The Bureau of Labor Statistics tracks all manner of
information, including consumer prices.
Each month, they release a Consumer Price Index Summary, which you can
find, for December, at https://www.bls.gov/news.release/cpi.nr0.htm. A few highlights are:
The CPI for All Urban Consumers, or CPI-U, increased 0.3% in
December, and 2.1% for 2016. The shelter
index was up 0.3% for the month, while gasoline was up 3%. The food at home index declined again, while
the food away from home index increased, with these two changes offsetting each
other. We have found that it is cheaper
to eat at home than to eat out, regardless of the fluctuation in the prices of
either. And generally, it’s healthier as
well.
Excluding food and energy, the CPI-U was up 0.2% in
December. Of course, housing, food, and
transportation are the three largest expenses for most households, so it seems
appropriate to pay attention to those prices and costs.
The FairTax Act of 2017, H.R. 25, was introduced in the
House on January 3, 2017. The bill is a
tax reform proposal which imposes a national sales tax on the use or
consumption, in the U.S., of taxable property or services. This national sales tax would be in lieu of
the current personal and corporate income tax, employment and self-employment
tax, and estate and gift tax. There are
exemptions from the tax for used and intangible property, property or services
purchased for business, export, or investment purposes, and for state
government functions. The sales tax rate
will be 23% in 2019, with rate adjustments in future years.
Under the bill, family members who are lawful U.S. residents
receive a monthly sales tax rebate, known as a Family Consumption Allowance, based
on criteria related to family size and policy guidelines. The states have responsibility for
administering, collecting, and remitting the tax to the Treasury.
Tax revenue would be allocated among 1) general revenue, 2)
the old-age and survivors’ insurance trust fund, 3) the disability insurance
trust fund, 4) the hospital insurance trust fund, and 5) the federal
supplementary medical insurance trust fund.
No funding is authorized for IRS operations after FY 2021.
Finally, the bill terminates the national sales tax if the
Sixteenth Amendment to the Constitution, which authorized an income tax, is not
repealed within seven years after the enactment of this bill. We shall see.
This is akin to the Impossible Dream, and I’m not certain Congress has
the intestinal fortitude to actually do this.
If your company sponsors a 401(k) plan, and you are an owner
or a member of the executive team which oversees the plan, the first six weeks
of the year is a good time to review plan operations. Following are some items you may want to
review, as it relates to the plan.
PLAN DESIGN – Does the plan continue to accurately reflect
why you installed the plan initially?
Common reasons are either to maximize benefit to ownership, or to offer
a meaningful benefit which enhances your ability to recruit, retain, and reward
employees.
PLAN ADMINISTRATION – Have all required notices been sent to
participants, in a delivery form which meets guidelines? Are contributions made on a timely and
consistent basis? Is loan management
working as it should? If an auto-enroll
feature is used, does this feature work in practice as it’s described in the
plan? Does the ownership questionnaire
continue to reflect the ownership and relationship status of the employee
population?
PLAN INVESTMENTS – Does the plan offer a Qualified Default
Investment Alternative, or QDIA? Does
the array of investment choices meet 404(c) guidelines, and if not, is it
intended to? Have the plan decision
makers chosen to use age based or risk based investment options, which in many
cases make it simpler for employees to participate? Is investment performance of the available
funds and options in line with their respective benchmarks?
PARTICIPANT EDUCATION AND INFORMATION – Is there a well
thought out, and consistent approach, to educating eligible employees about the
plan, how it works, how to access it, and how they can benefit from it? If so, is this plan executed
consistently? Does it communicate with
participants and eligible employees in a manner that reflects how most
consumers receive information?
picture credit: rolloveriraintogold.com |
PLAN COSTS – Are costs charged to participants benchmarked
for type and amount? Are fund fees at or
below averages? Has the investment
committee reviewed participant costs, and affirmed cost appropriateness for the
benefits received by participants? Are
compliance, administrative, and advisory costs in line with norms? Are types of costs charged to participants
appropriate, or should some of them be considered “settlor” costs, and instead
be paid by the company?
REGULATORY – Has the plan filed its 5500 on a timely
basis? If an audit is required, is the
audit completed on a timely basis? Are
there proposed changes to ERISA guidelines which could impact plan management?
picture credit: app.emaze.com |
Enough of all that.
It looks as if that, here in Georgia, the weather will be cooling off,
and the sun will be shining, for the next week or so. As it does, take a few minutes, and simply
step outside to enjoy the day. Your work
will be there when you return.
Quote of the week:
“You can discover more about a person in an hour of play,
than in a year of conversation.”
Plato