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Gross Income, HSA ER Contribution, and a student loan garnishment

Hi All, I am trying to process a student loan garnishment for an employee and I'm having trouble finding the definition of gross income - I am told by our payroll company that gross should include the employer matching contribution to an HSA, but I can't find anything to support that. Can anyone point me in the right direction? Thanks very much and Happy Holidays.


  • This is a soft answer, so if someone like Pat Haggerty weights in, assume he is right.

    Lets say I have $100 in wages, some GTL, and HSA. I would ignore the GTL/HSA unless the employee is voluntarily taking a benefit that is reducing wages available for garnishments. Just work with the actual wages. Benefits which could never have been wages in the first place should not affect the garnishment calculations.

  • The definition of wages under the WHD for wage garnishments is:

    The CCPA defines earnings as compensation for personal services, which includes:

    1. wages,
    2. salaries,
    3. commissions,
    4. bonuses, or
    5. other compensation—including periodic payments from a pension or retirement program, or payments from an employment-based disability payment program.

    All the earnings are payable to the employee. Since matching HSA's are not paid as earnings, they are not included in the wages.

  • That was my interpretation as well, but the payroll company is telling me differently

  • Ask them to cite THEIR opinion. A long time ago someone told me if you cannot support your answer, you do not know the answer.

  • Thank you, this is what I gave the payroll company.
  • @David Warren said:
    Ask them to cite THEIR opinion. A long time ago someone told me if you cannot support your answer, you do not know the answer.

    Kathie - this is the truest thing David has said. When a payroll company states things like this, I always come back with, So, if what you are telling me is incorrect, you will fix any errors caused by your mis-information and pay any and all penalties that arise from said error, correct? They will either give you something in writing or back off!

  • Also, keep your boss in the loop. If my boss found out late in the game that I was deliberately breaking well established payroll law based on something a vendor said, words cannot describe how fast I would be fired. Your vendor is not in charge of payroll, you are. They are supposed to be doing what you tell them to, not visa versa.

  • Thank you. Yes I discussed it with my boss, and she agreed with me. And I did override what the payroll company calculated so that the deduction came out with the correct amount.

    I also asked them to show it to me in writing, as you suggested, and they have not yet done so.

    Thanks so much for your advice, I always appreciate this group.
  • To change the subject slightly, the golden rule of payroll is to KEEP YOUR BOSS IN THE LOOP. You should NEVER surprise your boss.

    I have never had a boss who knew a tenth of what I do about payroll, but my boss is still my boss, and has every right to be keep in the loop and make decisions. Even (IMO) dumb decisions.

    Also, buy a copy of the Payroll Source Book. This is the payroll bible. You need a fantastically good reason to not do what that book says. Also, if you are in a lot of states, get one of the paid payroll library services (APA, BNA, CCH, RIA). If you pay a big league labor law firm for an answer, 9 times out of 10 it is just a copy of what of those services say.

  • a little late to the party but 100% agree with the others. In the end you will be the one responsible, not the vendor!

  • I have always used ADP. Not because of their not-so-great customer support, but because they are good at doing EXACTLY what I tell the to do. I do not need them to make decisions or give me advise. I need them to predictable follow instructions.

  • I use ADP as well, and have often said that we have to know more than they do. As I said, I did override the calculation, but the account manager tells me that the wage and garnishment department is still telling her that it's wrong and they're right, but I haven't seen any proof in writing from them.

    I remember years ago when I was setting up the HSA and ER Contribution, they argued with me for some time and kept telling me that I was wrong, the ER Contribution didn't go on the W-2 along with the EE contribution. I took them to the IRS publication, and the rep said that was my interpretation, he had set up hundreds his way and that I had to agree that if it was wrong it would be my fault. I said OK. A while after that something came out from ADP about HSA accounts basically contradicting what the Rep told me and supporting what I had asked for, and what the publication said. I was happy that I stood my ground.