Will the new overtime rule affect your small business?
The answer is likely, Yes. The new overtime rule does not exempt small business like many other labor laws. Here is the short and sweet version of what the new rules do: Increases the minimum salary threshold at which a full-time salaried worker can be “exempt” from overtime rules from $23,660 to $47,476 annually, or from $455 to $913 weekly. The salary level will be adjusted every three years. But, for the first time employers can include non-discretionary bonuses and commissions to comprise up to 10% of the salary level.
The new overtime rule will go into effect on December 1, 2016. How do you know if the new rules will affect your small business? You will need to answer these questions.
How can you comply with the new overtime rules?
Here are some potential options:
Are any of my employees exempt from the overtime rule?
Yes, some of your employees could be exempt. How do you determine if the employee is exempt? What does not matter is the employee’s job title. It does not matter how swanky the title is, so changing the employee’s job title to “Executive Administrative Professional Assistant” will not affect the employee’s classification. So, do not run out and change all of the job titles in your employee handbook. There are three categories of exempt “white-collar” employees Executive, Administrative, and Professional. The job duties o determines whether the employee falls into one of these categories.
To qualify for the executive employee exemption, all of the following tests must be met:
To qualify for the administrative employee exemption, all of the following tests must be met:
To qualify for the learned professional employee exemption, all of the following tests must be met:
If your small business needs help with legal issues, ask a Small Business Law Firm. We know how to help and understand your situation after all we are a small business, too. Contact us to see how we can help you and your business.
We all are saving for retirement and hopeful we will save enough to do all of the things we could not do while working. This post is making the assumption that you saved more than enough to make it through retirement. What happens to your retirement account after you are not there to spend it?
The Federal Government wanted to create tax-favored retirement plans, but it did not want those same plans to an estate-building plan to transfer wealth to the next generation. So, to hinder retirement plans from being able to become an estate-building plan Congress passed a law requiring certain annual distributions from these plans beginning at age 70 1/2 or, death, whichever happens first. This law and related regulation are referred to the “minimum required distribution rules” or “MRD rules.” The MDR is the amount that must be distributed under these rules in a particular year.
These retirement plans are very attractive because of the ability to accumulate funds inside the plan tax-deferred (or tax-free, in the case of a “Roth” plan). The MRD rules dictate when this tax-sheltered accumulation must end. Despite the apparent goal of the MRD rules (making sure tax-favored retirement plans are used for retirement income), the law still allows for your retirement account to stay in existence long past your death if you leave it to the right kind of beneficiary. If certain requirements are met, your retirement benefits can be paid out slowly over your beneficiary’s life expectancy.
The financial benefit of long-term deferral of distributions can be significant. Depending on the investment return, if the beneficiary is young, and takes no more than the MRD each year the value of the inherited plan can soar, under the life expectancy payout method.
Example: A 38-year-old beneficiary who inherits a $500,000 traditional IRA and withdrawals using the life expectancy method will have $1,696,000 inside the IRA in 30 years. And, if the withdrawals are reinvested the beneficiary would have close to $1,500,000 outside the IRA. This example assumes an 8% constant investment return on all assets and a 36% tax rate on all plan distributions and outside investment income.
Hopefully, you will have more than enough money saved to retire and do all of the things that you want, plus some things that you did not know you wanted. But, do not fail to plan for the scenario that your retirement account outlives you. At King Law, we can help you create an estate plan that fits your needs at a price in you can afford. Our next post will go into greater detail over the requirements and the different ways to meet them.
We had our ribbon cutting ceremony today. Thank you to everyone that took time from their schedule to attend and make this a special day. I want to thank the Henderson Chester County Chamber of Commerce for helping promote the event and for the support shown by their so many members attending the event. I want to thank the Chester County Independent for covering the event. And, a big thank you to my wife, Brittany, who went above and beyond in helping me prepare for this event.
King Law, is now officially a part of the business community of Chester County, Henderson, Tennessee. If we can assist you in the future, please, let us know how we can help.
Benjamin F. King
My goal is to bring issues that are often over looked. But, this blog is not legal advice it is only for general information. Each situation is fact specific.