President
Plumb Works

Because we provide human resources with a human touch, Lowden & Associates provides you a customized solution designed to fit your specific needs – not a “cookie cutter” solution sold to the masses.

You pick and choose the services you want, as well as how they are delivered – via ASO, PEO, Payroll and Benefits, HR Consulting or Insurance Only. We believe you will be hard pressed to find this assortment of services and delivery options anywhere else in the market today.

Why Outsource?
Outsourcing areas of your business that are outside your expertise makes excellent business sense. Outsourcing helps you focus on your core business, frees up your business resources and enables you to concentrate on expanding the revenue generating areas of your business.

The Outsourcing Institute has found that more and more companies are outsourcing a variety of their non-strategic functions so that they can concentrate on more competitive opportunities, as show in the following chart.

[ back to top ]

Cost of Being an Employer
The cost of being an employer includes both direct and indirect expenses, which you can reduce by outsourcing your HR services to Lowden & Associates.

According to the 2002 predictions of the Society of Human Resource Managers (SHRM) and the Bureau of National Affairs (BNA), businesses with less than 250 employees will spend an average of $1,469 per employee per year, in time (wages) on the activities associated with Payroll and Payroll Tax Administration, Human Resource and Personnel Management, Benefits Administration and Employee Administration.

In 2002, the Small Business Administration (SBA) determined that the annual compliance costs associated with being an employer amounted to $7,000 per worker for small businesses. Click here to view the complete checklist for Cost of Being an Employer.

[ back to top ]

Compliance
With new laws on the books every day, it’s important to protect your business against liabilities. LAI helps your company stay in compliance with federal, state and local laws and regulations. We take care of the paperwork, reducing your legal exposure and preventing costly compliance errors for your company.

Use our Compliance Calendar to prepare for upcoming deadlines.

Is your company in compliance with the following laws and regulations?

Social Security Wage Base Rises to $94,200 in 2006

The Social Security Administration (SSA) announced on Friday, October 14, 2005 that the 2006 social security wage base will be $94,200, an increase of $4,200 from the 2005 wage base of $90,000. As in prior years, there is no limit to the wages subject to the Medicare tax; therefore, all covered wages are still subject to the 1.45% tax.

The FICA tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, remains at 7.65% for 2006. The maximum social security tax employees and employers will each pay in 2006 is $5,840.40. This is an increase of $260.40 from the 2005 maximum of $5,580.00.

The social security wage base for self-employed individuals in 2006 will also be $94,200. There is no limit on covered self-employment income that will be subject to the Medicare tax. The self-employment tax rate remains 15.3% (combined social security tax rate of 12.4% and Medicare tax rate of 2.9%). In 2006, the maximum social security tax for a self-employed individual will be $11,680.80. This is an increase of $520.80 from the 2005 maximum of $11,160.00.

FICA coverage threshold increases for domestic, election workers

The threshold for coverage under social security and Medicare for domestic employees will be $1,500 in 2006, up from $1,400 in 2005; the coverage threshold for election workers will be $1,300 in 2006, up from $1,200 in 2005.

IRS Announces Pension Plan Limits for Tax Year 2006

The IRS has announced the dollar limits applicable to pension plans that become effective January 1, 2006 under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; Pub. L. No. 107-16) and has released the cost-of-living adjustments applicable to dollar limits on benefits and contributions under qualified retirement plans unaffected by that law, as well as other items, for tax year 2006 [IR-2005-120, 10-14-05].

Limits reset or established by EGTRRA

• For limitation years ending after December 31, 2005, the limit on the annual benefit under a defined benefit plan contained in §415(b)(1)(A) is increased from $170,000 to $175,000.
• The limit on annual additions to defined contribution plans under §415(c)(1)(A) is increased from $42,000 to $44,000.
• The limitation on the exclusion for elective deferrals under §402(g)(1) (e.g., §401(k) and §403(b) plans) is increased from $14,000 to $15,000.
• The annual compensation limit under §401(a)(17) and §404(l) is increased from $210,000 to $220,000.
• The compensation amount under §408(p)(2)(E) regarding elective deferrals to SIMPLE retirement accounts remains unchanged at $10,000.
• The limitation under §457(e)(15) concerning elective deferrals to deferred compensation plans of state and local governments and tax-exempt organizations is increased from $14,000 to $15,000.
• The limitation under §416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $135,000 to $140,000.
• The limitation under §414(v)(2)(B)(ii) for catch-up contributions to an employer’s SIMPLE plan for individuals age 50 or over is increased from $2,000 to $2,500; the limitation under §414(v)(2)(B)(i) for catch-up contributions to §§401(k), 403(b), and 457 plans for individuals age 50 or over is increased from $4,000 to $5,000.

Limits not reset by EGTRRA

• The limitation used in the definition of highly compensated employee under §414(q)(1)(B) is increased from $95,000 to $100,000.
• The compensation amount under §408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $450.
• The compensation amount under federal regulation §1.61-21(f)(5)(i), concerning the definition of “control employee” for fringe benefit purposes, remains unchanged at $85,000. The compensation amount under §1.61-21(f)(5)(iii) is increased from $170,000 to $175,000.

[ back to top ]