Fined for not having e-mail? Possibly, for any company with a 401k plan and no Internet access.
Traditionally, any business with a pension plan could file their 401k forms with the Department of Labor, or “DOL,” through either regular mail, or electronically. But, starting Jan. 1, 2010, companies without e-mail may be out of luck, and out of money; $15,000 to be exact.
In an effort to be more environmentally friendly, the DOL has gone “paperless” starting the first of the New Year. And, according to the DOL, there are no exceptions for this requirement.
And for companies without Internet access or e-mail, there’s a possibility of a $15,000 penality.
Brett Goldstein, a Plainview, New York-based pension administrator and president of the Pension Department, said the law is designed to save the government money by reducing manual operations.
So, while the government may save money, companies without advanced technology will be losing out.
“Unfortunately, 20-28 percent of small businesses don't use email and may be forced to pay a $15,000 penalty,” Goldstein said. 'Small business owners who don't have email, high speed Internet connections, and older business owners are going to have a hard time trying comply with the DOL's mandate that everyone use the Internet to electronically file their Forms.”
In another alternative scenario, while some small businesses may have e-mail, they haven’t digested the concept completely yet.
“The new e-filing requirement will be burdensome to small business owners who will have to spend time away from their business to e-file,” Goldstein said. “As small business owners don't want to spend time administering their 401k, this may be disincentive for small businesses to establish news 401ks and, at worst, may lead to 401k plan terminations.”
Some companies facing these concerns are approached the DOL to see if there were any alternative methods for filing electronically such as having a tax preparer file the 5500 on behalf of the client.
However, because of confidentiality agreements, the DOL says it’s a no go. So, companies are fighting back.
According to Goldstein, a petition is being sent to the DOL asking them to allow actuaries and tax preparers to file the Form 5500 on behalf of clients.
“It's one thing to allow companies to electronically file, but to mandate that everyone must file electronically without any exceptions is unconstitutional,” he said. “To assume that every business in America has access to the Internet and knows how to use it or wants to is ridiculous.”
This new rule will affect more than just those “technically challenged” companies.
“I have several clients that refuse to use the Internet or email. If this petition is not accepted by the Department of Labor, I will have to tell my clients that I can no longer service them; that's going to hurt my cash flow,” Goldstein said.
Now, whether or not it’s hard to believe that a company in 2010 does not use e-mail or understand how to do so, one thing is for certain: no one should have to pay $15,000 for Internet ignorance, or should they?