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Question
I am a salaried employee of a large corp. After 30 years of service the company decided to change from 24 pay periods to 26 come Jan 1 2010. They want to withhold 2 weeks pay but it turns out the first of Jan. is a Friday so our first check due on the 15th will be 45% less about 1.7% of annual pay.Is this standard accounting practice or would you normally just divide the annual by 26 and not withhold because I'm salaried?
I'm not entirely sure what's going on here. Why do they want to withhold 2 weeks pay? That makes absolutely no sense. When companies switch pay frequency, they would start just as if they'd always been doing that way. So they'd close out the payroll books to prepare. So you'd get your usual check on the 15th- for your pay due to you for the last half of December. Then, on the 29th, you'd get a slightly smaller check for the pay due to you for the first two weeks of January(since your annual pay is now divided by 26.)
Does that make sense? I have no idea why they would withhold pay. Did they give an explanation?
Best of luck to you!
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Answers by Expert:
Vanessa D. Powell, CPA
Expertise
I am experienced with general bookkeeping, payroll, journal entries, adjusting entries, all types of pension accounting, compliance issues, ERISA, benefit plan auditing, financial statements, payroll tax, Form 5500, retirement planning, and related issues. Please no homework questions. Only US accounting, please.
Experience
I am a CPA in Southern CA. I audit not-for-profit organizations, corporations, and employee benefit plans for the large accounting firm I work for, as well as performing other attest services, planning, and tax services.
Organizations
California Society of CPAs, American Institute of Certified Public Accountants
Education/Credentials
Licensed CPA in the state of CA. Graduated summa cum laude from Colorado Technical University. In order to keep my license, I take 80 hours of CPE every two years. Much of it in the field of accounting, auditing, and employee benefit plans.
Awards and Honors
Graduated summa cum laude (with highest honor).
Past/Present Clients
I have clients from all over the world, in nearly every industry. Most of my audit clients are employee benefit plans and not-for-profit entities. Most of my compilation engagements are manufacturing, agriculture, and construction.
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