Fringe Benefits AASBO CONFERENCE BREAKOUT SESSION Vivian Lovorn – Homewood City Board of Education September 19, 2016

Verify Parameters Verify that all Parameters are set correctly. All Parameters can be found under PR Setup.

Payroll Code Maintenance II Tab 6 Verify that the Group Term Life (GTL) Fringe Benefit is set up. Be sure that the box for Life Insurance Benefit is checked

Under Payroll Code Maintenance III Tab 6 Verify the Group Term life percentage’s by age. These parameters are used by the Calculate Taxable Fringe Benefit to compute the benefit/premium amount. The program uses the employee’s birth date on the employee’s personnel data record and the group term life codes to determine the employee’s premium cost per $1,000 of group term life coverage. Note: These rates will change sometimes as insurance rates change. You will maintain the rates here. 0-24 = .05 25-29 = .06 30-34 = .08 35-39 = .09 40-44 = .10 45-49 = .15 50-54 = .23 55-59 = .43 60-64 = .66 65-69 = 1.27 70-100 = 2.06

PR Parameter Maintenance I Tab 3 Additional Amount: Amount that is added to the employee’s annual salary to determine the insurance amount Employer Paid Amount/Percent: If the board pays an amount, in addition to the “Additional Term Life”, enter that amount or percent. This can be zero. Taxable Cutoff: A portion of the group term life premium may be a taxable benefit. The federal government has established the maximum insurance amount on which the premium benefit is not taxable. This amount is $50,000. 1. 2. 3. Mississippi Only Example: Employer provides group term life equal to the person’s annual salary plus an additional amount of $15,000 plus a board paid addition of $10,000. If the employee’s salary is $45,000, then the total group term life insurance amount is $70,000. The $70,000 less the taxable cut off amount of $50,000 equals the amount on which the taxable premium is computed, $20,000.

PR Parameter Maintenance I Tab 10 If you calculate once a year and divide the amount equally over the number of pay periods with the same amount withheld each month then you will leave the Clear Fringe Benefit After Update UNCHECKED. If you calculate once a year but charge the entire amount in December then you will leave the Clear Fringe Benefit box CHECKED. There is also the option to withhold federal and state taxes from those benefits. REMEMBER: Checking the “Clear Fringe..” will clear out ALL fringe benefits. This includes vehicle and miscellaneous fringes on ALL employees. Be sure to go back after updating December payrolls and re-enter other fringe benefits.

Other Items used when Calculating Taxable Fringe Benefit Employee had to have Retirement Deductions in the PR Check History for the period being reported. Salaried Periods must be > 0 Job cannot be marked as NO Pay Enrolled in DROP (State Specific Screen, Alabama sites only) may not be checked Employee must have an Original Hire Date on the Employee Data Screen

After the parameters are verified Go to PR Check Processing - Regular Checks - Calc Taxable Fringe Benefit

Calculate Taxable Fringe Benefit This will calculate the fringe benefits for eligible employees and update their employee maintenance screens. Effective Date: Should be 12/31 of the current year. This date is used to calculate an employee’s age. Scholastic Year: The value should be the scholastic year prior to the current year. So for calendar year 2017, you would use scholastic year 2016. Check Records will be pulled from this date range ( in this example, 7/01/2015 thru 06/30/2016).

4. Employment Date: Employees with an employment date equal to or prior to this date will be included in the report and will have a GTL fringe benefit amount updated. Generally, in Alabama, employee’s should be included if they have one year’s credit with the retirement system. It is up to individual clients as to the employment date that is used but it must be within date range on the previous screen. Example: If employment date is 7/1/15, and the employee was hired on 10/1/15, that employee would not be included in the calculation of fringe benefit. 5. Update Fringe Benefit – Check the box when you are ready to update benefits to employee maintenance. If the box is unchecked, you will get a report only and employee’s will not be updated. We recommend running unchecked first to verify. 6. Updating – Replace amount will replace the existing benefit amount on the employee’s record. Accumulate Amount will add the calculated amount to the existing fringe benefit amount on the employee’s record. 7. Calculate Amount Pay period amount – Amount to be posted each pay period. This amount is the annual amount divided by the employee’s salaried periods. Annual Amount (for December Fringe Calculations) – Calculated fringe by using employee’s annual amount Other - Enter the number of months used to calculate an amount. Usually used when an employee is terminated.