General News

Peter and his “guest” discuss new data and privacy protection regulations affective small and mid-sized businesses. 

Brandon and his guest, Shawn Parker, from MGKS discuss some of the initial implications and opportunities found in the “Setting Every Community Up for Retirement Enhancement Act” of 2019, better known as the SECURE Act, which was just approved by the Senate on Dec.19, 2019.

Brandon discusses how maxing out the annual 401k contribution limit will actually net you more in net income distributions in retirement when compared with a traditional deductible 401k max contribution.

The new year will ring in minimum wage increases in 21 states, with 4 more states and the District of Columbia implementing increases later in 2020. The highest minimum wage in 2020 will be $15.00 in Washington, D.C., effective July 1, 2020.

Paycor research found that 42% of surveyed organizations have negative feelings about their compliance management practices, in part because of limited resources and frequent changes to laws relating to minimum wage, paid sick leaves and pay equity laws.

The federal minimum wage for nonexempt employees remains at $7.25 per hour but if a state or local law requires a higher amount, employees must be paid at the higher rate. Arizona’s minimum wage rate is $12.00 for 2020.

It’s important for employers to stay on top of changes to minimum wage laws, as well as other wage and hour topics. Noncompliance can be costly – Employers paid a record $322 million in fiscal year 2019 to resolve wage and hour claims brought by the U.S. Department of Labor’s Wage and Hour Division (WHD).

WHD provides various online compliance resources for employers. It also launched a voluntary Payroll Audit Independent Determination (PAID) program, allowing employers to proactively investigate and correct overtime and minimum wage violations. Experts disagree on whether it’s a good idea for employers to participate, but the program is picking up steam. So far, more than six dozen employers have paid out more than $4 million in back wages to almost 7,500 employees via the PAID program.

Employers’ best defense to wage and hour claims remains a good offense. Overtime mistakes, improper misclassification and auto-deduct policies are frequent trouble spots. Employers can stay off WHD’s radar by keeping up with applicable federal, state and local laws, and by training front-line supervisors on compliant timekeeping policies and procedures.

Let Arcwood HR help you manage your wage and hour compliance. Contact us today to see how we can assist you in managing your employees and the ever changing employment laws.

This week on our weekly Money Radio (105.3 fm) segment Peter & Brandon Discussed QACA, the Qualified Automatic Contribution Arrangement a less commonly used type of Safe Harbor 401k plan. Which in some cases could be a better match formula and/or discretionary contribution than the older and more well know safe harbor match/contribution options.

1. A Third Safe Harbor Option, the QACA
   1. The QACA is a newer type of safe harbor 401(k) plan. Unlike the others, It includes a requirement for the plan to have an automatic enrollment feature. These work by automatically enrolling any eligible employee into the 401k on a certain date, without the need for them to actively enroll in the plan themselves.
2. QACA Match plans include the following special rules:
   • The QACA safe harbor matching contribution formula is a 100% match on the first 1% of compensation deferred and a 50% match on deferrals between 1% and 6% (3.5% total).
   • The plan’s default auto-deferral rate must start at no less than 3% and increase at least 1% annually to no less than 6% (with a maximum of 10%).
   • QACA safe harbor contributions can be subject to up to a 2 year cliff vesting schedule
3. There is also a nonelective QACA. It states:
   • • The nonelective QACA has a contribution of 3% to all participants, including those who choose not to contribute any amount to the plan.
     • QACA nonelective 3% contributions can also be subject to up to a 2 year cliff vesting schedule
     • Nonelective contributions can also be used to help satisfy Profit Sharing cross-testing. Fulfilling the minimum gateway for 9% profit sharing contributions to owners or other key groups as well as getting a pass for the plan’s nondiscrimination tests.

For more information on if a QACA safe-harbor plan may be appropriate for your company please contact Arcwood or your plan administrator.

This week on our weekly Money Radio (105.3 fm) segment Peter Rowe discussed the changes that are being implemented 1/1/2020 to allow business to use ICHRA, Individual Converge health Reimbursement Arrangements again. These can be a valuable tool for small businesses to offer their employees. Allowing them to make tax deductible contributions that their employees can use to buy their own policy’s on the individual market VS needing to offer full group plan. Peter also discussed their uses for larger employees looking to supplement the existing plans.  

This week on our weekly Money Radio (105.3 fm) segment Brandon Oliver hosted a discussion on Target Date Funds and how plan sponsors should monitor them.

Some of these best practices included actions plan sponsor & investment committees should follow including:

• Establishing a process for comparing and selecting TDFs
• Establishing a process for the periodic review of selected TDFs
• Understanding the fund’s investments–the allocation in different asset classes (stocks, bonds, cash), individual investments, and how these will change over time
• Reviewing the fund’s fees and investment expenses
• Inquiring about whether a custom or non-proprietary target-date fund would be a better fit for your plan
• Developing effective employee communications
• Taking advantage of available sources of information to evaluate the TDF and recommendations you received regarding the TDF selection
• And of course documenting the process

for more information on how to evaluate and monitor your plans target date funds please contact Arcwood Consulting or review the DOL TDF bulletin below.

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/target-date-retirement-funds.pdf

The U.S. Department of Labor unveiled its long-awaited final rule on the overtime “white collar” exemptions on September 24, 2019.  The regulations, at 20 CFR Part 541, were last updated in 2004, when the DOL increased the minimum salary level for exemption from $150 to $455 per week and made changes to the job duties employees must perform for exemption from the FLSA’s overtime requirements.

The DOL has been working overtime to update the regulations since 2015, when it proposed to increase the minimum salary level for exemption to $913 per week ($47,476 annualized).  A Texas federal district court enjoined that rule in November 2016, but the Trump administration appealed the injunction to the U.S. Court of Appeals for the Fifth Circuit.  While the appeal is still pending, now that the final rule has been issued, it is expected that the agency will soon move to dismiss the appeal as moot.

The final rule increases the minimum salary level for exemption to $684 per week ($35,568 annualized).  The DOL will allow employers to pay up to 10% of that minimum level ($3,556.80) in commissions, bonuses, and other non-discretionary incentives. If incentive payments fall short by even $1, however, employers will owe overtime pay to shorted employees for the entire prior year.  Under the final rule, employers will have only a single pay period for a final make-up payment to ensure exempt employees receive the full $35,568 for the year.

The final rule also increases from $100,000 to $107,432 the total annual compensation required for employees to qualify under the shorter highly compensated test.  This level is significantly below the proposed level of $147,414, likely in response to public comments.  Highly compensated employees must receive the guaranteed minimum salary of $684 each week, but the remaining compensation may be in commissions, bonuses, or any other type of compensation.

The DOL has abandoned its plans to update automatically the minimum salary and highly compensated levels in the future. Although the final rule does not include any new provisions regarding future increases, the DOL stated that its goal is to update the levels more regularly; any increases to the levels will come only after the DOL publishes notice of the proposed increases and provides the public with an opportunity to comment, as required under the Administrative Procedures Act.

The final rule will take effect on January 1, 2020.

We’re here to help – call us today if you have any questions or need assistance in becoming compliant before January 1.

Brandon discusses the fundamental differences between Roth IRAs, 401ks and Traditional 401ks, when it comes to eligibility, taxation and overall benefit to your retirement planning.

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The final quarter is here, so what does that mean for businesses and their health care plans? Watch Peter Rowe explain the State of the Union when it comes to health care through the rest of 2019 and into 2020.

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