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Out with the Old, In With the New

    As  2012 comes to a close and we prepare for the New Year, now is a great time to review what’s changing in HR in 2013.

    New rule changes for 2013:

    Medicare Tax Rate Increase for Your Executives Effective January 1, 2013

    New Medicare taxes on high earners, imposed under the Patient Protection and Affordable Care Act (PPACA), means big changes in wage withholding, executive compensation and personal financial planning for these employees.
For taxable years beginning after Dec. 31, 2012, employers will be required to withhold additional amounts from the wages of high-earning employees. The Medicare tax rate will increase by .9 percent (from 1.45 percent to 2.35 percent) on wages over $200,000 for single filers, wages over $250,000 for joint filers and wages over $125,000 for persons who are married but filing separately.


    Maximum Employee Contribution to FSA Effective 1/1/2013

    Under the Patient Protection Affordable Care Act (PPACA), employee health flexible spending account (FSA) contributions will be limited to $2,500 annually effective for taxable years beginning after December 31, 2012. Starting in 2014, the $2,500 limit will be indexed for the Consumer Price Index to account for changes in the cost of living. This maximum contribution applies on an employee-by-employee basis regardless of number of dependents on the plan. Additionally, if each spouse is eligible to participate in an employer’s health FSA, each may contribute up to the maximum contribution. This applies even where both spouses participate in the same FSA sponsored by the same employer. Health FSAs will continue to be subject to nondiscrimination testing.
Plan sponsors must ensure that their plan documents and open enrollment materials are amended to reflect this statutory change.



    Source: HR Professional Magazine Nov 2012.

    The minimum wage is going up in seven states including Washington.

    Arizona: The Industrial Commission of Arizona announced that the minimum wage will increase from $7.65 to $7.80 per hour for non-exempt employees effective Jan. 1, 2013. The minimum wage for tipped employees increases from $4.65 to $4.80 per hour, plus tips.

    Florida: It was announced that the minimum wage will increase from $7.67 to $7.79 per hour, effective Jan. 1, 2013. The minimum wage for tipped employees increases from $4.65 to $4.77 per hour, plus tips.

    Montana: The Department of Labor & Industry announced that effective Jan. 1, 2013, the minimum wage will increase from $7.65 to $7.80 per hour for non-exempt employees.

    Ohio: The Department of Commerce announced that effective Jan. 1, 2013, the minimum wage will increase from $7.70 to $7.85 per hour for non-tipped employees. In 2013, the minimum wage increases from at least $3.85 to at least $3.93 per hour, plus tips, for tipped employees. Note that the 2013 minimum wage provisions will only apply to business with annual gross receipts of more than $288,000 per year (in 2012: it is more than $283,000 per year).

    Oregon: The Bureau of Labor & Industries announced that effective Jan. 1, 2013, the minimum wage will increase from $8.80 to $8.95 per hour for non-exempt employees.

    Rhode Island: The governor signed two bills increasing the minimum wage from $7.40 to $7.75 per hour for non-exempt employees, effective Jan.1, 2013. Rhode Island permits employers to apply a tip credit toward satisfying its minimum wage obligations for tipped employees, and sets a minimum cash wage tipped employees must be paid. However, that statute was not amended, so the minimum cash wage a tipped employee must be paid remains $2.89 per hour. However, the tip credit an employer may apply increases from $4.51 to $4.86 per hour.

    Washington: The Department of Labor & Industries announced that effective Jan. 1, 2013, the minimum wage will increase from $9.04 to $9.19 per hour for non-exempt employees.

    State Proposing Minimum Wage Increase

    Colorado: The Department of Labor & Employment has proposed increasing the minimum wage, effective Jan. 1, 2013, from $7.64 to $7.78 per hour for non-tipped employees. The Department also proposes increasing the minimum wage from to $4.62 to $4.76 per hour for tipped employees.

    States Where Minimum Wage Determination Is Pending

    By statute, the minimum wage in Missouri and Vermont is adjusted on Jan. 1. However, to date, no announcements have been made concerning these states’ 2013 minimum wage

    source: SHRM Legal Issues update

    Changes to IRS retirement limits:

     

    Defined Contribution Plan Limits
    For 401(k), 403(b) and most 457 plans, below are the COLA increases for dollar limits on benefits and contributions.

    2013

    2012

    Maximum elective deferral by employee.

    $17,500

    $17,000

    Catch-up contribution (age 50 and older during 2012).

    $5,500

    $5,500

    Defined contribution maximum deferral (employer/employee combined).

    $51,000

    $50,000

    Employee annual compensation limit for calculating contributions.

    $255,000

    $250,000

    Annual compensation of "key employees" in a top-heavy plan.

    $165,000

    $165,000

    Annual compensation of "highly compensated employee" in a top-heavy plan.

    $115,000

    $115,000

     

    Finally, now is a great time to review your document retention policy and prepare to purge any outdated material.  You can reference IRS regulations for employment record keeping recommendations including EEOC forms, I-9’s and payroll information.

     

    Have a safe December!

    Heather Smith

    Programs Co-Chair