APA Garnishments & Wage Deductions 2

Question 1

Under the Debt Collection Improvement Act (DCIA), what is the maximum percentage of disposable pay that can be garnished for a federal student loan in default?

Accepted Answer

15%

Answer

The DCIA allows administrative wage garnishment for defaulted federal student loans of up to 15% of disposable pay, subject to the 30x minimum wage floor.

Question 2

When an employer receives an Income Withholding Order (IWO) for child support, within how many business days must the first withholding typically begin under the model federal form?

Accepted Answer

On the first pay date occurring 14 or more days after receipt

Answer

The standard IWO requires employers to begin withholding no later than the first pay period occurring on or after the date that is 14 business days after the IWO is received.

Question 3

Filing for Chapter 7 bankruptcy generally triggers an automatic stay. Which type of garnishment is typically NOT stopped by the bankruptcy automatic stay?

Accepted Answer

Domestic support obligations (child support/alimony)

Answer

Domestic support obligations such as child support and alimony are exempt from the bankruptcy automatic stay under 11 U.S.C. § 362(b)(2) and must continue.

Question 4

An employer charges a $5 administrative fee per pay period for processing a child support income withholding order. How should this fee be applied?

Accepted Answer

Applied only if state law permits it; fee comes from the employee's remaining wages

Answer

Employers may charge a reasonable administrative fee (allowed by state law) which is deducted from the employee's remaining disposable earnings after the support withholding.

Question 5

When an employer receives a tax levy from the IRS under a Form 668-W, what must the employer give the employee immediately?

Accepted Answer

A copy of the levy notice and Publication 1494 exemption statement

Answer

Upon receiving Form 668-W, the employer must provide the employee with the statement of exemptions (Part 3 of the levy) and Publication 1494 so the employee can claim their exempt amount.

(APA) American Payroll Association Certification Practice Test

(APA) American Payroll Association Certification Practice Test

APA Garnishments & Wage Deductions 2