Retirement Plans May Feel Effects of New Overtime Rules
The impact of the Department of Labor’s May 18 rule revising the federal overtime rules may not be confined to HR and payroll — retirement plan administrators and service providers may be affected as well.
The new overtime rules
will increase the exempt salary threshold level to $913 per week or $47,476 annually. Employees paid less than that threshold will be entitled to overtime pay for any work they do beyond 40 hours per week. HR/benefits blogger Lenny Saricola argues that
the reach of the revised rules could extend to retirement plans.
Saricola argues that changing base salaries and wages “will likely result in an increase in employer matching contributions.” He adds that many plans include overtime as compensation. And he argues that employers which exclude overtime pay from their definition of compensation could be affected if the changes to overtime pay result in their definition of compensation discriminating in favor of highly compensated employees under the Internal Revenue Code.
The variable, says Saricola, is how an employer decides to respond to the new overtime rules. The rules will go into effect on Dec. 1, 2016.