Description of Issue

Can you please break down the calculation for the imputed income for life over 50k?

Context

Enterprise ERP Payroll
Deduction and Benefit Master
Life Tables
Employee Deductions
Payroll Control Settings
GTL - Group Term Life
Imputed Life
Life > 50k
Life Insurance over 50,000

Cause

Resolution

These steps below are dependent upon the Payroll Control Setting for, Insurance-Include Employee Contribution Difference, set to Y and the deduction being Both or Employer paid with a non-cash amount higher than the Employee withholding amount.

The Control Setting for Include Employee Contribution Difference, when set to Y, it does not subtract the Employee Contribution amount from the non-cash calculation. Use Life over 50k Non-cash Pay is calculating at the same amount as the Life Insurance Deduction Withholding if the Deduction is Employee paid and the Non-cash amount is calculating at the employee withholding amount or 0.00.

Go to Payroll Control Settings (Payroll>Payroll Setup>Payroll Control Settings)
Double click the setting for Insurance - Federal Insurance Table. Note the Value. (Life table)
Go to Deduction and Benefit Master (Payroll>Payroll Setup>Deduction and Benefit Master)
Click Life Table in the toolbar. Click Search. Define the value from the Payroll Control Settings. Click Accept.
Determine where the employee lands on the table based on age and payroll date (See additional information) and note the rate. Click Return.
Click Search. Click the Insurance Tab. Select the non-cash pay code from the Non-Cash Pay Type drop down. Click Accept. Note the deduction codes.
1. Example, only one deduction (8000) displayed with the non-cash pay code (900)
Go to Employee Deductions (Payroll>Employee Maintenance>Employee Deductions)
Search for the employee and any deduction that was linked to the non-cash pay code. Click the Insurance Tab.
1. Example, there is an Employee Ins Amt of 56,000 and an Employer Ins Amt of 56,000. (See additional information)
Click the Cycles tab. Note the number of checked cycles.
Add the Employer and Employee Ins amounts together.
1. 56,000+56,000=112,000
Subtract 50,000 to get the amount over 50k that should be taxed.
1. 112,000-50,000=62,000
Divide that amount by 1000
1. 62,000/1,000=62
Multiply that by the rate on the federal life table based on age
1. 62 x .43=26.22
Divide that by the number of cycles
1. 26.22/2=13.33 would be the non cash pay code amount.
NOTE - If in Payroll Control Settings (Payroll>Payroll Setup>Payroll Control Settings) the setting for Insurance - Annualize Calculations is set to Y, the calculation would be as follows:
1. 26.22 x 12 months = 314.64
2. 314.64/ (number of pays on base pay in Employee Job/Salary) example, 26 = 12.40
3. If this Payroll Control Setting is set to N, the calculation would stop at Step 14.
NOTE: If in Payroll Control Settings (Payroll>Payroll Setup>Payroll Control Settings) the setting for Insurance - Include Employee Contribution Difference, set to N, the calculation would be as follows:
1. If the Life Insurance Deductions are not Exempt from FIT:
  1. Same calculation from steps 10-14/15.
  2. If the amount is either 13.33 (not annualizing) or 12.40 (when annualizing) and there is an Employee Withholding amount, it will be subtracted from the non-cash calculated amount.
    1. For example, if the Employee withholding amount is 8.00, the Non Cash Pay would be:
      1. 13.33-8 = 5.33 or 12.40-8=4.40
    2. For example, if the Employee withholding amount is 20.00, the Non Cash pay would be:
      1. 13.33-20.00=-6.67 or 12.40-20.00=-7.60. Since these are negative, the system would just take a 0.00 Non Cash amount.
2. If the Life Insurance Deductions are pre-tax and exempt from FIT:
  1. Same calculation from steps 10-14/15.
  2. If the amount is either 13.33 (not annualizing) or 12.40 (when annualizing) and there is an Employee Withholding amount, it will be subtracted from the non-cash calculated amount, however if the amount calculated is lower than the original calc, we will take the higher amount.
    1. For example, if the Employee withholding amount is 8.00, the Non Cash Pay would be:
      1. 13.33-8 = 5.33 or 12.40-8=4.40. Since 13.33/12.40 is higher than 5.33/4.40 the Non-Cash amount will stay at 13.33/12.40
      2. See last bullet in Additional Information

Additional Information

The Federal Life Table used to determine an employee's age is based on the end of the Check Date year of the payroll, (12/31/XX).
- For Example, if an employee's birth date is 01/15/81 and the payroll check date is between 01/01/2021 - 01/14/21, it will still evaluate their age as of 01/01/2021-12/31/2021. In this example it would still calculate their age as 40, even though the check date is prior to their 40th birthday.
- To find the employee's birth date go to Employee Master (Payroll>Employee Maintenance>Employee Master) and click on the Dates tab.
In Deduction and Benefit Master, if multiple deductions have the same non-cash pay code defined, and those deductions are attached to the employees, it will use all those deductions when calculating the non-cash amount.
In Employee Deductions if there is an Employee and an Employer Ins Amt defined on the Insurance tab, it adds them both together when calculating. Regardless if the deduction is only Employee or only Employer paid.
Basic Health and Life Insurance
The non-cash pay code should not be attached in Employee Job/Salary.
The 'Include Employee Contribution' setting is not related to subtracting the employee portion from the calculated non cash pay amount. It is used to compare the calculated non cash amount to the employee deduction amount and will set the non cash amount to whichever value is greater. The only time that the employee deduction amount is subtracted from the non cash pay amount is if the deduction is NOT exempt from FIT. If it is exempt from FIT it is already being excluded from the taxable gross, so it doesn't then exclude it again by reducing the non cash amount.

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