Priority of salary reductions.

[GBurns]

What happens when an employer is served a wage garnishment from the IRS, does the deduction to satisfy the garnishment have priority over deductions for FSA etc?

What orders have priority over Salary Reduction Agreements?

If any (such as the IRS garnishment) takes priority does it matter that as a result the amount of the remaining usual deductions for health insurance and FSA etc would reduce the net pay to an amount that is less than minimum wage?

If any have priority and cause the amount left to be insufficient to satisfy the Salary Reductions needed for health insurance or FSA etc, What do you do?

[Harwood]

1. Check out PLR 9511043, 12/21/94. It deals with the issue of a variety of deductions and calculating take-home pay subject to levy. Short quote: "deductions that are in effect at the time of the levy will generally be allowed."

2. The IRS reserves the right to disallow some deductions. Call the IRS contact on the Form 668 Notice of Levy form if there is any doubt.

3. Garnishments and minimum wages, etc are payroll questions and dealt with in books such as "The Payroll Source" from the American Payroll Association.