this year. in fact, more travelers

are expected to hit the road than at any time

since the great Depression. According to

the American Automobile Association (AAA):

•34.9 million Americans will travel more than 50 miles from home

•1.1 million people will travel in michigan

•memorial Weekend air travel was up 11.5 percent from last year (2.93 million people)

•91 percent of travelers over July 4th weekend traveled by car, 6 percent by air and 3 percent by bus or train

Associate Spotlight Dan Roberts When Rehmann Corporate Investigative Services (CIS) was looking to develop governmental investigations, they knew only the very best candidate would do. After all, when your staff already includes former FBI, U.S. Secret Service, intelligence service and state and local law enforcement professionals, how do you add to your line-up? You have to reach for the top.

In August, Dan Roberts joined Rehmann CIS’ Troy office as Director of Governmental Investigations and Compliance. Dan returned home to Michigan after 24 years of distinguished service with the Federal Bureau of Investigation, most recently as the Assistant Director of the Criminal Justice Information Services Division.

“I am very excited to have Dan as part of our team. The area of governmental investigations is an opportunity for our firm,” remarked Greg Suhajda, President Rehmann CIS. “And to be a leader in the industry, we need the top talent.”

Dan’s notable career includes high profile positions as Assistant Special Agent in Charge (ASAC) of the Salt Lake City Division’s Violent Crime, Organized Crime/Drug, Civil Rights and White Collar Crime/Public Corruption Programs and as FBI commander of the 2002 Winter Olympic Games. He was promoted in May 2003 to Special Assistant in the Office of the Deputy Director, where he provided oversight for a myriad of research projects and special assignments. In June 2004, Roberts was appointed as Special Agent in Charge of the FBI’s Detroit Field Office, directing all FBI investigations in the state of Michigan.

Prior to his FBI service, Dan served as a patrolman with the Franklin, Michigan Police Department and was a member of the Oak Park, Michigan Police Department.

ON THE ROAD (and in the Air)

AGAIN

In July, Michigan Governor Rick Snyder signed legislation into law allowing more flexibility for Michigan’s movie and film incentive program. It gives the state’s Film Office the ability to negotiate the size of the credits it offers to movie, television and video game producers. The incentives offered can be lower than the 42 percent subsidy now provided automatically when a project is approved for credits.

The state’s movie and film credit program will be capped at $25 million in the fiscal year that starts in October. The state’s current incentive program is not capped and offers some of the most generous credits in the nation.

WHAT FEES? Do you know what you’re paying?Retirement plan participants should have full disclosure of all fees they are paying on their plans so they have the information needed to make the most appropriate decisions for their objectives. At least that’s the proposed intent of the new fee disclosure regulation 404(a)(5). in theory, this transition full fee and expense transparency should be welcome with open arms by plan participants and beneficiaries. unfortunately, the upcoming disclosures may come as a shock to many participants.

•earlier this year, AARP* conducted a survey of retirement plan participants and found the following:

•71 percent of respondents thought they did not pay any fees in their retirement plan

•6 percent didn’t know if they paid fees or not

•81 percent felt fees were important in making investment decisions

•48 percent responded that they would speak to their employer if they found their plan fees to be higher than average

*401(k) Participants’ Awareness and Understanding of Fees (February 2011), AARP Research and Strategic Analysis; www.aarp.org/research

Alternatives in Real Estate

Financing

Five-yearcommercialmortgagesoftenrequirerefinancingattheendofthatperiod.Sowhatcanyoudoifthecurrentvalueofyourpropertyhasfallenbelowtheloanlevelandthelenderwon’tsimplyrenewit?Herearesomealternatives:

• Providemoreequitytothecurrentlendertogettheratiooftheloantothevalueofthepropertytoalevelacceptabletothebank

• Findanothertraditionallender.Thisoptionmayalsorequireinvestmentofadditionalcashtoincreasetheownerequityintheproperty

• TurntotheSmallBusinessAdministration—theSBAiscurrentlyacceptingapplicationsforcertaincommercialpropertieswithballoonpaymentsduebeforetheendof2012.ThisprogramisavailableuntilSeptember27th,2012

• Privateinvestors

• Fee-basedloanfacilitators

• Localeconomicdevelopmentfunds

• Friendsandfamily

Thesecanbeemotionallychargedissuessoworkingwithyourtrustedbusinessadvisorisrecommended.

by Carol Wright, CPA

KEEP ROLLING FILM!!!



The

Elec

troni

c

Heal

tH R

ecoR

d

a healthy change in the system By James Schafer, MPA


you have visited your physician recently, you may have noticed some changes. Perhaps you had the opportunity to register at a kiosk as if checking in for a flight. or

the receptionist may have scanned your insurance card and driver’s license in an optical card reader. if so, your physician has implemented an electronic health record!

in 2004, President george W. bush introduced an initiative to encourage physicians to begin using electronic communication capabilities for prescribing medications and keeping patient health records. the initiative was relatively successful with larger group practices and some hospital-based practices. but a survey by the center for Disease control (cDc) indicated that the adoption rate for smaller practices was less than ten percent.

in 2009, as part of the American Recovery and Reinvestment Act, President barrack obama provided financial incentives for the adoption of electronic health records. this program provides non-hospital based physician practices with incentives of up to $44,000 from medicare or $64,000 from medicaid if they adopt the electronic health record. incentives have already begun to flow and a significant number of physicians are implementing systems this year.

How will this benefit patients?implementation of the electronic health record will improve patient care. in the future health information will be transmitted easily and in a timely manner between the primary care physician, the specialists who provide specialty care and the hospital where the care is provided. if a patient is in an emergent situation, the hospital physician will be able to access key information regarding health history and make a more informed decision for treatment.

there will be less duplication of diagnostic tests, (i.e., less uncomfortable tests and pokes with a needle). We can all look forward to that. think of how many times in the past you had blood work done but it did not get to the next care giver you

were to see. they retested you with the same tests, an inconvenience to you and an added cost to the healthcare system. electronic health records will minimize these incidents.

electronic prescribing will make it more convenient to pick up the prescription at the drug store. the order will be sent while the patient is still in the exam room and be ready at the pharmacy when they arrive. not only will this provide convenience, it will improve health safety. Various studies have indicated that between 2.4 percent and 3.6 percent of prescriptions are filled incorrectly. healthcare providers will also know immediately if a similar medication was prescribed by a different physician or if the medication to be prescribed will interact with other medications in a harmful way. ninety-five percent of all pharmacies are already on a common clearinghouse system and able to share prescribing information.

but how secure and private will records be? All manufactures of the electronic health record are required to be certified and meet hiPAA requirements regarding confidentiality. Records will be encrypted as they are transmitted from provider to provider. Also, the patient will have the right to receive an electronic copy of their health record. instead of taking a file of papers along to a winter getaway, patients can take a “thumb drive” and have all the information necessary to get the necessary care wherever they are.

How will this benefit purchasers?insurance subscribers or employers pay a portion of healthcare cost. taxpayers help fund medicare. it is anticipated that electronic health records offer significant opportunities for reduction of healthcare costs.

how?•Lessduplicationoftestingand

diagnosticservices– a major contributor to costs

•Moreefficientpractices – requiring less staff and office space to organize and maintain large medical records areas. growth is possible without adding additional staff or space

•Easiermoreefficientsharingofdetailedinformationandconsultationsbetweenproviders. the cost of a specialist consult is far less than the cost of many tests that are ordered to diagnose a problem

• Improvedaccuracyofbillingforservices – information in one place in electronic format

•Lesspaperworkandgreaterefficiencyforinsurancecompaniestoprocessclaimsandpayproviders

Yes, healthcare visits will change. We will all get used to having a computer or electronic tablet in place of a pen and papers. though it might feel a bit uncomfortable at first, with the adoption of the electronic health record the quality and efficiency of care will improve. And that will result in a better outcome and an overall experience with the healthcare system.

IF


D i s c l o s u r eRetirement Plan Participant Fees By Ryan H. Sullivan CFP®, AIFA®

F U L L

the United States department of labor (dol) has outlined regulations that require retirement plan sponsors to disclose plan-related and investment fee information to plan participants. these regulations are scheduled to become effective for plan years starting on or after november 1, 2011. though the plan participant disclosures will specifically impact the responsibility of retirement plan sponsors, to date, it appears that more attention is being paid to the Dol plan provider fee disclosure regulation (408(b)(2)). Section 404(a)(5) will hold plan sponsors (or someone they designate to act on their behalf) liable for providing fee and expense information on plan, account and investment levels. this information must be provided to plan participants, beneficiaries and eligible non-participating employees.

Who is affected?the new regulation covers all participant-directed individual account plans. it does not include defined benefit plans, governmental plans, non-eRiSA 403(b) plans, SePs, SimPle iRAs or non-qualified plans.

the information that is required to be disclosed includes — but is not limited to — the following:Plan-relatedinformationeffectingthemanagementofanindividualaccount•how, when and any limitations

related to participants providing investment direction to their account

• investment options available within the plan

•Availability of and information regarding self-directed brokerage accounts (SDbA) and/or brokerage window

•Provide appropriate notice disclosing any material changes, 30-90 days prior to changes occurring

• initial disclosure required on or before date participant is first eligible to direct account investments and on an annual basis going forward

Planandparticipantlevelfeeandexpenseinformation•non-investment (internal) expense

related fees that may be charged against a participants account (recordkeeping, attorney fees, distribution fees, commissions, redemption fees, etc)

•explanation of the services provided for fees being charged


•on a quarterly basis provide disclosure of the administrative fees that are actually charged at the participant account level along with an explanation of the services provided for the fees charged

in Focus

Planinvestmentinformation•name and type of investment

•Performance data for each investment option

•Performance data for the corresponding benchmark for each available investment option

•expense information related to the available plan investments

• instructions to access additional information online for each investment option

•unique fees and expenses related to group annuities including an explanation of the services being provided for the charged fee


Additional required disclosure information can be viewed on the Dol website.

Deadline to initially discloseAlthough the effective date for 404(a)(5) compliance is for plan years starting on or after november 1, 2011 (January 1, 2012 for calendar-year plans), the Dol recently issued a proposed extension. the proposed final extension (as of July 19, 2011) established a transition period of 60 days following the effective date of the provider fee disclosure regulation, which has a new proposed effective date of April 1, 2012. that would allow plan fiduciaries until may 31, 2012 to issue their initial disclosures to covered participants and beneficiaries. Stay tuned for any additional deadline changes.

Disclosures should be mailed directly to all covered plan participants under the regulation unless the participant has authorizes email delivery.

education and guidancehow plan participants will respond to additional disclosure of plan fees and investment information no one knows for sure. but to ease the transition,

there are a few efforts that may prove worthwhile for plan sponsors and administrators.

Proactively discuss — either with your internal team or your service providers — the upcoming changes of your plan. Rather than waiting until the deadline is approaching, begin introducing the various components of your retirement plan and their responsibilities. most participants understand the concept of, “there’s no such thing as a free lunch.” they’re just unaware of everything that goes into running a retirement plan.

most importantly, know your resources. Reach out to your plan providers now and identify tools and resources that may be useful for you and your plan participants in the new age of full disclosure and transparency.

Read this article in its entirety at

rehmann.com/401kTrends

Certified Financial Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Rehmann Financial, 4086 Legacy Parkway, Lansing, MI. 517.316.2400


E very one of us has our own view of retirement; what we wish to do when we reach that phase in our lives and how we will financially prepare

ourselves. Physicians are no different. And when it comes to developing the retirement plan design that will best fit,

every medical practice is different.

So it’s no surprise that each medical practice faces its own unique challenges when

designing and implementing a plan. For instance, a single-owner practice must

consider factors such as the following:•Age when retirement saving

begins

•Willingness to be flexible in adjusting the amount of annual savings

•Demographics of the practice’s staff and the desire to benefit them in the plan design

•Physician’s other financial resources and how they factor into retirement savings

•Family members in the practice, and whether they will participate in the plan

•utilization of comprehensive financial plan

•understanding of fiduciary liability and the desire to minimize that liability

•Planning for the changing landscape of health care and the income tax environment

For a practice with multiple physicians, the factors stated above hold true, but the planning and ensuing plan design is further complicated by the various

perspectives that will be brought to the

process. the retirement plan design process needs to account for such additional factors as:•Ages of the physicians and their impact on the compliance

testing required

•Ability to accommodate the varying and changing objectives of the physicians

•challenges of managing fiduciary risk and balancing it with providing individual participants with flexibility and investment choices

•need to build varying levels of retirement security into the plan for key non-physician associates

A thorough process should begin with plan design and then integrate a service plan (shown right) to aid the Fiduciary in fulfilling their responsibilities.

When looking at retirement plan design options for a medical practice, the following types of key plan structures are typically focused on:•Defined contribution Plan

•Defined benefit Plan

As the proper plan design structure is determined, some key objectives must be kept in mind.

Eligibility – the demographics of the organization carries a good deal of weight in the contribution testing that determines what the physicians can contribute to the plan. the participation of associates such as part-time employees may impact the contribution funding objectives. When determining eligibility of plan participants, these factors must be considered.

ContributionFlexibility – there tends to be a desire to allow for as much flexibility in the plan design for contribution funding as possible. coupling the defined contribution and defined benefits plans helps to provide for that desired flexibility. careful ongoing communication and analysis is required in order to achieve a fairly high level of flexibility. Depending on the demographics of the practice, the physicians can have a fair amount of leeway in setting the employer contribution levels that will be funded in both plans. the standard rule of thumb is to set the contribution

in Focus

Solutions for their Unique NeedsBy Gerald Wernette, CPA, CEBS, AIFA

Retirement Plans for Medical Practices


level within the plan design parameters to the maximum contribution level (or something lower) and stick with that selection for a period of at least three years. the 401k deferral contribution portion of the defined contribution plan can be modified at any point in time.

FiduciaryLiabilityRiskManagement– this aspect of a retirement plan is often overlooked or not given adequate attention. it’s common for a physician to want to manage their own part of the plan and work with whatever the investment world has to offer. being able to cater to these wishes is ideal at the plan sponsor level, but it can be very problematic in application.

the keys to successful medical practice retirement plan solutions are careful and creative planning, ongoing oversight from a proactive plan administrator and input from an investment advisor specializing in the retirement plan arena. Don’t settle for cookie cutter solutions. And take care to choose an advisor who conducts an annual service plan review that includes reviewing the progress of your retirement savings goals and impact the growth of your plan has on the investment platform structures and costs. the best solution is one that will grow and adjust as your practice does.

Read this article in its entirety at rehmann.com/RetiredDocs

Securities offered through Royal Alliance Associates, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor not affiliated with Royal Alliance Associates. Rehmann Financial, 4086 Legacy Parkway, Lansing MI 48911, 517.316.2400

Service Description Scheduled Delivery Month

Actual Delivery Month

History/Comments

Fiduciary investment Review market Review, investment Policy Statement and Scorecard methodology

Fiduciary Plan Review Report card, Fiduciary education, Plan Design Review, Fiduciary best Practices and Administrative compliance Review

Provider Analysis and benchmarking Analysis of incumbent provider costs, services and investments compared to bidding service providers

employee communication group employee education meetings monthly monthly

individual employee education meetings monthly monthly

newsletters and memos client newsletter for Retirement committee monthly monthly

employee memos for Plan Participants monthly monthly

other Service meetings

Service Year: updated:

Source: R

etirement P

lan Advisory G

roup©

What is a Fiduciary? every qualified retirement plan must have at least one named fiduciary at the plan sponsor level. this person carries the overall responsibilities for the plan, including:• implementing plan related

decisions

• carrying out processes and procedures in regards to plan management

• making decisions regarding selection of provider, investments or investment management

Fiduciaries have a responsibility to act solely on the behalf of the participants, their beneficiaries and alternate payees in the plan. in addition they must:• carry out their duties

prudently

• Follow the terms of the plan document, which must be consistent with the laws that govern retirement plans

• Diversify plan assets

• Pay only fair and reasonable expenses

Fiduciaries are allowed to rely on the information of others and appoint others to aide them in carrying out their responsibilities, but they are still duty-bound to monitor those parties and the services they are providing. A fiduciary is personally liable for any losses resulting from a breach in their responsibilities. the penalties for non-compliance are steep and the cost of not reaching the targeted retirement savings goals can be even larger.

Note: Investors should understand that working with an advisor that is a fiduciary does not guarantee that they will experience greater investment performance pr reduced losses compared to working with an advisor that is not acting as a fiduciary.

PHySIcIaN PRactIce SeRvIce PlaN

Q.Howdoesapowerofattorneywork?in simple terms, a power of attorney is a legal document that authorizes another person to act on your behalf (called the “attorney-in-fact”). note: this may also be used to describe the person acting for you. the power can be either specific (e.g., limited to having someone sell your home or car) or broad. A regular power of attorney is no longer valid after you become incapacitated. however, a durable power of attorney remains in effect if you become incapacitated and terminates upon your death. that is why this variation is often preferred.

Q.CanIsetupadurablepowerofattorneytotakeeffectatthetimeIbecomeincapacitated?

it depends. Such a power of attorney is not authorized in all states. You must find out the applicable state law from an experienced attorney. Similarly, you should rely on an attorney to do all the other necessary paperwork for the durable power of attorney.

Q.WhatifIchangemymindaboutgrantingapowerofattorney?While you are competent, you may revoke a power of attorney (whether or not it is durable) at any time for any reason. the best thing to do is to notify the “attorney-in-fact” in writing. Also, notify other parties who may be affected.

Q.Canadurablepowerofattorneybeusedforhealthcaredecisions?Yes. For instance, you can establish the terms for deciding whether or not you are incapacitated. in addition, it is important that you discuss these matters in detail with the attorney-in-fact to give him or her more guidance.

Q.Howisthisdifferentfromalivingwill?A durable power of attorney gives another person the power to make decisions in your best interests. in contrast, a living will provides specific directions concerning terminally ill patients. living wills are now recognized in every state.

Q.CanIsetupadurablepowerofattorneyforarelativewhoisnolongercompetent?

no. A durable power of attorney is binding only if the grantor of the power was competent when it was drawn up. however, just because someone has been diagnosed as having a specific disease does not mean that he or she is incompetent. For instance, if an elderly person is suffering from Alzheimer’s disease, it still may be possible to utilize a durable power of attorney.

it is important to coordinate a power of attorney with other aspects of your estate plan. For more information, contact your trusted financial advisor.

Securities offered through Royal Alliance Associates, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor not affiliated with Royal Alliance Associates. Rehmann Financial, 4086 Legacy Parkway, Lansing MI 48911, 517.316.2400

Certified Financial Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

CHARTERED RETIREMENT PLANNING COUNSELORSM and CRPC® are registered service marks of the College for Financial Planning.

the thought of being

incapacitated – either

temporarily or permanently – is

certainly not a pleasant one.

Nevertheless, it is important

to have the proper provisions

in place should you suddenly

become incapable of managing

your financial affairs. one

common way to help ensure

some measure of protection

is to create a “power of

attorney.” In particular, it may

be beneficial to use a “durable”

power of attorney.

The Real

PoWeR in Estate PlanningBy Erickson Braund, CFP®, CRPC®

in Focus

Qualified Charitable Distributions

the law authorizing qualified charitable contributions (QcDs) has recently been extended through 2011.

to participate, simply direct your iRA trustee to make a distribution directly for your iRA (other than a SeP or SimPle) to a qualified charity. Participants must be 70½ years or older and the distribution must be one that would otherwise be taxable. up to $100,000 of QcDs can be excluded from gross income in 2011. in the case of a taxpayer who files jointly, the spouse (if 70½ or older) can exclude an additional $100,000 of QcDs in 2011. but QcDs can’t be deducted as a charitable contribution on the federal income tax return – that would be double dipping.

QcDs count toward satisfying any required minimum distributions (RmDs) that you would otherwise have to take from your iRA in 2011— just as if you had received an actual distribution from the plan. however, distributions that you actually receive from your iRA (including RmDs) that you subsequently transfer to a charity cannot qualify as QcDs.

For example, assume that your RmD for 2011 is $25,000. in June 2011, you make a $15,000 contribution to Qualified charity A. You exclude the $15,000 from your 2011 gross income. Your $15,000 QcD satisfies $15,000 of your $25,000 RmD. You’ll need to withdraw another $10,000 (or make an additional QcD) by December 31, 2011 to avoid a penalty.

instead of the situation described, you could take a distribution from your iRA and donate the proceeds to a charity yourself. You would then include the distribution in your gross income and take a corresponding income tax deduction for the charitable contribution. but due to iRS limits, the additional tax from the distribution may be more than the charitable deduction. QcDs avoid all this by providing an exclusion from your iRA to the charity. that means you don’t report the iRS distribution in your gross income and you don’t take a deduction for the QcD. the exclusion from gross income for QcDs also provides a tax-effective way for taxpayers who don’t itemize deductions to make charitable contributions.

Recent extension authorized through 2011

By Erickson Braund, CFP®, CRPC®



established in April 2010, the new standard is effective for periods ending on or after June 15, 2011, with early implementation permitted. With the implementation of SSAe 16, the AicPA adopted three categories of engagements termed Service organization control (Soc) reports.

SOC1Report – reports controls relevant to the user entities’ control over financial reporting. this is for customers that use service organizations and the cPAs who audit the customers’ financial statements. it evaluates the effect of controls at the service organization on those financial statements. Soc 1 engagements are very similar to the former SAS 70 reports. the most significant difference is the requirement for a service organization management written assertion.

SOC2Report – reports controls relevant to security, availability processing integrity, confidentiality or privacy. this is intended to meet the needs of a broad range of customers needing information and assurance about controls affecting the security, availability or processing integrity of a system or the confidentiality or privacy of the information processed by a system. it is based on the following principles:•Security •Availability •Processing integrity•confidentiality •Privacy

Service organization management selects the trust services principle(s) that apply to the information they process. in a type ii report, a

Service Organization

Control ReportsUpdated Reporting Standards By Kirk Balcom, CIA, CISA

The customer management is responsible for assessing the risks of outsourced activities and

monitoring the services being provided to a service organization. To obtain assurance, a CPA’s report on

the service organization’s system is requested. In the past, these reports focused on internal controls

over financial reporting. However, customers began requesting more: identification of internal controls

over security , availability or processing integrity of the system and confidentiality/privacy of information

processed.

In response, the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board

issued Statement on Standards for Attestation Engagements 16 (SSAE 16), Reporting on Controls at a

Service Organization.


description of the tests completed by the service auditor is included. if the privacy principle is addressed then a description and results of the service auditor’s tests of the compliance to the privacy notice are included.

SOC3Report – trust Services Report. this report covers the same areas as a Soc 2, but is used when the customer does not have the need for or knowledge necessary to effectively use Soc 2. it’s much briefer and does not include the description and the results of the tests performed. it covers at least a two-month period and has an unqualified opinion. it can be freely distributed on a website and displayed using the Systrust for Service organization seal established jointly by the AicPA and cicA. only a Systrust licensed practitioner can issue a seal to the service organization.

As with the former standard, there are two types of engagements:•type i – a report on management’s

description of the service organization’s system and the suitability of the design of controls (cannot be used for a Soc 3 report)

•type ii – a report on management’s description of the service organization’s system and the suitability of the design and operating effectiveness of controls

All three reports contain the following: •management’s description of the

service organization’s system

•A written management assertion that the description fairly represents that the system was designed and implemented during the reporting period and the controls were suitably designed during that same time frame. (in type ii reports, management asserts that the controls operated effectively throughout the reporting period.)

•A report containing an opinion on the fairness of the presentation of the

system, the suitability of the design of controls and in a type ii report, the operating effectiveness of the controls. Soc 3 reports include the service auditor’s opinion on whether the service organization maintained effective controls over its system during the period stated

Benefits of soc reportingthese reports contain information for purposes of assessing and addressing the risks associated with an outsourced service. Additionally they:•Provide independent, third-party

assurance that adequate internal controls exist for business processes and operations

•Differentiate an organization from its peers by demonstrating the establishment of a sound internal control environment over both financial and non-financial reporting data

•build trust and strengthen relationships

•Reduce the strain on service organizations by eliminating multiple visits from auditors (one Soc review is performed)

• identify opportunities for improvement in business processes and management of information technology operations

•Soc 1 reports provide information for service organizations customers’ external auditors or other auditors regarding the effectiveness of service organizations internal controls over financial reporting (required for customers’ annual Sarbanes-oxley Section 404 compliance or other regulatory compliance)

management of service organizations now have three options to report on internal

controls in place at their service organization. customers’ needs, who will be reviewing the reports and the intended use must be determined. once these are identified, management can make the right choice of which report adds the most value.

What is a Service Organization?A service organization is an entity that has personnel, expertise, equipment or technology to complete tasks more effectively and efficiently than a given entity can. Service organizations contract with an entity to outsource the collection, processing, storage, transmission, maintenance or disposal of data -- both financial and sensitive information which doesn’t impact financial statements. examples of service organizations that can process either financial or non-financial data include:

• health care claims processors that provide systems which enable medical records and related health insurance claims to be processed

• cloud computing processors that provide access to shared pools of computing resources such as networks, servers, storage and computer applications

• Accounts receivable collection processors that locate and contact debtors concerning past due obligations


Many small businesses rely on loans for funding. though the SbA

doesn’t loan money directly, they do set the loan guidelines. Recently, the SbA increased the size restrictions for eligible businesses, increasing the (tangible) net worth to $15 million and the two-year average (net) income to $5 million. this allows much larger businesses to qualify. there are several SbA loan programs available. one of the most common is:

TheSBA7aLoanforCommercialProperty,WorkingCapital,DebtConsolidation&More

this loan can be used for “any legitimate business purpose.” the new maximum loan is five million dollars. these loans may be used for most business purposes, including:•Refinancing of commercial real estate

•construction of a new building

•Refinancing of business debt

•Purchase of an existing business

•Working capital

•Purchase of real estate

•tenant improvements

•equipment financing

•leases

• inventory

loans that include real estate might be easier to obtain at the moment since lenders are more comfortable using a commercial building as collateral. loans that do not include commercial real estate (like business acquisitions) or are “under collateralized” can secure funding if the business has strong, steady cash flow ... or the business owners have enough outside income from other sources.

the SbA 7a loan may also be a good

option for refinancing a current business loan. it can be used to refinance the following types of business debt:•long term debt with a balloon

•business credit card debt – as long as you can show it was used for business purposes

•Revolving lines of credit

•SbA 504 loans

•green 504 loans

•SbA loan for energy efficient buildings, green building construction, green retrofit & renovation and renewable energy production for business use

the rate for an SbA 7a loan is typically the Prime rate plus a margin not to

exceed 2.75 percent. Some lenders will offer very good three- or five-year fixed rates that adjust after the initial fixed period. it allows for both larger SbA loans and multiple SbA loans to the same borrower(s).

SbA programs are also open to medium sized businesses with loans in excess of $12 million. it always pays to shop around and consider all financing options, lenders and loan programs. Additionally given the number of recent bankruptcies and foreclosures, looking for deals in new or used equipment, building lease and purchase options is prudent.

To learn more about available SBA loan programs, read this article in its entirety at rehmann.com/SBA.

Funding Small BusinessSBa loan Programs By Tony DiVito, CPA


This time around, we focus on leadership which is vital to building a dynamic and vibrant organization. make no mistake, effective leadership fuels successful companies. having key individuals with solid leadership can

significantly impact performance. With that in mind, i’ve assembled a collection of books which focuses on leadership attributes and delegation. good reading!

Carpp’s Book Corner: Volumes of business Wisdom

make the noise go Away By Larry G. LinneA friend gave this to me and i am glad that he did. the focus is on the power of an effective second person in command. if you find yourself short on time and long on tasks to do, if might be a good idea to pick this one up, take the time to read it, and chart a new course to productivity through delegation.

by James carpp, ciSA, ciRm

Following the Leader

the Abc’s of leadership By David M. HallDavid draws upon his many years of leadership experience to craft concise thoughts on the attributes and characteristics needed today to succeed in a leadership role. A broad range of characteristics are covered which allows you to select a topic of interest and in a relatively short period of time be exploring a key leadership attribute which can enhance your overall performance. if you are interested in polishing up your leadership style, i would pick up a copy.

leading outside the linesBy Jon R. Katzenbach and Zia Khanleading outside the lines provides leaders with insights on the formal organization — which includes management structure, performance metrics and strategy — as well as the informal organization where the culture, social networks and ad hoc communities exist. the key is to understand both worlds and manage their intersections to enable teams to produce better results. if you want to understand how work gets done in your organization, i would start here first.


YOU ARE HERE

Find the answers at rehmann.com/Here

BuTWHEREISHERE??? the images on these pages are street maps of three cities somewhere in the united States. take a close look and see if you can determine where you are.

Explorewww.rehmann.com

866-799-9580

5800 Gratiot RoadP.O. Box 2025Saginaw, MI 48605

PRSRT STDU.S. POSTAGE

PAIDSAGINAW, MI

PERMIT NO. 269

Need more?

[12] full disclosure - rehmann€¦ · thinking. of course, our resident book worm has some great...

Documents