Bramwell’s Lunch Beat: High Court Says 401(k) Fees Must be Monitored by Employersby
The plain-vanilla accountant goes out of style
Tighter regulation, automation, and an increasingly complex business landscape require entry-level accountants to possess a wider range of technical and communications skills. But some finance chiefs say many potential job candidates lack those skills, wrote Kimberly S. Johnson of the Wall Street Journal’s CFO Journal. More CFOs say they want people who have initiative and can do things like analyze data and present their findings coherently to colleagues. But demand is outpacing supply. The US unemployment rate for accountants and auditors was 2.9 percent in the first quarter. That compares with an overall jobless rate of 5.4 percent in April. Leadership, forecasting, strategic thinking, cost management, and financial reporting are the skills where the gaps between demand and supply are the widest, according to a survey of 173 finance and human resources hiring managers.
Employers must monitor 401(k) fees, Supreme Court rules
The US Supreme Court ruled on Monday that employers have a duty to keep watch over 401(k) plans to guard against high management fees that can erode retirement savings, wrote Dean Starkman and David G. Savage of the Los Angeles Times. A unanimous high court said Monday that employers can be sued if they fail in their “continuing duty to monitor” mutual funds in 401(k) accounts for unnecessarily high fees, potentially shaking up the $5.8 trillion market for administering the plans. The decision involving Edison International surprised analysts both for its sweep and the agreement of the frequently fractured court. The ruling effectively shifts the burden in disputes over monitoring retirement plans from workers to the employers that administer them. The ruling will send a “shock wave to the retirement-provider community and force them to discharge their fiduciary duties and protect people's savings,” said Dennis Kelleher, chief executive of Better Markets Inc., a Washington financial reform group.
Supreme Court upends Maryland tax law
The US Supreme Court also ruled on Monday that Maryland essentially doubled taxes for some of its residents, potentially putting the state on the hook for millions of dollars in refunds, wrote Bernie Becker of The Hill. In a divided 5-4 ruling, the court found Maryland’s law impeded interstate commerce by giving its residents incentives to only earn income within the state’s borders. Maryland has two separate income taxes, one is a state tax and another where the rate varies by county. The court ruling dealt with Maryland’s practice of not allowing residents credit for taxes paid to other states on the county portion of their income tax. Like other states, Maryland does give credit for taxes paid elsewhere on the state income tax. The court said Maryland’s law basically acted as a state tariff, “the quintessential evil targeted by the dormant Commerce Clause.”
Health chairs predict problems with coming ‘Cadillac’ tax
New York state legislators from both sides of the aisle are concerned that a soon-to-take-effect Affordable Care Act tax will have a “devastating effect” on health plan coverage for both public and private employees, wrote Katie Jennings of Capital New York. The so-called “Cadillac tax” provision of the Affordable Care Act, or excise tax on high-premium insurance plans, which isn’t set to kick in until 2018, imposes a 40 percent tax on health premiums above a threshold of $10,200 a year for individuals and $27,500 for families. It is expected to bring in $87 billion in federal revenue by 2025, according to the most recent Congressional Budget Office analysis. Assembly health committee chair Richard Gottfried, a Democrat, said “the approach of the Cadillac tax ought to be regarded by almost everybody as an oncoming train or worse.” The tax has been fiercely opposed by labor unions that argued it would have an outsize impact on unionized workers who often receive very generous health benefits packages.
IASB calls for feedback on proposal to defer effective date of revenue standard
The International Accounting Standards Board (IASB) on Tuesday published a proposal to defer the effective date of the revenue recognition standard, IFRS 15 Revenue from Contracts with Customers, by one year to Jan. 1, 2018. The new rule was issued jointly with the Financial Accounting Standards Board (FASB) in May 2014, with an effective date of Jan. 1, 2017. The main reason for the proposed deferral of the effective date is that the IASB is planning to issue an exposure draft of targeted changes to the standard, which will include clarifying some of its requirements and adding illustrative examples to aid implementation. The FASB also released a proposal to defer the effective date of its revenue standard by one year. Feedback on the exposure draft, Effective Date of IFRS 15 (Proposed amendments to IFRS 15), is required by July 3. The IASB will consider the feedback at its July meeting when it expects to make a final decision on whether to change the standard’s effective date. Early adoption of the revenue standard will continue to be permitted.
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