Category: Compliance

If you are an employer with a work location in California or New York, you may be subject to additional federal unemployment tax (FUTA) for 2023. 

These states had an outstanding federal loan balance for two consecutive years and failed to pay back the loans by the Nov. 10, 2023, deadline, so the FUTA credit will be reduced: 

Jurisdiction	FUTA credit reduction	Resulting FUTA rate	Additional tax (per EE)
California	0.6%	1.2%	Up to $42
New York	0.6%	1.2%	Up to $42

The first payroll with a check date on or after Dec. 1, 2023, will include the additional FUTA payment for employees who work in the affected states. 

If you do not plan to process any payrolls on or after Dec. 1, 2023, please contact your Payroll Specialist or Insperity Tax at IPS.Tax@insperity.com for assistance with a FUTA adjustment to ensure compliance.  

For more information about these unemployment tax credit reductions, visit  Federal Unemployment Tax Credit Reductions 2023 – Insperity HCM Knowledgebase.

The SECURE 2.0 Act of 2022 is a law designed to improve retirement savings in the U.S. It builds on previous legislation, Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Its objective is to address some of the shortcomings of the original SECURE Act and introduce mandatory versus optional provisions to help Americans save more for retirement.

The key provisions of SECURE 2.0 that are set to take effect in 2024 are provided below.

Mandatory provisions effective 2024

1.  Auto-enrollment in 401(k) and 403(b) plans: One of the most significant changes is the requirement for new 401(k) and 403(b) plans to automatically enroll eligible employees. The initial automatic contribution will be at least 3% of the employee’s pay but less than 10%. Each year, the contribution rate will increase by 1% until it reaches 10%, unless the employee opts out or chooses a different rate.  

2.  Increase in required minimum distribution (RMD) age: The SECURE 2.0 Act further pushes the age at which retirees must start taking RMDs from their retirement accounts. The original SECURE Act raised the age from 70½ to 72. The new Act proposes to increase this age to 75 by 2030, with the increase starting in 2024.

3.  Improving coverage for part-time employees: Requires employers to allow long-term, part-time employees to make elective deferral contributions to the employers’ 401(k) plans once the part-time employees have completed three consecutive years of service (where the employee completes at least 500 hours of service). The first group of such employees would become eligible to make elective deferral contributions in plan years beginning after Dec. 31, 2023.  SECURE 2.0 reduces the three-consecutive-year rule to two consecutive years, effective for plan years beginning after Dec. 31, 2024.

Optional provisions effective 2024

1.  Catch-up contributions: The Act allows individuals ages 60 and above to make catch-up contributions to retirement accounts. The catch-up limit for 401(k), 403(b) and governmental 457(b) plans will increase from $6,500 to $10,000. For SIMPLE IRAs and SIMPLE 401(k) plans, the limit will rise from $3,000 to $5,000.  

2.  Student loan payments: The Act allows employers to make matching contributions to a 401(k), 403(b) or SIMPLE IRA plan for employees making student loan repayments. This provision is optional and aims to help employees who cannot afford to make retirement contributions due to student loan debt.

3.  Small business tax credits: The Act increases the tax credit for small businesses that start a new retirement plan from the current cap of $5,000 to $7,500. It also offers a new $1,000 credit for small businesses that add automatic enrollment to their existing retirement plan.  

4.  Starter 401(k) plans: Employers that do not sponsor retirement plans may establish a starter 401(k) plan (or safe harbor 403(b) plan). Such plans would provide for automatic enrollment at a deferral rate between 3% and 15% of compensation. The annual deferral limit for starter 401(k) plans is the same as the IRA contribution limit, which for 2023 is $6,500 with an additional $1,000 in catch-up contributions beginning at age 50.

What’s the impact?

Many ask if these provisions only apply to deferred compensation plans that will be effective from Jan. 1, 2024. The answer is no. The provisions of the SECURE 2.0 Act apply to all applicable retirement plans, not just those established or becoming effective on or after Jan. 1, 2024.

For instance, the automatic enrollment provision applies to all new 401(k) and 403(b) plans established after the effective date, but it also applies to existing plans that amend their plan document to include an automatic enrollment feature after the effective date. Similarly, the increased catch-up contribution limits apply to all eligible participants ages 60 and above, regardless of when their plan was established.

It’s important to note that while the Act’s provisions apply broadly, the specific impact on any given plan or participant will depend on the plan’s terms and the participant’s circumstances.  For example, a plan may choose to apply the increased catch-up contribution limits only to new contributions made on or after Jan. 1, 2024, or it may choose to apply them to all contributions, including those made before that date.

In conclusion, the SECURE 2.0 Act’s mandatory provisions, effective Jan. 1, 2024, apply to all applicable retirement plans, not just those that will be effective from that date. Plan sponsors should carefully review the Act’s provisions and consider how they may impact their plans and retirement savings strategies. We encourage you to reach out to your financial advisor or retirement plan provider to understand how these changes may impact your retirement planning.

For 2024, many states will see increased minimum-wage requirements. Employers in several states must be aware that the minimum wage is rising nationwide.

You will need to add new salary records for employees who need pay increases due to minimum-wage changes. The system will not automatically increase their rate. To stay in compliance, enter any rate changes before you process the first pay period of the new year.

• View the minimum-wage map in the HR Resource Center for current and upcoming minimum-wage changes in 2024.

• Use the How do I find employees who are being paid below minimum wage? Guide in the Insperity® Help Center to identify employees who will fall below minimum wage with the changes effective Jan. 1, 2024.
• Follow the instructions for adding a new salary record for the employees who are affected. Please do not edit the existing record.

Key points to remember

• Minimum-wage rates are based on your employee’s work location, not the employer’s location.  
• Although minimum-wage rates are based on an employee’s work location, they can sometimes vary by jurisdiction, employer size and/or industry. Your employees’ work locations have been configured based on your company’s specific business requirements. 

To see accurate minimum wages listed on the Employee Salary/Hourly Rate List dashboard in isolved People Cloud, confirm your employees are assigned to the correct default work location on their General screen in Employee Maintenance.

• If you need to update the applicable minimum wage or your work locations, contact your Insperity payroll specialist.
• Where federal, state and local minimum wage apply, the Fair Labor Standards Act (FLSA) requires an employer to pay at the highest applicable hourly rate.

Insperity is here to help

If you have any questions or concerns about how this minimum wage change will impact your business, please contact your Insperity payroll specialist.

As stated in the Client Service Agreement (CSA), compliance with the FLSA and any similar state law is the client’s responsibility. By providing the information and suggestions contained in this communication, Insperity is not assuming any liability or responsibility for FLSA compliance and is not intending to amend or alter in any way the terms of the CSA.

Insperity Retirement Services is excited to announce that client-sponsored retirement plans we service will soon transition to Mid Atlantic Trust Company for trustee and/or custodian services. This change will result in consolidated billing, Plan Sponsor trust account access and a streamlined participant deposit process.

If you sponsor a plan through Insperity, you will need to sign new documentation reflecting the change. You should have received emails in September with details about the transition, as well as an email from DocuSign containing a link to review and sign the required documents.

• If you have already signed the documents through DocuSign, thank you. You’ll receive an email with details about the transition date for your plan.
• If you have not yet submitted the documents, please try to do so promptly so we can ensure a smooth experience for you and your employees. Once documents are received in good order, we will schedule the transition for your plan and notify you.

About Mid Atlantic Trust Company

Mid Atlantic Trust Company, doing business as American Trust Custody, is a leading financial services organization. It provides a wide array of brokerage, advisory and trust services to a diverse national client base of financial advisors and institutions, asset managers and benefits administrators through its various affiliated companies. Because Mid Atlantic Trust Company provides these services, they have plan investment data on over 100,000 401(k) plans representing approximately $147 billion in assets. Please reach out to your designated plan consultant or the 401(k) Plan Consulting team at 401kcspservice@insperity.com with any questions.

Congress sweetened the pot for small businesses when it passed SECURE 2.0 at the end of 2022 with the following provisions: 

Tax credit for startup costs gets better

SECURE 2.0 greatly enriched the tax credit for small employer plan startup costs by allowing employers with 50 or fewer employees to take a credit for 100% of their eligible startup costs. An eligible employer with 51 to 100 employees may claim a tax credit for 50% of eligible startup costs. The tax credit may be claimed for three years, up to $5,000 per year. 

New tax credit for employer contributions

SECURE 2.0 also established a new tax credit for making employer contributions up to $1,000 per eligible employee per year for five years. The amount of the tax credit depends on the number of employees and number of years after plan startup. Review our Client Q&A about the tax credit for more details. If you think you may qualify, we recommend that you consult your tax advisor about claiming tax credit.

The SECURE 2.0 Act was enacted on Dec. 29, 2022, and serves as a follow up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Both pieces of legislation are intended to address a perceived retirement readiness crisis by doing more to encourage retirement plan availability and participation. SECURE 2.0 is important because it encourages and makes it easier for employees to save for retirement and incentivizes employers to offer retirement plan benefits.

The bill contains many provisions which will take effect over several years. Insperity is committed to assisting our clients with relevant compliance needs as the various provisions of the law take effect. Additional information on SECURE 2.0 will be shared over the coming months. When appropriate action needs to be taken, our service teams will work with clients on implementation.

The U.S. Citizenship and Immigration Services published a revised Form I-9, Employment Eligibility Verification, on Aug 1, 2023. Now that the final version has been published, development can begin to update the electronic version in onboarding, ESS, and isolved People Cloud. Insperity will notify you in the release notes in the Insperity® Help Center when the updated I-9 form is available. Employers may continue using the current Form I-9 through Oct 31, 2023. Beginning Nov 1, only the revised form will be accepted. 

More information on the revised I-9 form can be found in the HR Resource Center:  New Form I-9 and Remote Verification Procedure Rolled Out

The EEOC announced that the submission of EEO-1 data for 2022 will begin in mid-July. Updates regarding the 2022 EEO-1 Component 1 data collection, including the opening date, will be posted to EEOCdata.org/eeo1 as they become available.

Who needs to file EEO-1 reports each year?

• Companies with 100 or more employees
• Companies with fewer than 100 employees or if the company is owned by or corporately affiliated with another company and the entire enterprise employs a total of 100 or more employees
• Federal government prime contractors or first-tier subcontractors subject to Executive Order 11246 with 50 or more employees and a prime contractor first-tier subcontract amounting to $50,000 or more

What information will be needed to file?

• Company ID and unique PIN
• Company EIN and NAICS code and company DUNS number (if a federal contractor)
• Establishment address, EIN and NAICS code for each establishment or establishment DUNS number (if a federal contractor)
• Count of all full- and part-time employees on the effective date selected by the employer
• Gender and race/ethnicity of all employees
• EEO-1 job categories of all employees

Get your data ready

Requirement one:  All jobs must have an EEO Category assigned

Navigate to Client Management > Job > Jobs and ensure the EEO Category is populated for all your jobs in isolved. Don’t forget to check any jobs that may be inactive as well. If the job was active in the prior calendar year, it will need to have an EEO Category assigned as well.

Requirements two and three:  All employees must have a gender and ethnic origin assigned

An easy way to identify where updates are needed is to run the EEO-1 report. Navigate to Reporting > Client Reports and select a Report Category of HR – Compliance to filter your report list. Select the EEO1 Report – As Of Date and enter the following report criteria:

• As Of Date: Enter the period end date for the payroll you select to use for EEO reporting. This pay period must fall between Oct. 1 and Dec. 31 of the 2022 reporting year.
• Date Type: Select Period Ending Date
• Employees To Include: Keep the default ALL Active and Inactive employees
• Select the Employee Audit Report (Excel format)

When viewing the report, page down and you will see a list of errors that need correction:

• All employees must be assigned an EEO job category
• All employees must have a gender and ethnic origin

Update your data

Ask your employees to add missing gender or ethnic origin data through employee self-service.

For clients using the modern Adaptive Employee Experience (AEX), employees will navigate to Personal > Personal Information > Federal Reporting > EEO to update their gender and race/ethnicity identification selections. They will be able to see their current self-reported status and make updates on any device: phones, tablets or computers.

For clients using Employee Self-Service in Classic View, employees will navigate to Employee Self-Service > Federal Reporting Data > EEO Self-Identification to update their gender and race/ethnicity identification selections.

Please note: If an employee is not comfortable answering the questions, they can select the option “I do not wish to disclose,” but the field cannot be left blank.

If your employees do not have access to make these updates, contact your payroll specialist and they can enable the appropriate security roles.

Ensure all work locations are tied to an establishment

Establishments screen links work locations to EEO-1 reporting establishments.

Navigate to Client Management > Client Maintenance > Establishments and ensure all your work locations are tied to an establishment in isolved. If you already have an establishment created, verify all your work locations are associated with the establishment. If you need to create an establishment, click the Add New button to create your establishment and then select your work locations that you want to tie to your establishment.

To use the isolved EEO1 Report or EEO1 Export, you need to link your work locations to EEO establishments and assign your company headquarters on the Establishments screen for accurate reporting.

If you are a multi-establishment employer, make sure you designate one of your establishments as your headquarters to enable the Type 3 Headquarters report.

Run your EEO-1 Audit Report

Run your EEO1 Employee Audit Report again to verify all your data has been updated. Look good? Now you are ready to run your EEO1 Export report. Navigate to Reporting > Client Reports and select the Report Category HR – Compliance to easily access the EEO-1 reports in isolved and submit your data through the EEO-1 Data Collection Portal.

For companies tracking ethnic origin, gender and EEO classifications in isolved, the EEO1 Export is formatted as a comma-delimited (CSV) file for upload to the EEO-1 Component 1 Online Filing System.  This report is available on the Reports > Client Reports menu in the HR Compliance Reports category.

U.S. Immigration and Customs Enforcement (ICE) announced that employers have until Aug. 30, 2023, to bring I-9s into full compliance after the July 31 sunset of the COVID-19 flexibilities policy. The sunset of this policy will reinstate the requirement that employers complete in-person I-9 physical document inspections for employees whose documents were inspected remotely during the flexible period. This also means that any new employees hired on or after Aug. 1 of this year must have their I-9 documents physically inspected, regardless of the company’s remote work status.

Employers have been exempt from the physical inspection requirement since March 2020. However, employers who have already initiated the return of their employees to in-person work are required to immediately physically inspect all employees’ I-9 documents if those employees onboarded remotely on or after April 1, 2021; this requirement applies to all employees, even if only a portion of the employee population returned to in-person work.

Recommendations for employers going forward:

• Bring all I-9s previously out of compliance into compliance with physical inspections prior to Aug. 30, 2023.
  • Compliance with the new policy can be evidenced by annotating the “Additional Information” box located in Section 2 of the form.
  • Examples of how to annotate the Section 2 box are available here.
• By Aug. 1, employers must inspect physical documents for all employees regardless of their remote work status.

Simultaneous to ICE’s recent action, the Department of Homeland Security (DHS) proposed a rule that would make in-person physical inspection of I-9 documentation optional under certain circumstances. DHS has stated that it could issue a more formal Notice of Proposed Rulemaking as soon as one year after the end of the comment period for the initial proposal. Employers should lookout for updates to this process beyond those issued by ICE in the coming months.

How isolved can help:

See the article in the Insperity Help Center Temporary COVID-19 Form I-9 Accommodations Set to Expire on how clients can take advantage of isolved to manage their I-9 process.

The Biden Administration announced its intent to end the COVID-19 Public Health Emergency (PHE) and National Emergency (NE) periods on May 11, 2023. These declarations have been in place since 2020 to provide flexibility and access to critical COVID-19 countermeasures, tests, vaccines and treatments.

What changes are expected to occur once the national emergencies end?

Various employee benefit plan deadlines were extended due to an “outbreak period” from March 1, 2020, until 60 days after the announced end of the national emergency. Since the national emergency ends on May 11, 2023, the outbreak period will end on July 10, 2023. Once the outbreak period ends, health plans can return to their nonextended deadlines.

Ending the emergency declarations will impact plans in the following ways:

• Group health plans are no longer required to cover COVID-19 diagnostic testing (including over-the-counter tests) at no cost to individuals. 
• Group health plans are still required to cover recommended preventive services, including COVID-19 immunizations, without cost sharing, but this coverage requirement is limited to in-network providers.
• The extensions of certain time frames for employee benefit plans are expected to end on July 10, 2023 (60 days after the end of the national emergency). Several timeframes were extended for many plans to give individuals more time to act. Extensions such as:
  • HIPAA special enrollment
  • Electing COBRA continuation coverage
  • Paying COBRA premiums
  • Submitting health claims and appeals

Plan sponsors should review and consider the following actions:

ACTION ITEMS	HEALTH & WELFARE PLANS
Collaborate with third-party administrators (e.g., COBRA administration) to develop a communication plan around extended timelines to participants
Review and update Plan Documents and Summary Plan Documents to ensure extended timelines are addressed
Communicate to participants on how previous extended timelines will be managed

For additional information and a comprehensive list of anticipated changes, please refer to the U.S. Department of Labor: https://blog.dol.gov/2023/03/29/what-does-the-end-of-the-covid-19-public-health-emergency-mean-for-health-benefits.

Clients with the COBRA Administration package for benefit continuation can reach out to the isolved Benefit Services team for assistance.