Andrew Nicholas: Great. And if you don’t mind, just a follow-up on ERTC. It sounds like that’s trending towards your expectation that the comp in the fiscal third quarter is a bit tougher. I just wanted to confirm that. And then also, it looks like the IRS has taken a stance with respect to ERTC and potentially making PEOs liable for that. Just wondering if that presents any risk or how you are kind of thinking about that dynamic in that part of the business. Thank you.
Bob Schrader: I’ll start on just kind of the financials. I’d say for the most part, ERTC, we finally got it right from a forecasting standpoint after three years. It’s bit been a little challenging to forecast that. But for the most part, it has lined up with our expectations. Most of that was assumed to be in the front half of the year. That’s behind us. There still is a little bit in the back half of the year. But for the most part, it has lined up. I’ve gotten this question a lot. I promise to provide an update on ERTC. So, I’m going to stick to my word, which was essentially we had said prior that we expected it to be a slight tailwind in the front half of the year. That’s where the front half landed, it was a slight tailwind.
We expected it to be a headwind in the back half of the year. It will be a headwind in the back half of the year. But I wanted to provide a little bit more color and you guys can kind of do the math and back into it. But on a full-year basis, with the tailwind in the front half and the headwind in the back half, we would expect it to be about a 1% headwind on a full-year basis to growth. And then, I don’t know if, John, you want to address the PEO?
John Gibson: Yeah. I think relative to your question on the PEO and ERTC and the IRS stance on it, I would say, the IRS has been trying to look for bad actors in both parts of that equation and tighten rules. As you can imagine, we’ve been very diligent with our compliance teams in setting up our process. In fact, we were a little slower going out on ERTC products in the PEO because we wanted to work through all of those compliances and the way we approach the contracting with our clients for those services. So, I would tell you, Andrew, we feel very good about our position of where we are in terms of managing that risk.
Andrew Nicholas: Perfect. Thanks so much.
Operator: Thank you. Our next question will come from Ramsey El-Assal with Barclays.
Ramsey El-Assal: Hi, thanks so much for taking my question. I had a follow-up on ERTC. It strikes me that there is a kind of a backlog building, right, as they’ve paused processing. So, is this the type of thing that we should think about, yes, it’s a headwind in the back half of the year, but eventually as the IRS begins processing again that revenue might start to flow again in the future? Is it sort of more of a shift of revenue into the future? And I know it’s complicated and they’re rolling in some deadlines in ’24 — calendar ’24. So, I’m just curious how we should — how you’re thinking about that ERTC revenue, not just for the following quarters, but maybe a little bit beyond that.
Bob Schrader: Yeah, not really, Ramsey, because what we’re basically doing is we’re amending the returns and filing the submissions for our clients which the IRS continues to accept. And so, we’re recognizing the revenue as we do that and they’re still accepting submission. So, there’s really not a timing shift there. The change at the IRS made at the end of Q1 really hasn’t impacted our ability to continue to go into our base and sell it, really hasn’t impacted our forecast from a revenue standpoint. The big difference is that you have the deadline, you are approaching a deadline here at the end of this fiscal year. And we’re three years into it and we’ve been through our base and really have identified all the clients that qualify for the opportunity.
We’ve talked to them. And if we haven’t talked to them, you can turn on the radio, everyone else has talked to them. So it just, hey, we’re through eight years into it. I think most small businesses that were qualified for this benefit have taken advantage of the opportunity. And there may be some a little bit flows into next year, but nothing of significance. I’m hoping at some point in time, I can stop talking about ERTC, but there’s really no timing shift there related to what the IRS did.
Ramsey El-Assal: Great. That’s very helpful. And a quick follow-up. SECURE Act 2.0, is that in any of your conversations in the selling season? Give us kind of your latest view about how that opportunity is framing up for Paychex?
John Gibson: Yeah. I think we highlighted and mentioned, in first half, 401(k), a very solid continued performance. So, we’re very pleased with that offering. I think as you know, we probably go out to the market with the most comprehensive retirement offerings for small businesses, anywhere from simple IRAs to our SEP plan that we are one of the largest providers, if not the largest provider of PEP plans. So, very pleased with that. It is part of our selling season campaigns. I think as I said, one of the things we’ve learned a lot about the retirement business from some of the state mandates, I continue to try to pound this in is this is one of the things you still have a lot of education to do for the small business owner.
Even though there are a lot of benefits to it, there are costs involved, there’s compliance issues. So, this is not something that people just sign up for. So, there’s a lot of education and pre-marketing that has to be done, but we’re certainly leveraging the SECURE Act as a means to entice clients into a conversation, and are finding it successful once we do in getting them to understand the benefits of our offerings.
