Dear Clients and Friends,
Welcome to the inaugural edition of the GJC Advisor. The George Johnson & Company team is squarely focused on providing sound financial guidance, value and knowledge to our clients and professional connections to help them grow their businesses. This newsletter is an extension of those goals. Each issue will offer insight on accounting topics that matter to you as well as other matters such as keeping your financial house in order and building profitability. We will also share stories about our dedication to the community and invite you to get inspired, find motivation and join us. We hope you enjoy this first edition of the GJC Advisor.
Cybersecurity Concerns for Employee Benefit Plans
In recent months, the Department of Labor (DOL) has raised concerns about cybersecurity and employee benefit plans. Employee benefit plans may be vulnerable to cyber-attacks and thus exposed to risks relating to privacy, security, and fraud. Plan administrators, or those charged with governance, have an ERISA fiduciary duty with respect to the management of the plan, which encompasses the duty to care for personally identifiable information (PII) and protected health information (PHI).
Most plan sponsors and service organizations now use electronic means to conduct financial transactions for the plan (such as the remittance of participant and/or sponsor contributions) and to interface with participants (for instance, permitting participants to electronically initiate a new loan or request a plan distribution). It is these electronic records, and the related investment transactions, that may be at risk to a cyber-attack. Potential at-risk PII data includes information such as social security number, date of birth, email address, etc. While PII might seem to be an unlikely target, it has significant value to cybercriminals since it is permanently associated with an individual (unlike a credit card account number, PII cannot be easily “cancelled”) and therefore can be exploited over a longer period of time.
Form 5500 Update
2016 Compliance Questions
In March 2016, the IRS announced proposed changes to the 2016 Form 5500 Series returns (including Form 5500, Form 5500-SF and 5500-SUP). These changes incorporate updated/more consolidated versions of the 2015 compliance questions. Proposed questions include the following:
• The trustee, custodian, and Form 5500 preparer’s name and contact information
• Basic information regarding methods used by qualified plans to satisfy nondiscrimination requirements, including ADP/ACP testing methods and minimum coverage
• Timing of in-service distributions for plans subject to minimum funding including defined benefit and money purchase plans
• Whether a plan received a favorable advisory, opinion, or determination letter with related information
If required minimum distributions were made to more than 5% owners
The IRS also will provide a 2016 Form 5500-SUP that will be used to report these compliance questions to the IRS if these questions are not answered electronically on Form 5500 or Form 5500-SF. Form 5500-SUP will be a paper-only filing.
DOL “Conflict-of-Interest” Fiduciary Rule Released
In April 2016, the DOL released the final ruling regarding the definition of who is a fiduciary and its role with respect to providing investment advice. The new regulation (also referred to as the “conflict-of-interest” rule) is designed to close legal loopholes permitting retirement advisers to recommend investment products that are more profitable to the adviser and not necessarily in the best interests of their clients. This is the first significant regulation addressing investment advice since 1975 and reflects the greater role played by participants in investment decisions, through participant-directed 401(k) plans, individual retirement accounts (IRA), etc.
The Plan Sponsor’s Fiduciary Role
When discussing the role of the plan sponsor as the fiduciary to a plan, it is important to note that the role of fiduciary extends to specific individuals within the plan sponsor organization. Identifying those individuals depends on job functions performed on behalf of the plan and is not based solely on a particular job title. Within the plan sponsor organization, plan fiduciaries will often consist of a named plan fiduciary, any committees charged with the governance/administration of the plan (which can include the audit committee, plan committee and/or a plan investment committee, etc.), as well an anyone else involved in decision making for the plan.
Get to know GJC Managing Partner,
Hometown: Oak Park, Michigan
How long have you been with GJC? I’ve been with the firm just over
eight months. I started with GJC April 2016.
What drew you to a career in the accounting field?
Entering college, I wasn’t sure of what career path I wanted to take. I started out in
Psychology, but quickly realized that I was on the wrong path. Shortly thereafter, a college teammate who was a Finance major, suggested I focused on a business major. After taking an accounting class and meeting Professor W. Howard Morris, who was an African American CPA, I was inspired to shift my focus and major to Accounting.
What do you find most rewarding about your work?
Being in the client service business is rewarding for me because I am able to help clients with their needs and help them solve problems. Each day looks different and comes with different demands and challenges. I’ve never gotten bored in public accounting.
What’s the best part of being a member of the GJC team?
For me, the Firm’s rich history of providing excellent services to our clients. I like to say we provide Big Four services, at reasonable and fair prices. Also, the Firm’s history includes that of the first African American CPA in the state of Michigan. To be a part of that rich history is an honor.
List your favorite place you have traveled:
Name one item on your “bucket list”:
Own a pet tiger
What is your favorite restaurant in Metro Detroit?
Beans and Cornbread!!
Favorite sports team:
What was your first car (make, model)?
What was the first concert you attended?
Boyz II Men in 1992
George Johnson established GJC 45 years ago in the City of Detroit. Since the firm’s inception, commitment to the community has been a central component of our mission. We consistently identify and fulfill avenues to help fellow Metro Detroiters. From our team volunteering in soup kitchens to celebrating Martin Luther King, Jr. Day as an opportunity to serve, we will continue to seek outlets to lend our collective time and talents to enhancing our community.
George Johnson sweeps up at Capuchin Soup Kitchen during our firm-wide Martin Luther King, Jr. Day of service
The GJC team stops for a photo while working at the Capuchin Soup Kitchen.