Effective June 15, 2017: The U.S. Prime Rate Has Increased from 4.00% to 4.25%.
WHAT IT IS:
Construction contractors that do business with governmental entities are required to pay workers (typically laborers and mechanics, but not office staff) a certain level of wages for projects that apply to alteration and/or repair to public buildings or public works. These pre-determined wages, known as prevailing wages, are supplied by the applicable public authorities and regulated by the U.S. Wage and Hour Division and equivalent State Departments of Labor. The rules relating to prevailing wage are governed by the Davis-Bacon Act and similar legislation.
The Paragon Alliance Group specializes in customized plan design and will assist you in establishing and administering a Retirement Plan for the deposit of the Fringe Benefit portion of the Prevailing Wage as set by the government. Proper design will allow your company to maximize tax savings and enable you to be more competitive in the bidding process.
Base Pay - $20.00 / Hour
Fringe Benefit - $7.00 / Hour
Prevailing Wage - $27.00 / Hour
Fringe Benefits can be paid as wages and/or to pay benefits, which includes a retirement plan.
PRIMARY BENEFIT: A contractor can save significant amounts of money by funding the fringe portion of the established prevailing rate into a benefit plan (retirement, health, life, vacation, etc.) instead of having the entire rate be paid as compensation.
REASONS TO ESTABLISH RETIREMENT PLAN:
TYPES OF PLANS: A Davis-Bacon Retirement plan can be:
PLAN DESIGN COMMENTS
CONTRIBUTION RATES AND DEPOSITS: