Jackson — The Horne CPA Group was a trendsetter in providing third-party administration services, the first among state CPA firms to do so. It has administered retirement and cafeteria plans for 30 years as it has become more common for accounting firms to enter this field.
Doris Watson, a partner and shareholder, has been with the Horne Group for 20 years and she says they’re probably the largest among CPA firms providing those services. She has seen this work grow and become more sophisticated. The 15 employees working in this group don’t do typical CPA things.
“We work exclusively with benefits, 90% retirement and 10% cafeteria plan,” she said. “It’s our niché area, but you don’t have to be a CPA to work in this group. There’s a lot of on-the-job training.”
Noting that accounting students only get a smattering of classes on this type of work in college, she and the other Horne employees have taken study courses through the American Society of Pension Actuaries, who sponsor a lot of continuing education in this field. They also participate in any other continuing professional education in the area of pensions.
Watson said the Horne Group has a lot of variety among their 500 employer clients. “The Horne Group is known for medical clients and so a lot of ours are too,” she said. “That includes hospitals, clinics and doctors’ offices. We also have clients in manufacturing, retail and law practice. Any employer who wants to set aside retirement funds can be our client.”
The main advice this CPA can give to employers is to really take a good look at what they can do for themselves and their employees with retirement plans.
“I’m a big proponent of retirement plans,” she said. “I’m seeing that employees are more savvy now and employers can use retirement plans to attract and retain good employees. I also see that young adults are much more aware of preparing for retirement.”
Clients tell her that their employees are asking for retirement benefits more and more. The 401(k) is the most popular. She feels that’s because it offers a tax saving for employers and makes them more competitive in their fields.
What are the challenges of administering benefits? Watson is quick to respond that this work is very technical and that nothing ever stays the same, making change a regular part of what she does.
“Congress changes the rules and the IRS and Department of Labor are continually putting out new guidelines,” she said. “These changes often require re-writing and re-adopting the plan document, which we have just been through with our clients.”
A client’s written, legal document sets out the provisions of the retirement plan — who’s eligible and how funds are allocated. It had been eight years since the plans were re-written and there were many changes, Watson said. That meant the Horne Group had to educate its employer clients in the process.
Overcoming the challenges
The economy dictates just how many dollars are available to be invested, which offers challenges to administering these plans.
“Other challenges we face are maintaining competitive fees and giving good advice through the many mergers and acquisitions we’re seeing,” Watson said. “We want to be fair to us and to our clients.”
She has observed that money purchase pensions have decreased tremendously among their clients. This type of retirement plan with 25% required funding is not as flexible as profit sharing or a combination, also with a 25% requirement. “Why would you need a plan like this?” she says. “We’ve moved a huge number of clients to just one plan.”
Looking at the future, she will continue to be aware of what Congress will do to affect these plans and will try to take advantage of opportunities that come along.
“One good thing now is the opportunity to make catch-up contributions,” she said. “This is for employees over age 50 who have not prepared for retirement as well as they would like. They can pay in more to a plan through 2006.”
Watson, a graduate of Mississippi College, says the question she is asked the most by clients is how they can design a plan that will help them meet their goals as well as take care of their employees.
“I also like to tell them that they may not be aware that the cafeteria plan, a menu of health and employee welfare benefits, will help them save FICA taxes, too,” she said.
This accountant and third-party administrator says she is optimistic about the national economy and is committed to finding ways to make employee benefits work really well for employer clients.
The Horne CPA Group was founded in 1962 and has 263 employees in four states. It is the largest CPA firm in the state and among the top 10 in the Southeast.
Contact MBJ contributing Lynn Lofton at email@example.com.