Transcript Prevailing Wage Pension Plans - Wickens, Herzer, Panza, Cook

Davis-Bacon Act
Prevailing Wage Pension Plans
by Richard A. Naegele, J.D., M.A.
Wickens, Herzer, Panza, Cook & Batista Co.
35765 Chester Road
Avon, Ohio 44011-1262
Phone: (440) 695-8074
Email: [email protected]
Workshop #9
ASPPA Annual Conference
National Harbor, MD
October 28, 2012
© Copyright 2012 Richard A. Naegele, J.D., M.A.
BOT-00046.098\816700.ppt
Labor Standards Statutes

The Davis-Bacon Act
(DBA)

Davis-Bacon and Related Acts
(DBRA)

Contract Work Hours and Safety
Standards Act
(CWHSSA)

Copeland “Anti-Kickback” Act
(CA)

Walsh-Healey Public Contracts Act
(PCA)

McNamara-O’Hara Service Contract Act
(SCA)
2
The Davis-Bacon Act
(DBA)
29 CFR Parts 1, 3, and 5
3
Code of Federal Regulations
29 CFR Part
1 – Procedures for Predetermination of Wage Rates under the
Davis-Bacon Act
3 – Payment & Reporting of Wages on Federal Construction
Contracts
4 – Federal Service Contracts
5 – Labor Standards Provisions Applicable to Federal Construction
Contracts
6 – Rules of Practice for Administrative Proceedings
4
Code of Federal Regulations
29 CFR Part
7 & 8 – Rules for DBA/SCA appeals before the ARB
525 – FLSA (Workers with Disabilities)
531 – FLSA (Credit for tips, meals, & lodging)
541 – FLSA (Exempt - Salaried employees)
778 – FLSA (Overtime)
785 – FLSA (Hours Worked)
5
DBA
 Enacted in 1931
 Amended in 1935 and 1964
 Protects communities and workers from non-local
contractors underbidding local wage levels.
6
DBA Requirements
 Payment of locally “prevailing wages” and
“fringe benefits” to laborers and mechanics, as
determined by the U.S. Department of Labor
(DOL)
 Applies to direct Federal and District of Columbia
contracts
 DOL Wage and Hour Division (WHD) oversees DBA
compliance.
7
DBA Requirements
 Applies to “laborers” and “mechanics” of
contractors and subcontractors
 Performing work on the “site of the work”
 Must be paid not less often than weekly
 Wage scale must be posted at the job site
8
Coverage of the DBA
 Applies to contracts in excess of $2,000 to which
the Federal Government or the District of Columbia
is a party for construction, alteration, and/or repair,
including painting and decorating, of public
buildings or public works.
9
Criteria For Considering DBA Coverage
 Is the contract an agreement to which the U.S. or
District of Columbia is a party?
 Is the agreement a “contract for construction”?
 Is the “contract for construction” a contract for
construction of a public building or public work of
the U.S. or the District of Columbia?
10
The Davis-Bacon
Related Acts
(DBRA)
11
DBRA
 Davis-Bacon (DB) requirements extend to numerous
“related Acts” that provide federal assistance by:
• Grants
• Loans
• Loan guarantees
• Insurance
12
DBRA Examples
 HUD financed construction of low-income housing
projects
 Federal Highway Administration provides grants to
states for reconstruction of roads and bridges on
Federal-aid highways
 2009 American Reinvestment and Recovery Act (AARA)
13
Distinguishing DBA and DBRA
 Examples of DBA Projects
• VA hospital
• Federal office building (GSA)
• Military base housing (DOD)
• National Park road (Dept. of Interior)
 Examples of DBRA Projects
• HUD – assisted housing construction project
• EPA – assisted water treatment plant construction
project
14
State Prevailing Wage Laws
 32 states (and D.C.) have prevailing wage laws
 Some state prevailing wage laws require annualization
of fringe benefit contributions
15
State Prevailing Wage Laws
32 states (and D.C.) with Prevailing Wage Laws
Alaska
Arkansas
California
Connecticut
Delaware
District of Columbia
Hawaii
Illinois
Indiana
Kentucky
Maine
Maryland
Massachusetts
Minnesota
Michigan
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
Ohio
Oregon
Pennsylvania
Rhode Island
Tennessee
Texas
Vermont
Washington
West Virginia
Wisconsin
Wyoming
16
Davis-Bacon
Compliance Principles
17
DBA / DBRA Compliance Principles
 Laborers and mechanics
 Area Practice
 Site of the work
 Fringe Benefits
 Truck drivers
 Federal contracts: PCA
 Apprentices, Trainees &
Helpers
interaction with DBA
 Computing overtime
pay
18
Laborers and Mechanics
 Workers whose duties are manual or physical in nature
 Includes apprentices, trainees and helpers
 Exemptions:
• As a general rule, an employee who spends the majority of
time in a supervisory position at the job site, and who
spends less than 20% of the work week engaged in skilled
labor, is exempt from Davis-Bacon requirements for the
percentage of time spent in that skilled time.
• Clerical staff such as timekeepers; professionals such as
architects, engineers; and inspectors and certain utility
installers are also exempt.
• Forced Account workers, prisoners, volunteers are generally
exempt, except when contractor is non-governmental.
19
Laborers and Mechanics
 Does not include:
• Timekeepers, inspectors, architects, engineers
• Bona fide executive, administrative, and professional
employees as defined under FLSA
 Working foremen are generally non-exempt
• Must be paid the Davis-Bacon (DB) rate for the classification
of work performed if not 541 exempt
20
Site of the Work
 Davis-Bacon applies only to laborers and mechanics employed
“directly upon the site of the work.”
 Site of work is:
• The physical place or places where the construction is called for
in the contract or will remain after work has been completed;
and
• Any other site where a significant portion of the building or
work is construction, provided that such site is established
specifically for the contract.
• May also include job headquarters, tool yards, batch plants,
borrow pits, etc., provided they are:
►
Located adjacent or virtually adjacent to the “site of work”
and dedicated exclusively or nearly so to the performance
of the contract or project.
21
 Obtain Wage Determinations: http://www.wdol.gov


Wage Determinations online
Davis-Bacon Wage Determinations (WD)
• Established by geographic area (usually a county or a group
of counties)
• Published for the 4 types of construction:
► Residential
► Highway
► Building
► Heavy
(classifications may be combined in many areas)
• May be modified periodically
• Must be included in bid documents and contract for
construction with appropriate Federal labor standards
provisions
Non-Government recipients/subrecipients must have wage
determination concurrence by governmental award official
22
Wages & Fringe Benefits
 DBA: the term “wages” or “prevailing wages” includes:
• The basic hourly rate (BHR)
• Contractor contributions irrevocably made to a trustee or
third party pursuant to a bona fide fringe benefit (FB) fund,
plan, or program
• The rate of costs the contractor reasonably anticipates in
providing bona fide FB’s where certain conditions are met
23
Fringe Benefits
 Under DBA, FB’s are a component “prevailing wage”
 The Wage Determination (WD) obligation may be satisfied by:
• Paying the BHR and FB in cash
• Contributing payments to a bona fide plan
• Any combination of the two
24
Fringe Benefits
 Must be paid weekly for all hours worked
 Cash wages paid in excess of BHR may count to offset or
satisfy the FB obligation
25
Fringe Benefit Example
 BHR
 FB
 Total prevailing wage
$ 10.00
$ 1.00
$ 11.00
 The contractor may comply by paying:
• $11.00 in cash wages
• $10.00 in cash wages plus $1.00 for FB
• $ 9.00 in cash wages plus $2.00 for FB
26
Examples of Fringe Benefits
 Life Insurance
 Health Insurance
 Pension
 Vacation
 Holiday
 Sick leave
27
Funded Fringe Benefit Plans
 Contractors may take credit (without prior approval from DOL)
for bona fide FB fund contributions made to third-party
trustees or insurers that:
• Are irrevocably paid; and,
• Are made regularly, not less often than quarterly
 Credit is for payments made for individual workers eligible to
participate in the plan, program, or fund
28
Annualization Principle
 Applies to benefits of a continuous nature (e.g., health
insurance, pension plans)
 Determine hourly rate of contribution that is creditable
towards contractor’s Davis-Bacon prevailing wage obligation
by:
• Dividing the total annual contributions by the total annual
hours worked (both Davis-Bacon and non-Davis-Bacon
work); and
• Allocating fringe benefit credits so that Davis-Bacon work
is not used to fund benefits on private (non-Davis-Bacon)
work
29
Annualization
Defined Contribution Pension Plans
 Davis-Bacon credit is based on the effective annual rate of
contributions for all hours worked in a year (both Davis-Bacon
and non-Davis-Bacon work)
 An exception to the annualization principle applies to plans that
provide immediate participation and essentially immediate
vesting (100% vesting after an employee works 500 or fewer
hours)
• This exception allows full credit for the amount of
contributions made on Davis-Bacon work
30
Annualization Example
Defined Contribution Pension Plan
A firm’s contribution for an employee’s pension plan that
does not provide for immediate vesting was computed at
$2,000 a year. The employee worked 1,500 hours on a DavisBacon project and 500 hours on other jobs not Davis-Bacon
covered
Credit per hour: $2,000 / 2,000 (hours) = $1.00
31
Annualization Example
Medical Insurance
 Employer provides medical insurance at $200 per month to
electrician on Davis-Bacon project: WD requires $12.00 plus
$2.50 in FB’s, or $14.50 an hour. Employee works 160 hours a
month
• $200 / 160 hours = $1.25 (credit per hour)
• No other benefit provided
• Electrician is due: $13.25 an hour
($14.50 – $1.25 = $13.25, is remaining balance of applicable
prevailing wage)
32
Discharging DB
Prevailing Wage Obligation
 If WD requires a prevailing wage of $14.50 ($12.00 BHR plus
$2.50 in FB’s), the contractor can comply by paying:
• $14.50 in cash wages; or
• $12.00 plus $2.50 in bona fide FB; or
• $11.00 plus $3.50 in bona fide FBs
33
Computing Overtime Hours
An employee worked 44 hours as electrician, where WD BHR is
$12.00 plus $2.50 in FB’s:
44 hours
44 hours
4 hours
x
x
x
$ 2.50
$ 12.00
$ 12.00/2
= $ 110.00 FB’s
= $ 528.00 BHR
= $ 24.00 OT
$ 662.00
34
Overtime Computation where
Employee Employed at Two Rates
During a workweek an employee works 20 hours as an
Electrician at $12.00 BHR plus $2.50 in FB’s and as a Painter for
24 hours at $10.00 BHR plus $3.00 in FB’s.
The regular rate for determining Overtime rate is:
20 x $12.00 = $240.00 (as Electrician)
24 x $10.00 = $240.00 (as Painter)
$480.00/44 = $10.91
Overtime due: $10.91 x 1/2 x 4 hours = $21.82
35
The Employer Decides How to
Satisfy the Wage Obligation
Contractors typically pay the “base” amount in cash and then
choose how to pay the “fringe” portion;
• Into a vacation fund,
• Into an approved apprenticeship program,
• Furnish “bona fide” fringe benefits, or
• As cash, and have it treated as wages
36
The Problem
Paying the fringe portion in cash is the most expensive way:
 All cash wages subject to payroll burden
• F.I.C.A./Medicare
• F.U.T.A.
• S.U.T.A.
• Public Liability Insurance
• Workers Compensation*
7.65%
.80%
2.0%
2-15%
1-6%
 The average payroll burden is between 14% - 25%
_________
*dependent on state regulations
37
 Fringe portion paid as wages must pay time and half for overtime
in some states
 Fringe portion paid as wages for Davis-Bacon, pay just the fringe
rate
 Fringes paid into benefits, pay only the fringe rate
38
What Makes a Fringe Benefit Plan
“Bona Fide”?
 Specified in writing and communicated to covered employees in
writing
 Irrevocable contributions
 Group benefit plan
 Contributions made to a third party or trust
 Convey a benefit to the person actually performing the work
 Accounted for on an hourly basis (weekly payroll reporting form
WH347)
39
Prevailing Wage Contractor
SAMPLE WAGE RATE = Base of $25.00 + Fringe of $10.00 = Total Wage Rate of $35.00
OPTION #1 — PAYING FRINGE BENEFIT
REQUIREMENTS AS CASH
OPTION #2 — PROVIDING “BONA FIDE”
FRINGE BENEFITS
Base Wage
$25.00
Fringe Amount
+ $10.00
Total Taxable Hourly Wage
$35.00
*Estimated Payroll Tax Burden (14.15%)
Workers Comp.
3.00%
FICA
7.65%
General Liability 2.50%
FUTA/SUTA
1.00%
TOTAL BURDEN 14% x $35.00 =
Total Payroll Burden
$ 4.90
Total Hourly Wage
+ $35.00
Base Wage
Fringe Amount
Total Taxable Hourly Wage
*Estimated Payroll Tax Burden
Workers Comp.
FICA
7.65%
General Liability 2.50%
FUTA/SUTA
1.00%
TOTAL BURDEN 14% x $25.00 =
Total Payroll Burden
Total Hourly Wage
Fringe Amount in Plan
Total Bid Hourly Wage
$39.90
Total Bid Hourly Wage
$25.00
+ $00.00
$25.00
(14.15%)
3.00%
$ 3.50
+ $25.00
+ $10.00
$38.50
Savings of $1.40 per Man-Hour
40
Compare to Union Plan
 Employees must be in the union 3 - 5 years to be vested
 Funds are held by the union Pension Plan until retirement
 Income stream is the only distribution option
 No investment control by the employee
41
Prevailing Wage Pension Plan:
Benefits to Employee:
 All Fringe contributions are 100% vested from day one
 Employees have multiple distribution options, immediate, set
time or retirement
 Employees can choose lump sum or other distribution options
 Employees can choose from selected funds for investment
42
Benefits to Employer of a DBA Retirement Plan
 Simple in Design
 Cost Effective
 Employer has Multiple use of Contributions
 Flexibility
 Affords Employer Fiduciary Protection
 Opportunity for Owners and Executives to Participate at
Higher Amounts
43
Tools to Increase Owners’ Contributions
 Safe Harbor Plans
• Non-Elective Contributions may be satisfied by Prevailing Wage
contributions
 New Comparability Profit Sharing
• Allows classes of employees to receive different percentage
contributions
• Prevailing Wage contributions can be used to permit larger
contributions to other employee groups
 Prevailing Wage contributions can be used as QNECs to increase the
actual deferral percentage of the non-highly compensated employees
(NHCE) which in turn increases the amounts that HCEs can defer to a
401(k) Plan.
 Prevailing Wage contributions can be used to OFFSET profit sharing
contributions by the amount of the Prevailing Wage contributions which
have already been allocated to the covered employees’ accounts.
44
DBA Retirement Plans
 Internal Revenue Code (Code) has no specific retirement plan
rules for DBA retirement plans
 DBA provisions are enforced by DOL Wage and Hour Division
(not by EBSA)
45
DBA Retirement Plans
 In order to properly certify the payroll as required under DBA,
the retirement plan contributions made for DBA fringe benefit
compensation amounts must be tracked separately
 A separate DBA retirement plan makes it easy to track the
DBA contributions
 Separate DBA-only retirement plan is not required
 Contributions can be made to a plan covering both DBA and
non-DBA employees
46
DBA Retirement Plans
 Note that the DBA employees are NOT union employees
 No special exceptions for DBA employees under the
coverage or non-discrimination rules of Code Sections
401(a)(4) or 410(b)
47
DBA Retirement Plans
 DBA retirement plans are almost always individual account /
defined contribution plans
 DBA defined benefit plans are very rare. It is much more
difficult for a defined benefit plan to show compliance with
the DBA fringe benefit requirements
48
Plan Design Issues
 The goal of the plan is to cover all employees on the prevailing
wage job starting with the first hour of service
49
Prevailing Wage Pension Plan Should Have:
 Immediate eligibility and immediate entry
 NO last day of plan year employment requirement
 NO minimum hours requirement to receive contribution
 Immediate 100% vesting
 Contributions not less often than quarterly
50
Fail Safe Design Can Have:
 Contribution equal to 25% of prevailing wage compensation
 Exclude highly compensated employees (HCE)
 Separate prevailing wage plan
51
Prevailing Wage Contribution Can Be Calculated
as:
 An amount equal to the total of the prevailing wage rate plus
the fringe benefit rate for the participant’s employment
classification less the cost of the cash differential payments
for the participant
52
 For employers whose employees work both DBA and non-DBA
jobs, a prevailing wage pension plan results in less disruption
for wage fluctuation between jobs
53
Example:
• Non-DBA Job:
Wages: $15.00 per hour
• DBA Job:
Wages: $16.00 per hour
• Prevailing Wage Pension:
$ 4.00 per hour
54
Remember:
If plan does not provide for
►
Immediate participation, and
►
Immediate 100% vesting
(100% vesting after 500 hours of service)
the plan contributions must be annualized for all hours
worked on both DBA and non-DBA projects
55
Other Plans
 Non-DBA plan covering the same employees can offset
contributions made to the DBA plan
 DBA amounts can be used to offset any other allocation
that may be provided under the plan provided that the
contributions are NOT limited by the annualized rules
56
Example:
Employer sponsors a 10% money purchase pension plan
with a DBA feature
Steve has compensation of $40,000, $25,000 of which is
from DBA work (1,000 hours at $25)
The DBA pension contribution is $5 per hour ($5,000)
Total compensation
Plan contribution due:
DBA contribution:
Balance Due:
$
x
$
$
$
40,000
10%
4,000
5,000
-0-
The DBA contribution satisfies the employer’s DBA fringe
benefit obligation and offsets the contributions otherwise
due under the plan.
57
Code Section 404 Deduction Issues
 Not a problem as long as DBA retirement plan contribution
does not exceed 25% of the employee’s gross compensation
 If DBA retirement plan contributions do exceed 25% of the
employee’s gross compensation, other employees must have
sufficient compensation so that the employer’s contributions
to all of the employer’s defined contribution plans do not
exceed 25% of the total compensation of all plan participants.
58
Highly Compensated Employees (HCE)
 Code Section 401(a)(4) nondiscrimination rules apply to DBA
plans
 DBA prevailing wages may apply to owners or other HCEs
 DBA plan contributions to HCEs can create discrimination
issues under Section 401(a)(4)
 Important to identify HCEs
 Plan design could exclude HCEs from plan coverage or from
DBA portion of the Plan
59
Example 1
EXAMPLE 1: How Prevailing Wage
Contributions Benefit the Owners
and Top Staff by Testing a ProfitSharing Plan With a Prevailing Wage
Plan
60
Example 1 (cont’d)
How Prevailing Wage Contributions Benefit the Owners and Top Staff
by Testing a Profit-Sharing Plan With a Prevailing Wage Plan
Profit-Sharing Offset
If an employer has been making fringe benefit contributions for
prevailing wage workers at a rate of 10 percent of compensation
and the employer then decides to make a similar profit-sharing
contribution, the employer may only need to make a contribution
for the non-prevailing wage workers. This can allow you to target
profit-sharing contributions more effectively to the key employees
and company owners.
61
Example 1 (cont’d)
How Prevailing Wage Contributions Benefit the Owners and Top Staff
by Testing a Profit-Sharing Plan With a Prevailing Wage Plan
PW
Contributions
PW as %
of Pay
10% of
Pay Profit
Sharing
Calculation
Profit
Sharing
Contribution
Due
Profit
Sharing
Saved
Employees
Compensation
Jones (PW)
$ 30,000
$6,000
20%
$ 3,000
$
0.00
$3,000
Smith (PW)
$ 40,000
$4,000
10%
$ 4,000
$
0.00
$4,000
Owner
$100,000
$ 0.00
0.0%
$10,000
$10,000
$ 0.00
Accountant
$ 60,000
$ 0.00
0.0%
$ 6,000
$ 6,000
$ 0.00
$23,000
$16,000
$7,000
This example shows the pro-rata allocation testing of a profit-sharing plan with a
prevailing wage plan. This saved the employer $7,000 in profit-sharing contributions,
while allowing the owner to receive a 10 percent contribution.
62
Example 2
EXAMPLE 2: SAME EXAMPLE WITH
CROSS-TESTING ALLOCATION FORMLA
63
Example 2
Same Example with Cross-Testing Allocation Formula
PW
Contributions
PW as %
of Pay
5% Minimum
Gateway
Additional
Cross-Tested
Contribution
Employees
Compensation
Jones (PW)
$ 30,000
$6,000
20%
Satisfied
$
0.00
Smith (PW)
$ 40,000
$4,000
10%
Satisfied
$
0.00
Owner
$100,000
$ 0.00
0.0%
$ 0.00
$44,500
Accountant
$ 60,000
$ 0.00
0.0%
$3,000
$
TOTAL
$230,000
$10,000
$3,000
$44,500
IRC §404
25%
Maximum
Deduction
0.00
$57,500
64
Example 3
EXAMPLE 3: Using Prevailing Wage
Contributions to Boost The Amount
Company Owners and Top Staff Can
Defer
65
Example 3 (cont’d)
Using Prevailing Wage Contributions to Boost the
Amount Company Owners and Top Staff Can Defer
Because most 401(k) plans are funded with employee elective
deferrals, the contractor will not avoid payroll costs and not
receive maximum credit against the fringe benefit rate. However,
the plan may be amended to include an additional contribution
source—prevailing wage. These contributions would cover only
prevailing wage employees and include a separate service and
vesting requirement from the 401(k) deferrals and match.
Furthermore, these prevailing wage contributions can be
characterized as QNEC (Qualified Non-Elective Contributions) or
safe harbor contributions for testing purposes.
66
Example 3 (cont’d)
Using Prevailing Wage Contributions to Boost the
Amount Company Owners and Top Staff Can Defer
401(k) WITHOUT Prevailing Wage Provision
(most traditional 401(k) plans do not have this provision)
NHCEs*
Pay
Deferrals
PW*
Contributions
Average
Deferral %
Test
Secretary
$
25,000
$ 1,000
N/A
4.00%
4.00%
Bookkeeper
$
35,000
$ 1,400
N/A
4.00%
4.00%
20 PW Employees
$1,100,000
$11,000
$0
1.00%
20.00%
$13,400
$0
Totals (NHCEs)
28.00%
Divide by # of NHCEs
NHCE Actual Deferral Percentage
÷ 22 employees
1.28%
x2
Computed Maximum Allowed HCE Deferral Percentage (w/out Prevailing Wage Provision)
2.56%
*If a plan does not have a prevailing wage provision, any PW contributions do NOT factor into the Average Deferral Test
(If the NHCE A.D.P. is below 2 percent, the HCE Deferral percent is 2 times the NHCE A.D.P.)
(NHCE means Non-Highly Compensated Employees)
67
Example 3 (cont’d)
Using Prevailing Wage Contributions to Boost the
Amount Company Owners and Top Staff Can Defer
401(k) WITHOUT Prevailing Wage Provision
(most traditional 401(k) plans do not have this provision)
HCEs
Pay
Deferrals
PW
Contributions
Actual
Max
Average Deferral %
Deferral % Allowed
Max
Deferral
Amount
HCE
Taxable
Excess*
Owner
$170,000
$12,000
N/A
7.06%
2.56%
$4,352
($ 7,648)
Manager/Son
$ 90,000
$ 8,000
N/A
8.89%
2.56%
$2,048
($ 5,696)
Total HCEs
$20,000
($13,344)*
Note: The Maximum Salary Deferral Limit for 2012 is $17,000 with a special catch up provision of $5,500 for
participants age 50 and older.
* Excess deferrals refunded to HCEs would be $13,344
(HCE means Highly Compensated Employee—which usually translate into family members, owners and key staff.)
68
Example 3 (cont’d)
Using Prevailing Wage Contributions to Boost the
Amount Company Owners and Top Staff Can Defer
401(k) WITH Prevailing Wage Provision
(most traditional 401(k) plans do not have this provision)
NHCEs
Pay
PW*
Contributions
Deferrals
Average
Deferral %
Test
Secretary
$
25,000
$ 1,000
N/A
4.00%
4.00%
Bookkeeper
$
35,000
$ 1,400
N/A
4.00%
4.00%
20 PW Employees
$1,000,000
$11,000
$100,000
11.10%
222.00%
$13,400
$100,000
Totals (NHCE's)
Divide by # of NHCEs
NHCE Actual Deferral Percentage
230.00%
÷ 22 employees
10.45%
x 1.25
Computed Maximum HCE Deferral Percentage (with Prevailing Wage Provision)
13.06%
(If the NHCE A.D.P. is above 8 percent, the HCE Deferral percent is 1.25 times the NHCE A.D.P.)
69
Example 3 (cont’d)
Using Prevailing Wage Contributions to Boost the
Amount Company Owners and Top Staff Can Defer
401(k) WITH Prevailing Wage Provision
(most traditional 401(k) plans do not have this provision)
HCEs
Pay
Deferrals
PW
Contributions
Actual
Average
Deferral %
Max
Deferral %
Allowed
Max
Deferral
Amount
HCE
Taxable
Excess*
Owner
$170,000
$12,000
N/A
7.06%
10.00%
$17,000
0.00
Manager/Son
$ 90,000
$ 8,000
N/A
8.89%
16.12%
$14,508
0.00
7.97%
13.06%
Total HCEs
$20,000
0.00
The net result from placing prevailing wage (PW) contributions into a 401(k) plan with a prevailing wage provision
is that it allows owners and key staff to obtain far greater benefits than are available inside a traditional (nonprevailing wage) 401(k) plan.
70
Appendix p.1
Additional Resources
1. DOL Davis-Bacon Fact Sheet >>
http://www.dol.gov/esa/whd/regs/compliance/whdfs66.pdf
2. General Davis-Bacon Act requirements and applicability > Compliance
Assistance By Law - The Davis Bacon and Related Acts (DBRA)
3. Wage determination on line > http://www.wdol.gov/
4. Selecting the appropriate construction type (see section 4b)
http://www.wdol.gov/usrguide/sectionc.aspx#c4b
http://www.dol.gov/esa/whd/programs/dbra/docs/memo-131.pdf
5. Selecting a wage determination > http://www.wdol.gov/dba.aspx#0
6. Wage rate posting requirements >
http://www.dol.gov/esa/whd/programs/dbra/wh1321.htm
71
Appendix p.2
Additional Resources (cont’d)
7. Performing a review of certified payrolls >
http://www.dol.gov/esa/whd/forms/wh347.pdf
8. Conducting labor interviews >
http://contacts.gsa.gov/webforms.nsf/0/12BF5D0E2DC4484685256CBC
0062F375/$file/sf1445.pdf
9. Recommendations for resolving wage rate violations.
DOL employment law guide >
http://www.dol.gov/compliance/guide/dbra.htm
10. Davis-Bacon Reference Material >
http://www.gpo.gov/davisbacon/referencemat.html
11. Prevailing Wage Resource Book >
http://www.dol.gov/esa/whd/recovery/pwrb/toc.htm
12. DOL wage and hour division offices > U.S. Department of Labor –
Employment Standards Administration (ESA) – Wage and Hour Division
(WHD) – District Office Locations
13. DOL Wage and Hour Division ARRA website >
http://www.dol.gov/esa/whd/recovery/
72
Davis-Bacon Act
Prevailing Wage Pension Plans
by Richard A. Naegele, J.D., M.A.
Wickens, Herzer, Panza, Cook & Batista Co.
35765 Chester Road
Avon, Ohio 44011-1262
Phone: (440) 695-8074
Email: [email protected]
The End
Workshop #9
ASPPA Annual Conference
National Harbor, MD
October 28, 2012
© Copyright 2012 Richard A. Naegele, J.D., M.A.