Presentation on theme: "Section 9 Other Deductions From Pay"— Presentation transcript:
1Section 9 Other Deductions From Pay Involuntary & Voluntary Deductions
2Federal Levies Notice of Levy - Form 668-W Part 2 thru 5 must be given to employeePart 2 – Employee copy Part 3 – to be received back from EE, completed and sent to IRSPart 4 – to be received back from EE, kept
3Exempt from Levies Unemployment compensation Workers Compensation Railroad Retirement Act pension and annuitiesSome armed services personnel retirement and disability paymentsCertain Public Assistance PaymentsChild Support Order ALREADY on the books (received prior to the levy)
4To Determine Exempt from Levy Use part 4 of form 668-W to determine the number of exemptions claimed – do not use Form W4Obtain IRS Pub Table for Figuring Amount Exempt from Levy on Wages, Salaries, and Other IncomeBased on the pay period and number of exemptions claimed, determine the exempt amountIf you do not receive the completed parts 3 & 4 the exempt amount is determined using the Married Filing Separate bracket on Pub. 1494
5Take Home PayTake-home pay is the amount of an employee’s wages that remains after all normal deductions in effect at the time a levy is received have been subtracted from the gross payPre-existing deductionsIf deductions increase as a result of a pay increase, continue to subtract from gross wagesIf deductions increase as a voluntary decision by employee, do not subtract increase amount from gross wagesExample: an employee with a 3% 401K deduction cannot increase their percentage. However, if they receive a pay increase, the resulting additional 401K amount is allowed as a subtraction from gross wages
6Release of LevyForm 668-D, Release of Levy/Release of Property from Levy – the form will include the final payment amountVoluntary Deduction Agreement –Form 2159
7Child Support Uniform Withholding Notice for Child Support Start withholding based on the effective date OR 14 days of the order dateDisposable Pay –all deductionsrequired by LAW –not benefits, mightvary by state
8Child Support Limits 50% EE is Married 60% EE is Single 55% EE is Married +12 weeks in arrears65% EE is Single +12 weeks in arrearsTotal of all support orders has to be at or below the maximums – state limits may be lower
9Multiple OrdersState law governs the multiple orders are handled. If the orders are from different states – work state law applies .Allocation methods for multiples:Allocate based on percentageAllocate equally1st come/1st serve
10e-IWO & Medical IWOInternet accessible way of obtaining, accepting, rejection, termination & lump sump paymentsMedical Insurance Support Provision – by state. Non custodial parent provides medical insurance coverage (at equal cost as other employees) for their children.
11Creditor Garnishment Governed by Federal and State law Under the DOL, W&H DivisionConsumer Credit Protection Act, Title IIIRestricts states regulationsRestricts amount that can be garnishedEmployee may not beterminated because oftheir wages beinggarnished
12What’s Covered & Limits Covered in CCPAAdministrative Wage GarnishmentAlimonyChild & Medical SupportCreditor DebtStudent Loan25% of weekly disposable earnings OR amount over the 30 times federal minimum wage (30x7.25=217.50)
13BankruptcyOrder is from court – until received, employer pays all garnishments in place. Once received all orders stop EXCEPT child support.Bankruptcy order supersedes all orders including levies.Once received all bankruptcy orders are paid to trustee that delegates the funds – again, exception is child support.
14Student Loans Higher Education Act allows garnishment Max for single garnishment is 15% or 30x federal minimum wageMax for multiple garnishments is 25% or 30x federal minimum wageCan not discharge, 30 day notice before start of garnishmentTermed EE who is rehired in 12 mo’s is given 12 additional mo’s from reemployment before garnishment can be put into effect.
15Fed Agency Debt Non tax debt Agency will provide 30 day notice. Limits are the same as loans (15% on one, 25% on multiple, or 30X federal minimum wage)
16Garnishment Priority Table Child supportBankruptcyFederal administrative garnishments*Federal tax levies*Student loan**State tax leviesLocal tax leviesCreditor garnishmentsEmployer deductions (e.g., for benefits)Employee voluntary deductions*All deductions in effect when a federal admin. Wage garnishment or fed. tax levy is received have priority over the order**The law provides no guidance, but the Dept. of Ed allows child support to have priority
17Legal concernsContact Bankruptcy trustee if there are any questions on support orders or any other garnishmentsAll orders are legal documents - any omissions may result in fines and penalties on the employerNever deduct more than what’s allowed by law
18FLSA restrictionsBoard, lodging, and other facilities provided by the employer for the employee’s benefit may be deducted even if the employee’s wages will then be below the minimum wage. The employee’s participation must be voluntary.Facilities are board, lodging, meals, housing, etc.Facilities ARE NOT tools, required uniforms, company provided security, etc.Section 9.1-7
19Voluntary DeductionsWage Assignments – agreement with a creditor in lieu of garnishment – state laws may applyUnion Dues – based on collective bargaining agreementUS Savings Bonds – Not allowed to be thru direct deposit as of 2011
20Charitable Contributions Donations from payroll of $250 or greater must be substantiatedMust include: amount of cash and noncash contributed, whether goods or services were provided in return, description and estimate of value of servicesDocuments include: pay stub, W2,document from org., pledge card$250 is applied to eachdeduction separately