What you need to know before Making Deceased Employee Payments

Transcription

1 What you need to know before Making Deceased Employee Payments

2 Agenda Coordinating with other Departments/Agencies Family State Laws

3 Agenda Payment Processing Helpful Tips and Resources

4 Question Have you ever had to make a deceased employee payment?

5 Coordinating with other Departments/Agencies

6 Departments/Agencies Benefits Human Resources Investments

7 Departments/Agencies Legal Accounts Payable Payroll

8 Departments/Agencies Establish a Process Create a Check List

9 Benefits- Departments/Agencies Update Beneficiary Forms Make sure benefits staff review the forms annually Notify Third Party Vendors

10 Departments/Agencies Benefits- Obtain a copy of the Death Certificate Continuation of benefits for family

11 Departments/Agencies Human Resources- Notify all Departments Talk with the family Coordinate company contributions and notifications

12 Departments/Agencies Human Resources- Sending a Condolence Letter Terminate employee in HR System Retrieving company property (Badges, Laptops, cell phone)

13 Question Do you have a checklist for making and paying a deceased employee payment? If so what is on it?

14 Departments/Agencies Stock and Investments- Value of Stock on date of death Notify Broker

15 Departments/Agencies Stock and Investments- Initiate any distributions that are required Recognize Income in year of death

16 Departments/Agencies Legal Department- Contested Beneficiary Information Difficult Situations

17 Departments/Agencies Accounts Payable Department- Uncashed Checks Direct Deposit Reversal

18 Departments/Agencies Accounts Payable Department- Obtain needed Tax Forms (W-9) Create New Vendor

19 Departments/Agencies Payroll Department- Update Payroll System Determine Final Payment W-2 Form

20 Departments/Agencies Payroll Department- Understand Residential State Laws Get all Forms needed to process final payout

21 Departments/Agencies Payroll Department- Labor Costing ( Different Earnings Type) Benefits Deduction Reporting -401 (k)/403 (b) Notify Garnishment Agency, if applicable

22 FAMILY

23 Family Get notification of Death Letter/Package for Family Meet with the Family if needed

24 Example of Family Letter Dear M : On behalf of XXX Corporation, Department of Human Resources, please accept my condolences upon the death of <<first and last name>>. This letter summarizes important information regarding M s <<pay; benefits; pay and benefits>>, including actions to be taken by <<XXX Corporation and benefits providers>>, and information requiring your attention. Department of Human Resources staff names and telephone numbers are also included for your convenience. If you desire clarification on any part of this letter or you need assistance, please do not hesitate to call. Pay M 's final pay and leave payout must be paid to <<his; her>> Estate. To establish the Estate for this purpose, a Certificate of Qualification or Letter of Administration must be obtained from the Fiduciary Clerk of the County in which M resided. Upon receipt of this documentation, XXX Corporation will issue payment to the named Executor or Administrator. A stamped, self-addressed envelope is enclosed for your convenience in returning the requested item. If you have any questions about this matter, please call Linda Dailey in the Payroll Division at (703) xxx-xxxx. Health and Dental Insurance Your <<health; dental; health and dental>> insurance coverage with XXX Corporation is paid through. You may elect to continue your County <<health; dental; health and dental>> insurance for up to 36 months by participating in the COBRA coverage plan. Detailed information regarding the COBRA plan is included in this package. For more information, contact in the Employee Benefits Division at (703) xxxxxxx. Group Term Life Insurance You are named as a beneficiary of M 's life insurance policy. Employee life insurance policies are provided by the Standard Insurance Company. A Standard Insurance representative will send you a beneficiary statement form. Please return the completed beneficiary form with a certified copy of the death certificate directly to Standard Insurance. If you have any questions regarding the group term life insurance, contact Jane Smith in the Employee Benefits Division at (703) xxx-xxxx If you would prefer to have a staff member meet with you to review this information, please call Susan Kirkman at (703) , and she will arrange a meeting. If I may be of assistance to you with this or other County business, please feel free to contact me at (703) Sincerely, Director, Department of Human Resources

25 State Law

26 State Law Determined by State the employee Lived In Whom you can Pay When you can pay

27 State Law Determined by State the employee Lived In What you can pay Taxability of the payments made

28 State Law Examples- VA State Maximum Payable Who you can make the check payable too Conditions before Payment can be issued State Withholding VA $15,000 Successor 60 days after death, no qualification of estate Follow Federal Rules

29 State Law Examples- WV State Maximum Payable Who you can make the check payable too Conditions before Payment can be issued State Withholding WV $800: or $5000 if more than 120 days after death (includes pensions and funds allowed for funeral cost) Spouse, Adult Children, Parents, Siblings, or person paying the funeral expenses (in that order) Proper Demand and Application; absence of pending probate proceedings Follow Federal Rules

30 State Law Examples- GA State Maximum Payable Who you can make the check payable too Conditions before Payment can be issued State Withholding GA $2500; All wages if deceased was a state employee Designated beneficiary; if none, spouse or children's guardian (in that order) with out administration of the state No Provisions No Provisions

31 State Law Examples- FL State FL Maximum Payable Any unpaid wages due, including travel expenses and reimbursements up to $300 Who you can make the check payable too Spouse, Children over the age of 18 or Parents (in that order) Conditions before Payment can be issued No Provisions State Withholding No State Income Tax

32 State Law Examples- CT State CT Maximum Payable All unpaid wages due Who you can make the check payable too Surviving Spouse; if none then next of kin; if none then funeral director or physician if they have a preferred claim; or any person the court deems to have sufficient interest Conditions before Payment can be issued Small estate not over $40,000. Application from surviving spouse or next of kin; affidavit of debt from funeral director or physician or any other creditor. Transfer or release discharges of employer's debt State Withholding Follow Federal Rules

33 State Law Examples- CA State CA Maximum Payable $15,000 (including any unused leave or other compensation) Who you can make the check payable too Surviving Spouse or Conservator Conditions before State Payment can be issuedwithholding Affidavit of right and proof of identity Follow Federal Rules

34 State Law Examples- NY State Maximum Payable Who you can make the check payable too Conditions before Payment can be issued State Withholding NY All unpaid wages due (1) Within 30 days of death-designated beneficiary or if none pay surviving spouse (in that order) (1) Within 30 days of death- affidavit from spouse when wages do not exceed $30,000; Follow Federal Rules

35 State Law Examples- NY State Maximum Payable Who you can make the check payable too Conditions before Payment can be issued State Withholding NY All unpaid wages due (2) between 31 days and 6 months after deathaffidavit that states date (2) between 31 days and 6 months same as of death, relationship, above ( in that order); no appt of administrator a child over age 18, or executor, name and parent, sibling, niece or address of person to nephew (in that order) receive the money and can not exceed $15000 Follow Federal Rules

36 State Law Examples- NY State NY Maximum Payable All unpaid wages due Who you can make the check payable too Conditions before Payment can be issued (3) More than 6 months after death - affidavit showing date of death, (3) after 6 months to no executor or death distributee, administrator creditor or person who appointed, no surviving incurred funeral spouse or minor child or expenses entitlement of payment and can not exceed $5000 State Withholding Follow Federal Rules

37 State Law Examples- OR Taxable State Maximum Payable OR $10,000 Who you can make the check payable too Surviving Spouse, dependent child or their Guardian Conditions before State Payment can be issued Withholding No Provision Wages earned but unpaid at the time of death are subject to withholding tax

38 State Law Examples- Other State Maximum Payable Who you can make the check payable too Conditions before Payment can be issued State Withholding DC, MD, PR,SD, SC and others No Provisions No Provisions No Provisions No Provisions

39 Processing the Payment

40 Question What do you do if a direct deposit that has been sent to the bank but the payment will not be received until after death of your employee?

41 Processing the Payment Pay Day is Friday and employee dies

42 Processing the Payment What happens with the payment? Employer may need to do a reversal or deletion of that deposit

43 Processing the Payment Employee dies before cashing their paycheck Employer should reissue the check to the employee s personal representative/estate Reported on the employee s Form W-2

44 Processing the Payment Wages Paid out in the same year as the Death Follow State Law Calculate Final Payment

45 Processing the Payment Example: Employee Jane Doe passes away on June 1, When Jane passed away her employer XXX Corporation owed her $ in wages and $ in accrued vacation pay.

46 Processing the Payment Salary $2, Paycheck Calculation Accrued Vacation $1, Final Pay $3, Social Security Tax $ Medicare Tax $ Net Check $2,770.50

47 Processing the Payment Wages Paid out in the same year as the Death Report on the Employee s W-2 Report on Form 1099-Misc

48 W-2 Processing the Payment

49 1099 Processing the Payment

50 Processing the Payment Wages Paid out in the year after Death Follow State Law No Tax is withheld

51 Example: Processing the Payment Employee Jane Doe passes away on December 28, When Jane passed away her employer XXX Corporation owed her $ in wages and $ in accrued vacation pay. The final payment was made on January

52 1099 Processing the Payment

53 Processing the Payment Work with Accounts Payable to record payment and information has been verified Send out letter explaining final payment

54 Processing the Payment Example of Sample Letter:

55 Helpful Tips

56 Helpful Tips Collaborate with all Departments Make sure benefit information is updated at least annually Have a Check List and written procedures and keep them updated

57 Helpful Tips Keep an Excel Spreadsheet of Payments Made Name Vendor # SSN# SAP ID# 1099 Wages/Gross FICA Taxable Wages Soc Sec Tax EE Med Tax EE FICA Tax Final Payout Comments Estate of Jane Doe $ 10, $ 10, $ $ $ $ 10, Deceased in 2015 John Doe $ 6, $ - $ - $ - $ - $ 6, Deceased in 2014 (prior yr) $ 17, $ 10, $ $ $ $ 16,231.82

58 Helpful Tips Coordinate communication with the family Utilize your reference material to make sure you are following the State Law before issuing the final payment Be consistent and accurate when responding to the family

59 Resources

60 APA Payroll Source State Tax Websites APA State Guide to Payroll Resources Internal Revenue Service website Corporate Attorney Your Service Provider Payroll Subscription Library- Bloomberg BNA, Walter Coulter and others

61 Question Did you learn something today that will help you when you have an employee pass away?

62 Questions

63 Thank You Contact Information: Linda Dailey Payroll Compliance Supervisor Fairfax County Government