GBC Tax and Payroll Service Form Archive - Your One Stop Resource for State and Federal Forms and Documentation

Payroll Services of Atlanta

GBC Income Tax and Payroll Services of Atlanta, we are committed to providing you with timely information to help you manage your business, your workforce and your cash flow. We  have created a list of common forms for download, as well as, links to helpful websites.

Please follow this link to our form tax form archive.

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

Here's a small sampling:

• IRS Withholding Calculator
• Tax Requirements By State
• W4 form

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READ MORE

• GBC Tax Offer Atlanta Experienced IRS Representation
• Contact GBC Income Tax Services Today! 
• Atlanta Income Tax Preparation Services
• Visit the Internal Revenue Service's Website

Signs That Your Income Tax Preparer is Bad News : No Proof of Credentials

Bad Tax Preparer:
No Proof of Credentials

Warning Signs of the Bad Atlanta Georgia Income Tax Preparer:

WARNING SIGN 6

Thanks for Business, But Don't Talk About Me...

All tax preparers will have a Preparer Tax Identification Number, this PTIN is given by the IRS. You are not only allowed to see this, but you should ask for it before you have anyone new doing your taxes. Get a copy of this number, as it can help you in case of any fraudulent behavior.

Do not get scammed, follow the above “rules of thumb” and avoid any IRS trouble altogether. If you are looking for a good, high quality tax preparer for your Atlanta Georgia taxes, then you have come to the right place.

GBC Tax Services founder is Ghassan R. Ghraizi, CPA, CGMA.  
Read more about Ghassan R. Ghraizi here. Ghassan is a Certified Public Accountant, Certified Chartered Global Management Accountant, Atlanta BBB Member.  

Read Warning Sign 1: Asking You to Lie About How Giving You Are
Read Warning Sign 2: They Look Like They're Officeless...
Read Warning Sign 3: Not Asking For Documentation
Read Warning Sign 4: Lies About Tax Breaks
Read Warning Sign 5: History of Bad Behavior

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• Read about CGMA - Why It Matters
• Visit the Internal Revenue Service's Website
• Contact GBC Income Tax Services Today! 
• Atlanta Income Tax Preparation Services

Signs That Your Income Tax Preparer is Bad News : History of Bad Behavior

Bad Tax Preparer:
History of Badness

Warning Signs of the Bad Atlanta Georgia Income Tax Preparer:

WARNING SIGN 5

History of Badness

It is easy to check out a tax preparer before using them. In this digital age, you can almost do a google search about any serious professional and find them online, and along with their customers that had used them in the past.

For old school background checks, you can check out the state's board of accountancy if you are using a Certified Public Accountant (CPA).

Visit our BBB profile here. GBC Income Tax Services is a proud member of the Atlanta Better Business Bureau, is an accredited BBB member with an A Rating.  


Read Warning Sign 1: Asking You to Lie About How Giving You Are
Read Warning Sign 2: They Look Like They're Officeless...
Read Warning Sign 3: Not Asking For Documentation
Read Warning Sign 4: Lies About Tax Breaks

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• GBC Tax Offer Atlanta Experienced IRS Representation
• Visit the Internal Revenue Service's Website
• Contact GBC Income Tax Services Today! 

Do you need to meet with your tax representation prior to being audited by the IRS?

Having excellent experienced tax 
representation is extremely
 important and invaluable
during an audit by the IRS.

People who acquire tax representation for their tax audits, often wonder whether or not they need to meet with their actual tax representative.

The good news is that if your time is extremely valuable and you hire tax representation to represent you to the IRS, you usually do not need to meet up with them at all. 

Through the Power of Attorney (form 2848), your tax representative can handle all the dealings with the IRS on their own. This includes even being able to sign final agreements with them after the tax audit of your business is complete.

Download Form 2848

One thing to note is that tax representation can be extremely useful for people who are incredibly busy, however there is a caveat that needs to be talked about. The IRS can still force you to appear by using what is called an “administrative summons”. This administrative summons is most often used if your IRS representative is not cooperating with the IRS and sharing all the details they are looking for. Often this happens too if they are expecting or have suspicions of some sort of fraudulent behavior with your filing.

In this case, having very good tax representation is extremely important and invaluable. They can help you save yourself from possible pending criminal charges which the IRS take extremely serious. If you do know you filed wrongly, or inaccurately, you should hire help right away to help you correct the mistake.

Often people in this situation succumb to:

• Fabricating receipts
• Fabricating records to support invalid deductions
• Lie to the examiner about income or other items

High quality tax representation whether you are in Atlanta, Georgia or anywhere else is money well spent and is often worth its weight in gold (solid gold).

Typically, it is very difficult for the IRS to prove underlying tax evasion. Doing any of the above three things though is what on average leads to the taxpayers ultimate downfall. Honesty truly is the best policy. Regardless, having a good tax representative who is well versed in criminal cases or potentially criminal cases could end up saving you from the wrath of the IRS.

GBC Income Tax Services is a proud member of the Atlanta Better Business Bureau, is an accredited BBB member with an A Rating.  
Visit our BBB profile here.

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• Payroll Taxes for Your Small Business
• Contact GBC Income Tax Services Today! 
• GBC Tax Offer Atlanta Experienced IRS Representation
• Why Hire a CPA Listed with the BBB

Signs That Your Income Tax Preparer is Bad News : Lies About Tax Breaks

Bad Tax Preparer:
Lies About Tax Breaks

Warning Signs of the Bad Atlanta Georgia Income Tax Preparer:

WARNING SIGN 4

The Big Lie About the Ethnic Tax Breaks...

Anyone that tells you that you get a tax break based off your race or religion, is an idiot or a scammer. Since even idiots know we are all taxed more or less the same, you can bet that this person is a scammer and you need to stay away from this person.

For example in the last 10 years or so, there has been a scam running targeting African Americans stating they get tax breaks due to slave era reparations. This is just absolutely false, and if you get sold some of this snake oil, you know it is time to run away before you get hurt and lose some serious money.

GBC Income Tax Services is honest and upfront about your income tax.   
Read more about GBC Income Tax Services here. We provide Atlanta expert income tax filing services for individuals and small businesses, including partnerships, single member LLCs, and corporations (C and S Corps).

Read Warning Sign 1: Asking You to Lie About How Giving You Are
Read Warning Sign 2: They Look Like They're Officeless...
Read Warning Sign 3: Not Asking For Documentation

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• Visit the Internal Revenue Service's Website
• GBC Tax Offer Atlanta Experienced IRS Representation
• Contact GBC Income Tax Services Today! 

Atlanta Payroll Tax Problems with the IRS? No Worries. We Got You Covered.

Haste makes waste

If you are in Atlanta and are having payroll tax problems with the IRS, fear not anymore. There is indeed a solution. There is a few things you should know about payroll taxes though, crucial knowledge that could help you avoid legitimate problems with the IRS as long as these rules of thumbs are followed and guidelines applied.

First things you need to know before getting Atlanta IRS representation is what to hold back from every employee's paycheck:

• Federal (and if applicable state) income taxes
• FICA contributions (for such programs as Social Security and Medicare) 
• READ MORE ABOUT FICA  

Knowing that going in, it will be a whole lot easier to help you out of your Atlanta IRS based problems should you ever need professional audit help.

Other important notes for an employer to know to help them with their Atlanta payroll tax problems:

• How much income tax to withhold depends on the numbers of exemptions claimed by the employee.
• FICA contributions from a percentage of gross earnings earned by the actual employee in which you must either match to a certain percentage, or fully.
• Use a federal tax deposit form with your payment (makes things way easier)

Along with these, there are also a couple things you must make sure you always send to the IRS. If you do not send these to the IRS, then you may indeed find yourself needing Atlanta IRS representation.  The Atlanta IRS requires this information by federal law, so it is best to make sure you send it over:

• Form 941 Employer's Quarterly Federal Tax Return. Form is filed every 3 months whilst your business maintains employees. This report shows the employees' federal income tax and FICA withheld for the previous quarter.
  Download Form 941
• Form 940 Employer's Annual Federal Unemployment Tax Return or FUTA. Filed once a year, and is used to calculate federal unemployment tax. It is important to note that the FUTA tax is paid by the actual business and is not withed from the employee's check.
  Download Form 940

If you find yourself failing in this area of Atlanta IRS representation for your business, do not fret. The Atlanta IRS has reported that the vast majority of businesses are often late, or mess up, their taxes. While the Atlanta IRS considers payroll taxes the most serious of all the tax debts, often they will be willing to work with you as long as you pick the correct Atlanta IRS representation.  

Be careful with payroll taxes, as Atlanta IRS collectors can be extremely tenacious if you owe any payroll taxes whatsoever. 

If you do find yourself in trouble, give GBC Tax a call today to help with your Atlanta IRS representation, the sooner the call the sooner your payroll tax problems can be fixed.

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• Payroll Taxes and Your Business
• Helpful Payroll Related Articles
• Visit the Internal Revenue Service's Website
• Contact GBC Income Tax Services Today! 

Signs That Your Income Tax Preparer is Bad News : Not Asking For Documentation

Bad Tax Preparer:
Not Asking for Documentation

Warning Signs of the Bad Atlanta Georgia Income Tax Preparer:

WARNING SIGN 3

No Questions Asked = Bad Taxes

If your Atlanta Georgia income tax preparer is not asking for:

• Thorough financial records
• Without looking at all your info
• They avoid lots of documentation
• Asks to e-file your return with your last pay stub before you receive your Form W-2.

Some things that LEGITIMATE tax preparers will ask for:

• W2
• Annual reports dealing with your investments and assets
• The pay stubs from your job, along with a few additional employment info
• Children's Social Security numbers (if applicable)
• Child custody proof in order to claim dependents

This could be some big red flags for a scam.  Run the other way fast...

Run to GBC Tax Service.

Read Warning Sign 1: Asking You to Lie About How Giving You Are
Read Warning Sign 2: They Look Like They're Officeless...

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• Contact GBC Income Tax Services Today! 
• Atlanta Income Tax Preparation Services
• Visit the Internal Revenue Service's Website

Advice On Dealing With The IRS from eHow's Money Section

Read Notices from the IRS
Immediately and Thoroughly

IRS problems are extremely unsettling. While you are likely to feel panicked and overwhelmed, following the steps below will assist in solving your tax issues in a timely fashion.

Do not let a notice from the IRS sit around without taking action. 

The notice will contain a payoff date for any liability noted. A timely resolution to your problems is crucial to minimize the effect of penalties and interest on this and any money you owe.

• Read the IRS notice several times. The notice will be difficult to fully understand if you read it only once. 
• Make notes on what the IRS is asking for, including the tax year the notice...

READ MORE : How to Solve IRS Tax Problems | eHow.com 

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• About GBC Services
• Commonly Used Tax Forms
• Visit the Internal Revenue Service's Website
• Contact GBC Income Tax Services Today! 

Signs That Your Income Tax Preparer is Bad News : No Storefront

Bad Tax Preparer:
No Storefront

Warning Signs of the Bad Atlanta Georgia Income Tax Preparer:

WARNING SIGN 2

They Look Like They're Officeless...

When I mean officeless, I mean a Georgia tax preparer's office is in a sign less building and a empty storefront. Sad for the ethically moral startup (or the skillfully incompetent but good hearted preparer) anyone who cannot generate enough business to invest in at least some nice branding probably should be avoided.

Would you really trust someone in a rotting can of an office with your most precious financial records? And to top it off you are trusting this person to give you good financial advice? Probably not the best of choices to get your Atlanta Georgia taxes done by.

Read Warning Sign 1: Asking You to Lie About How Giving You Are

GBC Income Tax Services is locate in Atlanta at 1950 North Park Place SE, Suite 150, Atlanta, GA 30339-2097.  Stop by today and let use help your with you State and Federal tax needs or any IRS Representation.
Read more about GBC Income Tax Services here.

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• GBC Tax Offer Atlanta Experienced IRS Representation
• Visit the Internal Revenue Service's Website
• Contact GBC Income Tax Services Today! 
• Atlanta Income Tax Preparation Services

Signs That Your Income Tax Preparer is Bad News : Asking You to Lie

If you are searching for a high quality Atlanta Georgia income tax preparer, there is a few things you should watch out for. The IRS can be totally unforgiving if you fail to deliver the taxes to the tax man, and they can be even more brutal if they find you are misfiling or exaggerating your claims.

With that all said, let us look at the 6 things to AVOID when it comes to your Atlanta Georgia income tax preparer. 

Of course, some of these just go without saying and should be common sense. However, it is known that common sense often is not very common at all, so this series will talk about these warning signs for you to avoid.

Bad Tax Preparer:
Asking You to Lie

Warning Signs of the Bad Atlanta Georgia Income Tax Preparer:

WARNING SIGN 1

Asking You to Lie About How Giving You Are:

Whenever a tax preparer tells you to inflate your claimed charitable donations, this person may be inflating (lying) about what you should and can do with your tax preparations. Most of the time, these kind of tax preparers are really trying to get you the most money possible because they get a percentage of the tax refund. So it makes sense that they would want to get as much of it as possible, right?

Steer clear of these folks. Lying about your charitable donations one is just wrong, and two it can get you into some stupid serious trouble with the Atlanta IRS (or ANY IRS!)

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• GBC Tax Offer Atlanta Experienced IRS Representation
• Visit the Internal Revenue Service's Website
• Contact GBC Income Tax Services Today! 
• Atlanta Income Tax Preparation Services

GBC Services Offering Low Cost, Affordable Payroll Services with HRMS

Valuable, expertise
Payroll services

In response to demand for increased technology solutions from its clients, GBC Services LLC announces that it has chosen to extend its Payroll and HRMS offerings.

GBC will be offering an all-inclusive, affordable package that will now include web-based HRMS, Employee and Manager Self Service, Timesheet Reporting and Approval—all combined with superior outsourced Payroll and Tax services.

GBC Payroll and Human Resources can extend its reach and value into clients’ operations and processes.

“We offer  high touch with our clients and a technology platform organizations that need more than a basic payroll service bureau,” explains Ghassan Ghraizi, president and one of the founding members of GBC Services. “Our clients expect a lot from us and we believe by adding the high-end HRMS technologies we can take our service to yet another level.”

GBC Services of Atlanta offers valuable expertise to companies of all sizes that seek to outsource their Payroll services to a company with a great reputation and excellent service record.” GBC Services’ knowledge and experience, coupled with their solid and robust HRIS / PR technology, can provide a small or mid-size company with an affordable, superior product, normally only available to the larger enterprises.

GBC Services is a committed Payroll Services company with lots of experience that serve small to midsize Southeast businesses very well.

GBC Services is now offering their all inclusive, low-cost single priced package under the product name of “GBC Professional Level Payroll and Human Resource Management System”.

• Flexible and Convenient Payroll Services Options
• Download Commonly Used Tax Forms 
• Convenient Human Resource Management Solutions 

Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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READ MORE

• Contact GBC Income Tax Services Today! 
• Atlanta Income Tax Preparation Services
• Visit the Internal Revenue Service's Website

Payroll Taxes and Your Business

Many small businesses fall behind
in paying taxes at some
point during their existence.

Payroll taxes are all taxes that are collected, by federal, state, and local governments, based on salaries and wages paid to employees. These taxes must be withheld from wages by all businesses that have employees. These taxes are remitted on a monthly or semi-weekly basis, depending on the quantity owed. Businesses are also required to make regularly scheduled reports to the Internal Revenue Service (IRS) and to state and local taxing agencies about the amount of taxes owed and paid. Businesses are not required to withhold payroll taxes on wages paid to independent contractors. Self-employed persons are responsible for paying their own payroll or income taxes directly to the appropriate taxing entity.

Many small businesses fall behind in paying these taxes or filing the associated reports at some time during their existence. Such an error is, however, very costly because significant interest and penalties apply for late payment or nonpayment of payroll taxes. In fact, the Trust Fund Recovery Penalty allows the IRS to hold a small business owner or accountant personally liable for 100 percent of the amount owed, even in cases where the business has gone bankrupt.

READ MORE from Inc.com
Inc.com
Business Taxes 
Tax Withholding 
Electronic Tax Filing
Tax Preparation Software

Purchasing QuickBooks
products through
GBC, will qualify for an
significant discount.

GBC Offers Quickbooks Support

We offer QuickBooks support and consulting at various levels for clients who want to use QuickBooks. We start by assisting clients in determining the QuickBooks edition that serves their financial recordkeeping and operations best.

Purchasing QuickBooks through GBC Services, clients can realize discounts of up to 50%.

READ MORE AT GBC

What Small Business Needs Should Accounting Services Meet?

A high-quality accounting firm
will address the concerns of
your company.

There are many consulting firms that promise comprehensive Atlanta accounting services, but not all are the same. Indeed, if you are in the market for someone to take care of the tax and payroll aspects of your business, it pays to investigate the company you decide to work with.

Think about it. Anyone handling your company's finances is handling the life-blood of your business. Would you hand that responsibility over to just anyone?

Selecting the right accounting solutions in Atlanta, Georgia, may seem a bit challenging at first...

READ MORE GBC Tax Services Website
For All Your Accounting Needs Call GBC 678-366-9232

A Middle Class Legacy of Rich Tax Cuts

It is said that “money is the No. 1 fighting word in America”; therefore, it shouldn’t come as any surprise that Americans wrote more letters to their congressional representatives about money in 1969 than about the Vietnam War. It came about after a popular upheaval, decrying how “155 individual taxpayers with incomes above $200,000 paid no federal income tax on their 1967 tax returns” (Burman et al. 2002). The 155 individual taxpayers cited by Joseph Barr, who was Secretary of the Treasury under Lyndon Johnson from 1968 to 1969, included 20 millionaires!

Thus the Tax Reform Act of 1969 was introduced, and, after 18 major legislative changes, the 10% add-on minimum income tax evolved into what is commonly known today as the Alternative Minimum Tax (AMT). AMT now encompasses a complex set of rules that assesses a minimum tax rate of either 26% or 28% on Alternative Minimum Taxable Income (AMTI) and tacks it on the regular tax owed, currently affecting individual taxpayers with an Adjusted Gross Income even lower than $50,000!

For more information, visit our website: http://www.gbctax.com/income_tax_services.asp
Comparatively, when the minimum tax was first introduced in 1969, the 10% additional tax was assessed on incomes exceeding $200,000, which by most calculations, equals more than $1.1 million in 2007 – after adjusting for inflation; therefore, AMT, though originally aimed at the very rich who, through various loopholes in the tax system, had been able to purchase their way into paying no federal income tax, has now become a major source of government revenue assessed primarily on middle-income households. While there has been a 160% increase in the minimum tax rate since 1969, income subject to the tax has decreased by 95% in value. It's what is popularly described as the "AMT mistake": the government's failure to adjust the minimum tax for inflation.

Analysts generally agree that a second and more important mistake behind the AMT’s recent expansion is related to President Bush’s 2001 and 2003 tax cuts, which, ironically, reduced regular income tax without changing the way AMT is calculated, thereby giving the top 1% income earners in the US the most benefit. In other words, by reducing regular tax rates, the 2001 and 2003 tax cuts effectively reduced the income tax paid by households whose regular tax rates are higher than AMT rates. More than 90% of households that reported Adjusted Gross Income (AGI) in excess of $500,000 evaded paying AMT because their regular tax rates are higher than AMT rates, and they are the primary beneficiaries of the 2001 and 2003 tax cuts. Contrastingly, over 90% of upper-middle and middle income households whose AMT is calculated after taking the AMT exemption ($44,350 for single filers, $66,250 MFJ or widowers, and $33,125 MFS), disallowing credits for dependents, medical expenses, state and local taxes, and and other itemized deductions, made up the deficit in the government’s tax revenue created by the reduction in the regular tax rate.

By the numbers, in 2004 (latest complete data on AMT available from the IRS post the 2001 and 2003 cuts), of 132,226,042 tax returns sampled, 3,096,300 were subject to AMT, divided by AGI as follows: 4,714 had no AGI (0.15%); 5,809 had AGIs under $25,000 (0.18%); 14,821 had AGIs between $25,000 and under $50,000 (0.47%); 244,461 had AGIs between $50,000 and under $100,000 (7.9%); 1,095,242 had AGIs between $100,000 and under $200,000 (35.4%); 1,529,159 had AGIs between $200,000 and under $500,000 (49.4%); 149,042 had AGIs between $500,000 and under $1 million (4.8%); and 53,052 had AGIs of $1 million and over (1.7%)!

Naturally, no discussion about tax can be totally devoid of politics. The so-called AMT mistake has been a big boon for the federal government’s coffers. Increases in the AMT rate notwithstanding, which until recently had popularly been viewed as an equalizing tax on the very rich, Republican and Democratic administrations alike have reaped billions in increased revenues without appearing to raise income taxes. However, under assumptions that existing tax credits, like the child credit, would remain in place, “by 2013, the AMT alone would actually raise more revenue than the regular tax alone.”

As in 1969, the United States was at war in 2007. Unlike 1969, there was relatively no outcry when congress failed to “fix” the AMT till the last minute, and, unlike 1969, money does not appear like the no. 1 fighting word in America, as there seems to be little repercussions over a tax that has outlived its intended purpose. If the federal government's intent had been to raise the income tax on middle-income households, then compounding the burden in complicated and costly rules does not constitute a sound economic policy; but the American people's relative complacency about the way AMT has apparently been exploited to effectively fund upper-income households' tax cuts points to uncharacteristic apathy towards the government's ineptitude, deep-rooted corruption, cynicism, or subservience to a combination of interests that embody these and other uncomplimentary traits.

Recent criticisms of the present tax system range from those who lament their smaller proportionate tax, in comparison to taxpayers earning substantially less, to those who think that they are paying too much tax, irrespective of comparative earnings. Ideas for fixing the US tax system range from implementing a complete overhaul of the present tax code to those who aim to abolish the income tax system.

Proposing an eleventh hour one-year fix that shields millions of Americans from an average $2,000 tax assessment, congress’ so-called “fix”, however, has not changed the trend established since 1969: increasing the AMT tax rate while decreasing the AGI subject to the tax. No longer the equalizing tax on the rich, this complex set of rules determining how to calculate AMT, requiring middle-income Americans to tabulate two calculations before totaling their tax liabilities, has now paid for the tax cut upper-income Americans have received since 2001. There are many proposals for fixing the AMT mistake and for relieving the federal government from its subsequent addiction to the revenue; but, unless the tax is either abolished or indexed to affect the taxpayers originally targeted by its introduction in the tax code, middle income taxpayers will continue to tote a disproportionate burden of a questionable political agenda.

To learn more visit our website:http://www.gbctax.com/income_tax_services.asp 

Retiring 401(k) Plan Fees

In all business transactions,
pay for performance.

Pity the Wall Street Banker! Earlier this month, I heard that their bonuses were expected to fall $200,000 on average, from $2 million. After all, by many accounts, this year’s equity market hasn’t performed as expected. But then I read about the latest record-setting Wall Street bonus payout.

Ask five economists about the source of this Wall Street bounty, and, all things being equal, they might give the same answer, all things being considered, each with 25 different qualifications, all things being possible.

One conclusion many economists might propose, all things being bright and beautiful, is that Wall Street bonuses are not necessarily tied to performance. (Duh?) In fact, some economists might find a correlation between the size of an average banker’s portfolio and the average payout. So without begrudging those hard working folks at Wall Street the trillions of pennies they scrape from the millions of average investors like me, here’s a rub: no matter how the financial market performs, Wall Street bankers seem assured of receiving record bonuses every year. Whereas recipients of Wall Street’s annual windfall have to worry about ways to double that income next year, the average mortgage-paying, life-loving, family-supporting, global-rationing guy like me is thinking – or should be thinking – about ways to accumulate enough in retirement assets to simply live comfortably during those looming forgetful years. A pretend-economist like me, therefore, might not be faulted for assuming that a major chunk of the average household’s wealth is tied to retirement savings like a 401(k).

In a November 5, 2007, article published on Bloomberg.com, (Time for Employers to Cut Cord to 401(k) Plans), John F. Wasik cites a troubling calculation from the US Government Accountability Office, stating “that paying an additional 1 percent in 401(k) fees will reduce your retirement fund total by 17 percent after 20 years and 30 percent over 30 years.” In other words, those pennies scraped by Wall Street bankers will make a substantial impact not only on those record-setting Wall Street bonuses but also, in reverse, on the average retirement savings account. Those fees cited by Wasik, however, are not limited to 401(k) plans; but, in the interest of limiting the number of words in my first entry on this blog to .1% of an average Wall Street bonus, I will focus on 401(k) plans.

If a household’s goal is to accumulate $1 million in retirement savings over the course of two married careers, something that is not only possible but also recommended for the average middle income household with two working parents, then 1% percent in 401(k) fees, according to US GAO quoted by Wasik, will shave off $170,000 over 20 years! $300,000 over 30 years! What’s more troubling, according to US GAO, 83% of 401(k) plan participants don’t even know how much in fees and expenses they are paying for their 401(k) plan, and many investment advisors are not helping the situation. In fact, short of full disclosure, some investment advisors have a conflict of interest vis-à-vis their investment recommendations.

Looking to the regulatory agencies hasn’t paid dividends either. While the US Securities and Exchange Commission has instituted rules for using “plain English” in writing disclosure documents in financial statements, facilitating the ordinary investors’ understanding of a company’s financial health, understanding the costs of a 401k or any other retirement plan, it seems, require the help of a consultant like Jeb Graham. Graham correctly distinguishes between hard dollar and soft dollar costs, and it is through the so-called soft dollar costs that an average contributor to an employee retirement account can lose up to 30% of 401(k) value over 30 years. It is not hard to accumulate 1% in hidden fees – fees that are not disclosed in prospectuses – and even though the issue has been identified, raising the ire of an increasingly untrusting public, the problem is compounded, in my experience, by plan providers who have lied to their customers about those fees.

In deference to Graham, pin-pointing soft dollar costs does not require a consultation. Stephen J. Lansing describes 401k costs in plain English. Though Lansing underestimates the basis points charged by plan providers, even Lansing’s calculation of soft dollar fees amount to more than 1%: finder fees starting at .25%, 12b-1 fees starting at .25%, and sub-transfer agent fees up to .65%.

But rather than cutting the “cord to 401(k) plans”, as Wasik suggests, employers should seek a plan that adopts Wasik’s recommendations, which are also summarized interrogatively by the 401k help center dot com:

· Give plan participants control
· Eliminate conflicts of interest
· Provide access to all investments
· Pay only hard dollar costs to plan providers (no finder, no commission, and no asset-based fees)
· And shop for the best value

And, most importantly in all business transactions: pay for performance.