FSA Balance Reminder

Flexible Spending Account (FSA) Balances

Employees with a health care or dependent care FSA need to be reminded to spend the remaining balances in their accounts before the end of their plan year. Listed here are some tips to avoid forfeiting funds at the end of the year or grace period:

• Request prescriptions for purchased OTC (over-the-counter) medications to treat an illness or for wellness purposes. Because of the changes in the health reform laws, as of January 2011 OTC medications cannot be reimbursed through an FSA without a doctors' prescription.




• Review list of eligible expenses. There might be a number of items that FSA account holders do not realize are eligible for reimbursement. The list can be browsed on the wageworks website.
  



• Purchase medical supplies. It can be helpful to have a backup supply on hand.




• Be sure to submit outstanding receipts.




• Get a flu shot and vaccinations.




• Log auto miles. Gas fees to and from eligible medical, dental and vision appointments are eligible for reimbursement, as are visits to the drug store or pharmacy.

New COLA Adjustments

Taxpayers may benefit from the newly announced COLA adjustments for 2012.

Federal income tax brackets will jump higher and taxpayers will be able to set aside an additional $500.00 in their 401(k) plans in 2012. In summary, 401(k) and 457 plan contribution limits will increase to $17,000. Catch-up contribution limit for those aged 50 and over remains unchanged at $5,500 in 2012.

The IRS announcement on the COLA adjustments for 2012 also affect the standard deduction, the personal exemption and the 2012 tax bracket threholds as well. Personal and dependent exemption will increase from $3,700 to $3,800, the standard deduction for married couples will go from $11,600 to $11,900 and for single filers and couples who file separately the deduction will go from $5,800 to $5,950.

There are also changes in tax bracket threshholds, estate tax exemptions, gift tax, etc. For more information on these changes, please visit the IRS website.

RETIREMENT SAVINGS TAX CREDIT

The saver's credit is a fairly unknown incentive for low-to middle-income workers to save for retirement. By helping to spread the word to employees, employers can increase the value of their retirement plan benefits for those employees.

The credit, called the Retirement Savings Contributions Credit, may be applied to voluntary contributions that an eligible workers makes to a 401(k) or similar employer-sponsored defined contribution retirement plan or to an individual retirement account (IRA). Credits range up to $1,000 for single filers and $2,000 for married couples.

The credit is available to workers aged 18 years and older who have contributed to a company-sponsored retirement plan or IRA in the past year and are:

• Filers who are single or married, filing separately, with adjusted gross income of up to $27,750 in tax year 2010 or $28,250 in 2011.


• Filers who are head of household and have adjusted gross income of up to $41,625 in 2010 and $42,375 in 2011.


• Filers who are married and filing a joint return and have adjusted gross income o up to $55,000 in 2010 or $56,500 in 2011.


• The filer cannot be a full-time student or be claimed as a dependent on another person's tax return.

According to Transamerica Life Insurance Company, "only 12 percent of full-time American workers with annual household incomes of less than $50,000 are aware of the credit". Employers can educate low and moderate-income workers to learn how to apply for the saver's credit and also maximize the value of their retirement plan contributions. Transamerica recommends communicating the following advice:

• Filers using tax preparation software should use form 1040A, 1040 or 1040NR. The credit is not available with form 1040EZ (popular with low-income filers).


• Filers using tax preparation software should watch for and be sure to answer questions that refer to the saver's credit, retirement savings contributions credit and/or credit for qualified retirement savings contributions.


• Filers preparing their tax returns manually should complete form 8880, Credit for Qualified Retirement Savings Contributions, to determine the credit rate and amount.


• Filers using a professional tax preparer should ask about the saver's credit.

Additional online information can be found on the IRS Website.

E-Verify Self Check Announced

The U.S. Department of Homeland Security (DHS) announced March 21, 2011, the launch of E-Verify Self Check - a free Internet service that allows individuals in the United States to check their employment eligibility status before formally seeking employment.

This new feature is currently available to residents in Arizona, Colorado, Idaho, Mississippi, Virginia and the District of Columbia. It will allow individuals to check their employment eligibility status prior to applying for a job and the individuals will be alerted to any red flags that might come up and could be corrected before employers use the E-Verify service.

The E-Verify Self Check is completed in four steps: 1) Users enter their identity, 2) Users confirm their identity through questions populated by the system based on credit information, 3) Users confirm their identity by answering those questions, and 4) Users enter work eligibility information such as citizenship status and social security number.

If an individual receives information on a mismatch, they will be prompted to resolve the mismatch or not. If the individual chooses to resolve the mismatch, a form will be generated with the E-Verify details and how to resolve the mismatch.

The intent of the self check process is to improve errors and decrease the E-verify workload. The possible disadvantage of this system is a lack of credit information from individuals trying to use the system. Individuals with no credit or work history or individuals born outside of the United States with no credit or work history will not be able to use the system.

DHS plans to continue updating and implementing this system throughout the United States within the next 12 months.

To use the E-verify Self Check, get answers to questions and other information, visit the U.S. Citizenship and Immigration Services website at: www.uscis.gov.

Smart Policies for Smart Phones

Technological advances have allowed employers to use a variety of modern tools, from laptops, digital assistants, mobile devices and smart phones. Employees working with flexibility have started using these tools to increase their accessibility to work, especially when off-site or after work hours.

While there are no set rules for the use of such devices, it's important that employers be proactive in setting up clear policies and communicate expectations regarding the use of mobile devices to help against privacy liability. Policies also need to be in place to limit overtime claims as the use of mobile communication continues to grow.

Guidelines

An established comprehensive communications policy is the first step. The policy should be reviewed frequently and implemented with other human resource guidelines.

For company provided devices, explain that the employer retains ownership and rights of access to all electronic communications, including the ability to access and audit device content for business reasons. This content should include emails, texts, photos and videos - whether business or personal related.

If the employer reimburses the employee for some or all of the electronic device, a similar policy should be established with the right to access content. Be clear and communicate often that the employee should not expect to have any privacy for transmitted information. Include a clause prohibiting harmful activities to shield the employer from liability.

Communicate and outline the consequences of the employee failing to return the company-owned device when employment is terminated.

Overtime

Although most employers have policies to ensure compliance with federal and state laws regarding overtime pay, few policies address the unexpected or unauthorized overtime incurred with electronic devices for non-exempt employees. Small amounts of time spent reading text or email after hours may not be a legitimate overtime claim but if the employee routinely works after hours using the electronic device it leaves the employer open to overtime claims.

To avoid overtime liability some suggestions would be to: 1) restrict use to exempt employees whenever possible, 2) do not allow employees to sync the work email to a private phone or computer without prior approval, 3) instruct employees to log in their time so the employer can verify the work performed and calculate the duration and business necessity of calls or emails.

If you do take these measures, courts tend to leave the majority of the burden in the hands of the employee to establish monetary damage claims.

Bottom line, be proactive in taking measures by adding a policy for electronic devices to avoid liability in the "smart phone age".