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Many employers are all too familiar with the experience of having to refund contributions made to the organization’s 401(k) plan by highly compensated employees to remedy the previous year’s failed actual deferral percentage (“ADP”) test. The ADP test is designed to ensure that the average deferral rates for highly and non-highly compensated employees are roughly equal. Thanks to the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), the experience of refunding highly compensated employees’ deferrals in order to satisfy the ADP test will in many cases be consigned to history. The below addresses how the SECURE Act relaxes some of the rules affecting 401(k) plan testing.

Q: Can a 401(k) plan retroactively avoid ADP testing?

The year 2021 presents for the first time the opportunity to retroactively escape the prior year’s ADP test without regard to the extent by which contributions from highly compensated employees exceeded the average deferral percentage contributed by the organization’s non-highly compensated employees. Under the SECURE Act, it is now possible to adopt a safe harbor nonelective 401(k) feature that will exempt the plan from ADP testing with respect to the previous year. Unlike in the past, a notice to participants before the beginning of the year in which the safe harbor nonelective contribution applies is no longer required. As such, employers can now wait until the end of the year, or even longer, before deciding whether to make a safe harbor nonelective contribution for the year.

Q: How are safe harbor nonelective contributions similar to, or different from, safe harbor matching contributions?

Continue Reading New 401k rules could end “refunded contributions”

Guest post by Madison Tanner, Esq.

It is the most wonderful time of the year! Bonus season. Jokes aside, it is the season of giving. We have all been through so much this year: a pandemic, a contentious election, and virtual meetings replacing human interaction. The challenges we faced in 2020 resulted in the closure of local restaurants, reduced hours at small boutiques, and limitation of leisurely activities outside of the home. Many of us (particularly the last minute shoppers like me) are fleeing to our favorite small businesses to purchase a gift certificate for a loved one while simultaneously supporting the “shop small” movement. Small businesses graciously save the (holi)day with their festive gift certificates and I-O-U services. Thanks to these establishments, we can purchase an experience for our loved ones ranging from a facial or massage to a meal at their ideal lunch spot. The begging question is: how long does one have to use that gift certificate? The answer: in Florida, it should not expire.

Florida Law

Florida Statute § 501.95 governs on the issue. The statute, beloved by the consumer and despised by the small business owner, was first enacted in 2007 in an effort to regulate trade and protect consumers. Pursuant to § 501.95(2)(a):

“a gift certificate purchased or credit memo issued in this state may not have an expiration date, expiration period, or any type of postsale charge or fee imposed on the gift certificate or credit memo….”

Exceptions to the Rule

Continue Reading Small Businesses Beware and Consumers Rejoice: Gift Certificates Cannot Expire

The coronavirus has impacted more than an individual’s health and well-being. In the wake of this global pandemic, many businesses have been impacted — whether it be from an order from local or state government or because it has been directly hit with employees or customers who were diagnosed with COVID-19.

Businesses have had to grapple with the distinction between “essential” and “non-essential” and alter their budget to purchase PPE and other sanitary items. Projections for revenue for 2020 were obliterated in the process leaving business owners with difficult decisions in terms of whether it is worthwhile to remain open in a limited capacity, temporary closure, furloughs, layoffs, bankruptcy, or in some cases going out of business. The Payroll Protection Program instituted by the Federal Government has provided a temporary salve, however, in many cases business losses continue in big and small ways.

Business Interruption Insurance

The natural offshoot of this business and economic disruption for businesses is whether their business insurance coverage, for which its owners paid premiums month in and month out, ‘owe’ for business income lost, and additional expenses, due to a viral pandemic such as to COVID-19.

Multiple insurers are facing federal class action lawsuits for denying business interruption claims. Further, claims by business owners for business disruption losses have increased exponentially. This post endeavors to examine some of the issues that will be at the forefront for business owners, and carriers, as it pertains to COVID-19.

Coverage

Continue Reading What You Need to Know About COVID-19 and Business Interruption Insurance Coverage

Yesterday, Governor Ron DeSantis issued Executive Order No. 20-91 (which the Governor amended later the same day for clarification). Section 1.B of Executive Order 20-91 provides “all persons in Florida shall limit their movements and personal interactions outside of their home to only those necessary to obtain or provide essential services or conduct essential activities.”

What are essential services?

Unfortunately, it’s not easy to describe in general terms what an “essential service” is. Of course, if you own a business, you consider your business’s service or product essential, otherwise you wouldn’t be in business to begin with! Personal feelings aside, however, it’s important to understand how the State of Florida defines “essential services.”Continue Reading COVID-19: What are Essential Services?

Florida law requires all businesses to file an annual report with the Florida Department of State, Division of Corporations (the “Department”). Annual reports are due between January 1 and May 1 of the year following the calendar year in which the business’ articles of organization/incorporation became effective or the foreign entity obtained a certificate of authority to transact business in this state. If annual reports are not filed, businesses could incur penalties or even worse, potential administrative dissolution of the business. Annual reports must be filed with the Department between January 1 and May 1 of each calendar year thereafter.

Electronic Filing of Annual Reports – Proceed with Caution

Continue Reading Business Owners, BEWARE: Business Identity Theft is on the Rise

Just in time for the start of the 2018 hurricane season, the Florida Department of Economic Opportunity (DEO) has launched a new website, FloridaDisaster.biz, to help Florida businesses prepare for and recover from hurricanes and other disasters.

In a recent press release published by Florida Trend Magazine, Governor Rick Scott said:

Floridians understand the importance of being prepared for disasters, especially during hurricane season. This new website will help businesses make safe and informed decisions for themselves, their employees and their customers. Every Florida business can visit FloridaDisaster.biz, make a disaster plan and stay updated as we move further into hurricane season.”

The website focuses on three main areas:
Continue Reading State Launches FloridaDisaster.Biz to Help Florida Businesses

CAK big wheelYeah, that’s me on a Big Wheel at age 6 or 7. Check out that air! Good thing there was grass for soft landing….

Recently, my law partner and I tried a temporary injunction in a complicated business dispute. When I cross-examined the opposing expert, he answered “Yes” to most of my leading questions, as…

Guest post by Bonita Springs Trust and Probate Litigation Attorney Richard Mancini:

As Clarence famously said in “It’s A Wonderful Life”:

Strange, isn’t it? Each man’s life touches so many other lives. When he isn’t around he leaves an awful hole, doesn’t he?”

Many plan for the time when their time on earth is over and plan to distribute their wealth to family and friends. Unfortunately, sometimes the plans aren’t clear or the plans forget an important aspect, which leads to fights and litigation after their passing. As we reflect back on 2016 and look to the future, it is critical to have a complete estate plan, but not just any plan.Continue Reading Reflecting on Trust and Probate Law with Richard Mancini