retirement

Read this if you sponsor an employee benefit plan. 

The Department of the Treasury and the Internal Revenue Service recently issued final regulations updating the required minimum distribution (RMD) rules.

Effective on September 17, 2024, the regulations adhere closely to the proposed regulations issued in 2022 (REG-105954-20). The IRS did say in a press release that the final regulations did take into account some comments. Two such instances:

• Applying the qualified annuity exception when an employee had died and, after the employee's death, the beneficiary made an irrevocable election as to the method and the amount of the annuity payments before Dec. 20, 2019. 
• The applicability date in the proposed regulations of distribution calendar years beginning on or after Jan. 1, 2022, has been changed to distribution calendar years beginning on or after Jan. 1, 2025.

Proposed regulations for additional RMD issues under the SECURE 2.0 Act

The IRS also issued proposed regulations (REG-103529-23) to address additional RMD issues under the SECURE 2.0 Act, including:

• Applicable age determinations for employees born in 1959
• Purchases of annuity contracts with a portion of an employee's individual account
• Distributions from designated Roth accounts
• Sec. 4974 excise tax waivers related to timely corrected RMD failures
• Spousal elections under Section 327 of the SECURE 2.0 Act related to the death of an employee before the employee’s required beginning date
• Divorce after the purchase of a qualifying longevity annuity contract
• Outright distributions to a trust beneficiary

The new proposed regulations include provisions for which Treasury and IRS are soliciting public comments, including provisions addressing other changes relating to RMDs made by the SECURE 2.0 Act. For details on how to submit comments, see the proposed regulations.

If you have questions regarding the final rule or the proposed regulations, please contact our Employee Benefits Team. We’re here to help.

Read this if you are interested to see how AI can help your organization.

Over the past few decades, technological advancements have revolutionized various industries, compelling businesses to integrate sophisticated tools and software into their operations. Initially, these innovations sparked apprehension, but with education and adaptation, their value became undeniable, embedding them into business workflows. The same will hold true for AI integration, but this time, the pace is unprecedented. Businesses that delay even a year or two risk being left behind, jeopardizing their competitive edge in the marketplace.

"AI won't replace you, but someone using AI will" is a prevalent notion, highlighting how AI tools are already automating repetitive tasks across industries. A 2024 report by Business Insider supported earlier findings, suggesting that many job roles, especially those involving routine tasks, are at significant risk of automation. Another recent IT study conducted by the CPA Firm Management Association revealed that 73% of organizations currently adopt a "wait and see" approach to AI/ChatGPT.

Businesses that leverage AI and automation will likely outpace those that do not. The quicker businesses recognize AI's current impact, the sooner they can adapt to maintain competitiveness. Here are four steps to effectively integrate AI into your organization.

1. Grasping AI and new technologies
   Understanding AI, automation, and various quickly changing technologies is vital. Many contemporary applications labeled as AI are built on algorithms designed to execute specific tasks, which we term "augmented intelligence." For instance, customer service chatbots that handle routine inquiries or document automation tools that organize data exemplify narrow AI, crafted for distinct purposes. Robotic Process Automation (RPA) mimics human actions related to data entry or transaction processing but requires human intervention if any process changes occur. Many vendors offer scripting between programs, widely used in various sectors, to facilitate tasks such as data integration from multiple sources to enhance cash receipts and disbursement transactions, banking, and payroll into enterprise resource planning systems.
2. Educating your team on Generative AI technologies
   The initial step to harnessing Generative AI (GenAI) is educating your team on its safe and effective use. GenAI tools like OpenAI's ChatGPT, Anthropic's Claude, and Microsoft's Copilot utilize large language models to generate human-like responses to text prompts. You can leverage GenAI to condense extensive data, draft communications, and assist with complex tasks like writing code or creating financial models. Users must understand that GenAI can produce inaccurate or biased information, known as "hallucinations." Training should emphasize not entering confidential data into GenAI systems and making sure that all AI-generated content is reviewed by knowledgeable personnel. Introductory training should cover the risks and benefits of GenAI, as well as best practices for generating accurate and useful responses.
3. Establishing a robust AI usage policy
   A comprehensive AI usage policy is essential for safe and effective AI integration. This policy should define acceptable AI use, including what can be done without permission, how to set up accounts, and outlining mandatory training before use. The policy should also stipulate that all AI-generated content must be verified by a knowledgeable individual who is accountable for the information and technically able to review and validate the AI-generated content. The policy should be clear on data privacy and security, particularly regarding the handling of sensitive information. Additionally, the policy should encourage ongoing education and adaptation as AI technologies evolve.
4. Appointing AI specialists
   Identifying AI specialists within your organization is crucial. These individuals should be involved in daily operations and interested in exploring AI's potential benefits. They should be given time and resources to investigate new AI solutions, attend relevant conferences, and participate in webinars. Pilot projects that address significant challenges or improve efficiency should be prioritized. For example, Microsoft 365's Copilot integrates AI capabilities into familiar tools like Excel and Word, making it a practical starting point for many businesses. Regular discussions and updates on AI advancements should be part of team meetings to ensure everyone stays informed and engaged.
5. Getting started
   Embarking on your AI journey begins with defining clear objectives—what do you want to achieve with AI, and how will it drive value for your business? Once your goals are set, allocate the necessary resources, including budget, talent, and time, to support this initiative. Next, assess your businesses’ readiness and specific needs, identifying any gaps in skills, infrastructure, or data. Preparing your data is crucial, as clean, relevant, and well-structured data forms the foundation of any successful AI project. Aligning on the right tools and technology is equally important, ensuring they fit your objectives and existing systems. Start by piloting AI tools in a controlled environment, monitoring results closely, and being ready to make adjustments based on what you learn. This iterative approach will help you fine-tune your strategy and maximize the impact of AI on your organization.

Whether businesses are ready or not, the evolution of AI solutions is rapid and unprecedented. Business solutions like Microsoft 365 Copilot and OpenAI ChatGPT are already making an impact across various industries. Organizations should have dedicated personnel to monitor and integrate these advancements, supported by robust internal policies and ongoing education to ensure secure and effective implementation.

Ready to transform your technology landscape? Have questions about your specific situation? Our team is here to guide you every step of the way. Please contact us. We're here to help. 

Read this if your organization is interested in creating successful well-being programs.

In today’s evolving business landscape, firms are more aware than ever of the need to attract, engage, and retain employees. Central to these efforts are employee well-being programs, which are rapidly becoming ubiquitous. In fact, nine out of 10 businesses now have some form of a well-being program. This newfound focus is also reflected in employee survey data, with 71% of workers reporting that they believe their employers are more concerned about employees’ mental health than in the past. Moreover, over 80% agree that how employers support mental health will be an important consideration for them when they look for future work.

Despite this profound cultural shift, perceived workforce well-being remains virtually unchanged since 2022, thus begging the question: what can your organization do to maximize its investments in human capital?

The Fitbit fallacy

Imagine your firm has just introduced a new well-being program. Employees are eagerly strapping on their new Fitbits, competing in step challenges, and sharing their progress on social media. Initially, the energy is palpable and infectious; however, after just a few short months, you begin to notice empty wrists among your colleagues. Participation plummets, and these shiny new Fitbits are relegated to gather dust in desk drawers.

So, what went wrong?

A key insight into the problem is that well-being is not only influenced by individual choices, but also by the organizational context. Many workplace factors, such as workload, autonomy, communication, and culture, can create conditions that undermine or support employee health. Simply offering individual-level interventions, such as Fitbits or yoga classes, is not enough to address the systemic issues that affect well-being. 

Gilding the lily

Historically, workplace well-being initiatives were designed around the individual, providing meditation apps, incentivizing exercise, and so on. However, recent research indicates that these initiatives—while laudable—are far less likely to have a sustainable impact on employee health than systemic solutions, including organizational-level interventions. As noted by Dr. William Fleming, Research Fellow at the University of Oxford’s Well-being Research Centre, “There’s growing consensus that organizations have to change the workplace and not just the worker.” It’s like planting a seed in rocky soil: without the right environment, it won’t thrive—even with the best of intentions.

Tilling the soil

Just as planting a seed in rocky soil requires tilling the ground to create the right conditions for growth, cultivating a sustainable culture of well-being in an organization requires far more than ‘surface-level’ programming. Rather, well-being demands a holistic and strategic approach that considers the employee experience in its entirety, from physical and mental health to social and emotional well-being. Moreover, it also requires that the organization align its well-being goals with business objectives and outcomes and demonstrate how investing in employee well-being can enhance performance, productivity, and innovation. As noted by the World Health Organization, "A healthy workplace is one in which workers and managers collaborate to use a continual improvement process to protect and promote the health, safety, and well-being of all workers and the sustainability of the workplace."

Here are some strategies to consider when making a commitment to well-being initiatives:

1. Leadership commitment: Well-being should be a core value, championed by leadership. When executives prioritize their own well-being and actively participate in well-being programs, it sets a powerful example for the entire organization.
2. Integrated policies: Policies should reflect a commitment to well-being. This includes flexible working hours, mental health days, and comprehensive health benefits. Policies should be rooted in a culture of respect, necessitating a shift from a ‘command and control’ mindset to a ‘trust and empower’ perspective. Central to this shift is establishing work structures and operational systems that create transparency and accountability. 
3. Physical environment: The workplace environment plays a crucial role in employee well-being. Ergonomic workstations, presence of natural light and nature elements, access to privacy rooms, and relaxing places to unplug from technology can significantly influence physical and mental health.
4. Community building: Foster a sense of community from day one! Design onboarding practices that introduce new hires to the values, norms, and expectations of your organization. Provide opportunities for socialization, mentoring, and collaboration, as a strong sense of belonging can enhance overall well-being. Encourage team-building activities, social events, and peer support networks. 
5. Continuous feedback: Well-being means different things to different people. Regularly solicit feedback from employees about their overall employee experience—not just your well-being initiatives. Use this feedback to make continuous improvements, and then communicate those improvements. When employees feel heard and valued, their engagement and satisfaction increase.

Reap the rewards

Investing in organizational factors that support well-being isn’t just a feel-good initiative; it’s smart business strategy. Research shows that companies with robust well-being programs see higher employee engagement, reduced absenteeism, and increased productivity. In other words, a healthy workforce is a high-performing workforce. Moreover, these companies also enjoy lower healthcare costs, improved retention rates, and enhanced employer branding. By fostering a culture of well-being, companies can not only attract and retain top talent, but also boost their bottom line and competitive edge.

Conclusion

While Fitbits, chair massages, and yoga are great starting points, they are simply insufficient to create a wholesome work environment. Establishing an enduring culture of well-being requires integrating it deeply—and holistically—into the organization’s core practices and values.

Put simply, you can’t expect to ‘yoga’ your way to employee well-being; rather, you must place a comprehensive and systematic approach toward cultivating a workplace environment in which your most valuable resource—your people—can flourish. By doing so, you can cultivate a culture where employees not only survive but thrive. 

If you have any questions about well-being programs or questions about your specific situation, please contact our Well-being Consulting team. We’re here to help.

Read this if you work within a State Medicaid Agency (SMA). This is the first article in a series of articles published in follow-up to the Medicaid Enterprise Systems Conference (MESC). Future article topics will speak to guidance shared at MESC on MITA 4.0, Advanced Planning Documents (APD), forthcoming templates, Artificial Intelligence (AI) in Medicaid, and operational reporting requirements.

If you haven’t already embraced the Centers for Medicare and Medicaid Services (CMS) as a partner for your SMA Medicaid Enterprise System (MES), now is a great time to start. CMS was out in full force at the Medicaid Enterprise Systems Conference (MESC), highlighting trends across the MES space, bringing policy and regulatory changes to the front of conversations, and showcasing SMA collaboration and reuse at every turn. Across sessions and collaborative workshops, CMS clarified the value it seeks from MITA 4.0, the steps taken to move it forward, and the industry partners committed to making it a reality. Most evident was CMS’s message about the value that can come from engaging CMS and SMA state officers (SOs) early and often in your enterprise planning, implementation, and operations discussions.

In true partner fashion, CMS highlighted several trends in Medicaid to help inform SMAs’ MES journeys:

• Certain module enhancements may no longer require streamlined modular certification and can be eligible for enhanced funding (i.e., Health Information Exchange [HIE], prescription drug monitoring program [PDMP], and data warehouse [DW] modules).
• SMAs continue to focus on a single module or vendor at a time as opposed to multiple modules for the same vendor.
• SMAs continue to implement cloud-based end-to-end solutions as replacements for legacy Medicaid Management Information System (MMIS) modules.
• SMAs are asking to forego Operational Readiness Reviews (ORRs) altogether due to testing delays and skip straight to requesting certification. CMS is asking SMAs to stop requesting ORRs be skipped and instead prioritize making sure the solution’s testing is comprehensive, of quality, and producing results that instill confidence in the solution’s ability to fulfill your program needs.
• During CMS site visits, SMAs shared concerns regarding procurement, vendor management, and public health emergency (PHE) unwinding as they relate to various MMIS projects.
• SMAs are continuing to replace legacy systems, and the industry should expect to see more MMIS module certifications as states and territories shift to new solutions.

Lastly—and for the first time at MESC—CMS presented a summary and synthesis of regulatory changes that highlighted each regulatory requirement’s timing so that it could serve as an input into SMA efforts. This is an incredibly valuable reference for all SMAs and is available via outreach to your SO!

Partnering with CMS is not optional—it's essential. CMS’s presence and insights at MESC underscored the importance of early and ongoing collaboration. By aligning with CMS guidance and leveraging its expertise, SMAs can navigate MES complexities more effectively. Whether it's embracing MITA 4.0, staying informed on regulatory changes, or integrating new technologies, the path to success lies in a strong partnership with CMS. Let’s continue to engage, collaborate, and build a future where our collective efforts drive meaningful outcomes for the Medicaid community.

Please contact our Medicaid team if you have any questions or would like to learn more. We're here to help.

Read this if your company is eligible for the Employee Retention Credit (ERC) and has filed a claim.

In a recent news release, the IRS announced that it will begin processing low-risk ERC claims submitted prior to September 15, 2023, when a moratorium on processing new claims was effective. The IRS indicated 50,000 low-risk ERC claims will be processed and paid out quickly. The IRS projects payments will begin in September, with additional payments going out in subsequent weeks. The IRS anticipates adding another large block of additional low-risk claims for processing and payment in the fall.

The IRS also indicated it has sent out 28,000 disallowance letters in recent weeks to businesses whose claims showed a high risk of being incorrect. The IRS estimates that these disallowances will prevent up to $5 billion in improper payments. We have seen a couple of denial letters that relate to the quarter ended September 30, 2021. Those denial letters indicate the IRS does not believe the employer was subject to government orders that impacted operations—nor did the employer incur a significant reduction in gross receipts. If you received a denial letter related to the quarter ended September 30, 2021, and do not have the appropriate support for the impact of government orders or a reduction in gross receipts then it may not make sense to appeal the denial.

The IRS also announced that it has shifted the moratorium period on new claims that was effective as of September 14, 2023. Per the agency, it will now start judiciously processing claims filed between Sept. 14, 2023, and Jan. 31, 2024. Like the rest of the ERC inventory, work will focus on the highest and lowest risk claims at the top and bottom end of the spectrum. This means there will be instances where the agency will start taking action on claims submitted in this time period when the agency has seen a sound basis to pay or deny a refund claim.

Given the complexity of the ERC (and to reduce the risk of improper payments), the IRS is moving methodically and deliberately on both the disallowances as well as additional payments to balance the needs of businesses with legitimate claims against the promoter-fueled wave of improper claims that came into the agency.

“The Employee Retention Credit is one of the most complex tax provisions ever administered by the IRS, and the agency continues working hard to balance our work to protect taxpayers from improper claims while also making payments to qualifying businesses,” said IRS Commissioner Danny Werfel. “It has been a time-consuming process to separate valid claims from invalid ones. During the past year, we maintained a steady cadence of both ERC approvals and disapprovals.”

As the IRS begins to process additional claims, the agency reminds businesses that they may receive payments for some valid tax periods—generally quarters—while the IRS continues to review other periods for eligibility. ERC eligibility can vary from one tax period to another if, for example, government orders were no longer in place or a business’s gross receipts increased. Alternatively, qualified wages may vary due to a forgiven Paycheck Protection Program loan or because an employer already claimed the maximum amount of qualified wages in an earlier tax period.

The IRS also reminds businesses that if they receive a denial of an ERC claim, they have options available to file an administrative appeal by responding back to the address on the denial letter. IRS.gov also has additional information on administrative appeals with the IRS-independent Office of Appeals.

Our take: For those employers still waiting to receive their ERC claims and who worked with a non-tax professional to calculate and claim the credit, now is the time to determine if you have (or received from the third-party vendor) the appropriate documentation to verify eligibility to claim the credit and confirm the calculation of the credit. At a minimum, you should have documented support for the reduction in gross receipts test or full/partial shutdown test related to the eligibility of the businesses or organizations to claim the credit and detailed support.

In addition, we recommend an employer who has received payment for some, but not all claims call the IRS to verify the outstanding Forms 941-X are actually on file at the IRS. We have encountered situations where the IRS has no record of receiving a Form 941-X and the client has the return receipt confirming receipt by the IRS.

Lastly, employers who receive a denial letter are encouraged to reach out to their tax advisor for assistance with the appeals process if they believe they are in fact eligible for the credit.