Transcript Workshop Session 3 - Year End Update

California Payroll
Conference
Year End 2014
Becky Harshberger
[email protected]
818-955-6016 desk
September 11 and 12, 2014
Agenda
 IRS and CA Updates for 2015
 ACA update
 CA Changes & UI fund Insolvency
 All State UI outlook for 2015
 Legislative Outlook for 2015
 Communication Plan
 YE Checklist
Federal and CA updates for 2015
(check APA website for updates!)
 FICA Base
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(ER)
$119,100? (6.2%)=$7,384.20
CA SDI
$101,636? (1.0%)
401(k)
$ 17,500 50+ $5,500
Mileage
$
0.565? (2013 rate)
Adoption Asst
$ 13,190?
Qualified Parking $
250?
Transit Pass $
130? ($245 in 2013!)
Foreign earned income exclusion $99,200?
CA supplemental rates unchanged in 2015?
ACA: what payroll needs to know
 On January 1, 2015 employers averaging or expected to
average 100 or more FT employees (or FT equivalents) will
be subject to the coverage mandate. Payroll and HR will be
dealing with data collection around:
 Control group aggregation
 FT time status
 Look back periods
 In 2016, the mandate drops to 50 FT or FT equivalents
 Reporting the cost of healthcare on a W2 (code DD)
ACA Lingo
Full-time
Workers employed at least
130 hours per month
FTE
Those employed that did not
work 130 hours a month. For
ACA adding their total hours
for the month (using up to
120 hours per employee) and
divide this amount by 120.
ACA Lingo: Full Time and FTE example
For January through June 2014, the company employed 40 FT employees (at least 130 hours of
service each month) and another 10 employees who each worked 65 hours each month. For July
through December 2014, the company employed 60 full-time employess and another 10
employees that worked 65 hours per month
Full-time Employees
Multiply 40 full-time employees by 6 months (40 FT employees x 6 months= 240) and 60
Step 1
full-time employees by 6 months (60 FT employess x 6 months= 360)
Step 2
Add 240 and 360 (240 + 360=600)
Step 3
Divide 600 by 12 months (600/12= 50 full-time employees)
FTEs
Step 1
Multiply 10 FTEs by 65 hours per month (10 x 65=650)
Step 2
Divide 650 hours per month by 120 hours (650/120 hours =5.41)
Step 3
Multiply 5.41 by 12 months (5.41 x 12 months=64.92)
Step 4
Divide 64.92 by 12 months (64.92/12=5.41 FTEs), rounded down to 5 FTEs per month
Company employed an average of 55 full-time and FTEs during 2014 and would be subject to the
Employer Mandate in 2016
ACA Lingo
Pay:
Company chooses to pay
the penalty tax of $2000
a year per employee
instead of providing
adequate and affordable
healthcare coverage
Play:
Company chooses to offer
compliant coverage, BUT
that coverage is
unaffordable to certain
employees, the company
will pay $3000 a year for
each full time employee
who obtains government
subsidized coverage on the
exchange
ACA Lingo
Adequate:
The offered coverage must
cover on an actuarial basis at
least 60% of the value of
benefits available under the
plan. For example, if the plan
covers 50% of hospitalization
cost, it is NOT adequate..
Affordable:
If the employee’s share of
premiums does not exceed
9.5% of an employees
household income. For
example, if the FT EE earns
$50k, the employee cannot
pay more than $395.83
toward monthly premiums
($50k x 9.5%/12).
ACA and Payroll
 New Forms
 1095 A
 1095 B
 1095 C
 1094 A
 1094 B
 1094 C
 W2 Box 14, Code DD
FUTA tax rate basics
2014 FUTA credit reduction states BCR
rates updated by DOL on 28 July 2014
FUTA tax rate basics
FUTA wage base increase
2014 SUI financing at a glance
CA SUI Fund still insolvent
 The Unemployment Insurance (UI) fund has a revised projected
deficit of $9.5 billion by the end of 2014, according to a new report
released by the Employment Development Department.
 Sacramento has a number of groups interesting in changing UI
wagebase and in ways to pay off the debt….
When employees change their work
state
Unemployment insurance integrity
Tax rate management Penalty rates for
late filers/payers
Ernst & Young LLP’s 2014 pick of six to
watch for future cost increases
Communication Plan
Communication Plan
To Joe/Jane Employee
 Update your W2 mailing address
 Date of last paycheck for 2014
 When to expect W2
 2015 W4’s (exempts)
 What to do if you think you’re W2 is wrong
 What to do if W2 is lost
 2015 limits
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FICA
CA SDI
Mileage
401(K)….50+ catch up
 Flexible spending deadlines and new elections
Memo distribution: email, common areas, website, stuffer, inner office mailer
Communication Plan
 Communication with AP for reportable reimbursements
(those that initially didn’t go through payroll….taxable
relocation, life insurance, exec perk’s…)
 Communication with Executives
 Make ‘em feel special, send them a separate letter of
information, set up a particular person to deal with exec or
exec tax preparer
Communication Plan for 2015
 IRS and state changes happen through out the year, how
effectively are you communicating them to employees?
Year End Checklist for you
Create a checklist for your team that includes
 What you need
 Who is responsible for getting it to you
 The date you need it
Ensure accountability with calendars and emails
Payroll Dept checklist
 Verify all stop pymts, voids and manual checks have been
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processed
Schedule an out of sequence payroll for any adjustments
in advance
Schedule a bonus payroll!
Recon 401(k) and the employer match, true up if needed
1099 processing? (if you are responsible for A/P)
Backup your database (in-house systems)
Seven Deadly Sins to Avoid:
1.
2.
3.
4.
5.
6.
7.
Gluttony – Fixing all dimensions of a YearEnd.
Lust – Intense or unrestrained craving for YearEnd features.
Sloth – Failing to do high quality work at all times.
Opaqueness – Obscuring the progress, quality or other attribute
of a project.
Pride – Believing that we know everything to produce YE
Wastefulness – Misuse of critical resources
Myopia – Not seeing beyond your own work
Thank you for your attention