Articles

IRS Grants Transition Relief for Health Savings Account Contributions

Article from the American Payroll Association:

On April 26, the IRS announced transition relief for employers that sponsored Health Savings Account (HSA) qualified plans for their employees in 2018. The maximum HSA contribution limit for individuals with a family high-deductible health plan (HDHP) remains at the original 2018 level of $6,900 instead of the Tax Cuts and Jobs Act (TCJA) level of $6,850 [Rev. Proc. 2018-27].

Why do employers need relief?

The TCJA changed the Consumer Price Index used to determine inflation adjustments, which resulted in the IRS publishing a revised procedure to account for a lower 2018 maximum HSA contribution limit for individuals with a family HDHP from $6,900 to $6,850 ($50 difference). The change was applied retroactively to January 1, 2018 (see Rev. Proc. 2018-18, 2018-10 IRB 392).

APA along with other stakeholders requested the HSA relief because of unanticipated administrative and financial burdens. The revised IRS procedure includes an explanation on how to treat excess contributions for 2018.

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California Senate Bill 16, an act to add Section 706.053 to the Code of Civil Procedure, relating to wage garnishment

California Senate Bill 16, an act to add Section 706.053 to the Code of Civil Procedure, relating to wage garnishment

The State Assembly is about to vote on SB16, a bill that would apply local minimum wage rates when calculating the amount of wages that can be garnished to collect on defaulted student loans. A week ago APA sent the attached letter, opposing the bill, to the leadership in the State Assembly. (In February, we sent a similar letter to the State Senate.)

 

We need your help to let lawmakers know this bill will cause problems for businesses and for the people responsible for garnishing employees’ wages. Please share this message with your chapter members and urge them to write or call their representatives in the State Assembly.

 

  1. Find your legislator using one of these links:
  2. By district – http://www.legislature.ca.gov/assemblydistricts.html
  3. By address – http://findyourrep.legislature.ca.gov/
  4. From your lawmaker’s page, send this (or a similar) message:

 

I am a payroll professional, and I respectfully request that you oppose SB 16, which will require employers to apply local minimum wage rates when calculating the amount to withhold for a student loan garnishment. As detailed in a letter submitted by the American Payroll Association (APA) to the Assembly Leadership, relying on the local minimum wage will be difficult for employers and unfair to employees.

I support fairness in the wage garnishment process that emphasizes a reasonable approach for employees without unduly increasing the administrative burden on employers. Payroll professionals appreciate provisions that help the employees we pay, but we also ask lawmakers to recognize that, in the case of a garnishment, employers are third parties to a legal dispute. Changes to the law requiring employers to rely on a local minimum wage for garnishments also require that employers spend time, effort, and resources that are quite unrelated to the application of a local minimum wage to pay the workers in their employ.

Further, applying a local minimum wage is inherently unfair to California residents. By basing the exemptions on a local minimum wage, California residents working in locations with the highest minimum wages are afforded greater exemptions than those living in other areas. An employee in San Francisco is provided greater exemptions than an employee in Cupertino, who in turn is provided greater exemptions than an employee in San Diego. Within jurisdictions that apply a local minimum wage based on the number of employees (e.g., Los Angeles and Malibu, effective July 2017) the disparity in exemptions is even more remarkable.

Alternative methods exist by which the state might provide robust and fair consumer protections to employees without causing undue difficulty on employer-garnishees. I urge you to vote against SB 16 and consider alternatives.