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Regulatory alert: Paycards and MyIRA

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in Office Management,Payroll Management

Federal agencies have been busy adding to their regulatory agenda. Here’s the latest news from the regulations front.

1. Proposed regs on paycards. Proposed regulations issued by the Consumer Financial Protection Bureau update Regulation E with respect to paycards. The regs would establish a timing rule. You would be required to provide employees with model notices regarding the customary fees that apply to paycard transactions and their ability to opt out of the paycard program prior to the first time you load their pay onto their cards.

The proposed regs also would cover cards that aren’t currently considered paycards. These include cards used to disburse incentive payments (e.g., bonuses), travel reimbursements and other payments unrelated to compensation. In addition, it would cover cards used in isolated circumstances when other payment methods aren’t available (e.g., cards that provide final pay or advance money in an emergency). These regs won’t take effect until final regs are issued. (79 F.R. 77010, 12-23-14)

2. Final regs on MyIRA. Final regs, which became effective Dec. 15, 2014, allow the Fiscal Service to issue Treasury bonds for a new bond-backed retirement savings program, MyIRA. MyIRA is a Roth IRA program, which means employees can contribute only on an after-tax basis.

Employers withhold employees’ contributions and remit them to the Fiscal Service’s agent. The Fiscal Service is authorized to establish minimum amounts for employees’ initial and additional contributions.

Key: The program is voluntary on employers’ part and isn’t considered a retirement plan under Title I of ERISA. In addition, employers that make MyIRAs available aren’t responsible for complying with Roth rules related to contribution limits, income limits and taxability. The Fiscal Service has an array of marketing materials for interested em­­ployers. (79 F.R. 74023, 12-15-14)

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