Payroll Version 17 Manual
Chapter 3 - Human Resources
The following information is covered in this chapter:
Human Resources window
The Human Resources window offers a complete spectrum of tools and command buttons to assist you with assigning pay items to and making claims for cafeteria plan accounts, pension plans, setting up and maintaining personal time, customizing evaluation forms, and assisting you with evaluation scheduling. In Top Pay and Ultimate Payroll version 17, there is a new feature called HR Forms, which provides an array of the most commonly used human resources forms you may need for your employees.
As with setting up your new employee defaults (see Setting up new employee defaults ), you can also set up information to default in for new employees from the Human Resources window. Should you need to customize each employee's record, you can then highlight each employee and update his or her record.
Cafeteria Plans
The Cafeteria Plans section of the Human Resources window allows you to set up and administer your company's cafeteria plan. Instructions are provided in this section of the chapter for setting up your payroll program. Please familiarize yourself with it before entering your cafeteria plan information.
What is a Cafeteria Plan?
A Cafeteria Plan is an employee benefit program designed to take advantage of the regulations contained in Section 125 of the Internal Revenue Code. Employees may choose from among two or more benefits consisting of cash and qualified benefits offered by the employer.
Both the employer and employee save money by converting un-reimbursed medical and dependent care expenses and group insurance premiums from an after-tax to before-tax basis. Your payroll program allows you to manage such a Plan with a feature called the Cafeteria Plan.
How does the tax savings work?
Under Section 125, the taxes that are eligible for reduction are Federal Income Tax, State Income Tax, Employer and Employee FICA, and Federal Unemployment tax. In most states, the State Unemployment tax is reported using the full gross wages. Contact your State Unemployment office to check if your State Unemployment tax is eligible for the reduction.
Who can offer/participate in a Cafeteria Plan?
Any sole-proprietorship, partnership, corporation, or S-Corporation can offer a cafeteria plan to its employees.
Employees choose whether or not they want to participate in all or part of the plan. Prior to the effective date of each Plan Year, an enrollment form must be filled out by each employee (including those who do not wish to participate).
Those not eligible to participate in such a plan include a sole proprietor, a partner or owner of an S-Corporation who owns 2% or more, and an employed spouse of a Sub S-Corporation. Owners, however, benefit from tax savings from those employees who do participate.
What benefits are allowed?
There are two basic options in a Section 125 benefits plan: flexible spending accounts (medical and dependent care) and premium conversion.
Flexible spending accounts
Important note: Flex spending plans are setup to use it or lose it, meaning at the end of the plan period (12 months), if the employee has a balance in the account, they lose it.
Medical
A Medical Spending Account allows an employee to set aside before-tax dollars to pay for medical expenses which are not paid for through insurance or the employer. Expenses include dental, medical, and vision expenses normally allowed by the IRS as deductions on a tax return. Insurance premiums cannot be included in a medical spending account. Refer to IRS Publication 502 for a list of eligible medical expenses and other related information. It is recommended that employers set an allowed maximum for a medical spending account so as to reduce their risk.
Dependent Care
A Dependent Care Spending Account allows an employee to set aside before-tax dollars to pay for day care expenses for children under 13 years old or for adult day care for a disabled spouse or other disabled dependent. According to IRS regulation, a maximum of $5000. 00 can be set aside in a Dependent Care account each Plan Year for married couples filing jointly and single heads of households. Refer to IRS Publication 503 or a tax advisor for information on eligible dependent care expenses.
Premium conversion
The premium conversion part pays insurance premiums in before-tax dollars for Group Sponsored Insurance Programs such as Health Insurance, Dental Insurance, Prescription Drug Insurance, Term Life Insurance (up to $50,000), etc.
Benefit payments on long-term and short-term disability will be taxable to the recipient if the premiums are paid in before-tax dollars.
Buttons in the Human Resources Cafeteria Plan window
Update
The Update button is only active when the New Employee Settings selection is made from the Employee List. Clicking this button will update any settings made in the Cafeteria Plan tab window for all employees.
Clear File
At the end of each Plan Year, all employee account balances must be zeroed out. The Clear File button will zero the balances for all employees and delete the Flex Register file.
Make sure that your Flex Register file (located in the Hard Drive/User/User House/Documents/Aatrix Top Pay folder (or Aatrix Payroll Folder)/Company folder/Registers f is backed up before continuing.
Pay Claim
Click the Pay Claim button to open a window that allows you to cut a reimbursement check.
To reimburse the employee through the normal payroll process, once the claim is made, the claim total will be paid as long as there are sufficient funds in the employee's Flexible Spending Account.
Make Claim
Click the Make Claim button to open the Claim Entry window.
Register
Click the Register button to display the Flexible Spending Account register window.
Save
If you have made any changes to the setup of an employee's Flexible Spending Account(s), click the Save button to save these changes.
Setting up the Cafeteria Plan Administrator
Before setting up your employees in the Cafeteria Plan Administrator, you should have finalized all the details of your Cafeteria Plan (e.g., benefits being offered, eligibility requirements, reimbursement schedule, etc.).
1. Make sure you have created all applicable deductions and reimbursement payroll items and assigned them to the appropriate employees.
2. In the Human Resources tab window, click the Cafeteria Plan tab.
Located at the top of the Employee List is an option called Employee List Settings. It is a file that acts like a template. If all (or most) of your employees have the same Cafeteria Plan setup, it will save you time and frustration if you first configure this file and then update the Employee List instead of setting up each employee individually.
3. Decide whether you want to set up all employees at the same time, or to individually set up each employee.
• There is also a New Employee Settings option. This will set up the Cafeteria Plan items for all employees you enter into the payroll program.
• To set up all your employees at the same time, select the Employee List Settings option located at the top of the Employee List. To set up the Cafeteria Plan for New Employees, select the New Employee Settings.
• To set up an individual employee, select the name of the employee in the Employee List.
4. Select from the pop-up menus the deductions and reimbursement payroll items that apply to your Cafeteria Plan's Flexible Spending Accounts.
5. Click the Options for Group Insurance Premium button to display the Flex Options setup window.
6. Select from the pop-up menus the deductions and reimbursement payroll items that apply to your Cafeteria Plan's Group Insurance Premium Conversion.
Leave the pop-up menu selection as None if you don't offer a particular group premium conversion or Flexible Spending Account.
7. Mark the Make default for all employees checkbox if you wish to have these pop-up options selected for all of the employees.
8. Click the OK button.
9. Click the Save button.
10. If you are setting up the New Employee Settings file, click the Update button.
When you click the Update button, the setup in the New Employee Settings file is assigned to all employees in the Employees List. A message will appear stating that this has been done. Click the OK button.
If you need to personalize the setup of any particular employee, simply select the employee from the Employees List and make the necessary changes.
Viewing/Editing Flex spending account registers
When you record a paycheck or reimbursement check that includes Flex Spending Account (FSA) data, the program takes this data and stores it in separate FSA registers. The following instruction set explains how to access the FSA registers for viewing and/or editing purposes.
Viewing/editing a FSA register
1. In the Human Resources window, click the Cafeteria Plan tab.
2. Select the name of the employee whose FSA register you want to view or edit.
3. Click the Register button.
4. From the Register pop-up menu, select either Medical FSA or Dependent Care FSA.
5. In the employee's Flex register, view, delete, or edit any of the recorded entries.
Delete Entry
To delete an entry, select the entry you wish to delete. Click the Delete Entry button. The entry will be permanently deleted from the selected FSA register.
The program does not automatically adjust the FSA registers if you delete a paycheck from Pay History, you must go into the FSA register(s) and manually delete the corresponding entry.
Edit Entry
To edit an entry, select the entry you wish to edit. Click the Edit button. A dialogue will appear allowing you to change any of the information related to the selected entry.
6. Click the Done button to return to the Cafeteria Plan window.
Pre-designed Cafeteria Plan reports that cull information from the FSA registers are available in the Reports tab window.
Entering reimbursement claims
Whenever an employee submits a claim for reimbursement of an eligible medical or dependent care expense (e.g., child care, dental fees, eyeglasses, x-rays), you must enter that claim into the employee's file. If you have questions concerning eligible expenses, consult IRS Publications 502 (Medical) and 503 (Dependent Care) or your tax advisor.
Insurance premiums are not eligible for reimbursement from Flexible Spending Accounts.
Entering a reimbursement claim
1. In the Human Resources tab window, click the Cafeteria Plan tab.
2. Select the employee's name in the Employees List.
3. Click the Make Claim button.
The employee's name will display in the title of the Make Claim dialogue.
4. Select whether the claim type is a Medical or Dependent Care expense.
5. Enter the relevant information (date, amount, and description) in the text boxes.
6. Click the Pend button to add the claim to the employee's file.
When you click Pend, the claim is placed in the Currently pending list.
Pending claims are removed from the list when the employee is reimbursed.
What next?
• If you don't want to reimburse the employee's claim now, click the Done button to return to the Cafeteria Plan window.
• If you want to reimburse the employee now, refer to the next section. It provides instructions for reimbursing claims.
Reimbursing claims
There are two ways in which you can reimburse an employee for an eligible medical or dependent care expense:
• Add the amount of the reimbursement to the employee's paycheck
• Print a separate reimbursement check
No matter which method you use, the outcome is the same-- the employee is reimbursed for an eligible expense using money that has been set aside in his/her Medical or Dependent Care Flexible Spending Account.
Adding reimbursements to paychecks
If you want to include Medical and Dependent Care reimbursement payments on your employee's paychecks, you must first set them up as extra income payroll items (reimbursement type, exempt from all deductions) and then assign them to all applicable employees.
Also, these reimbursement items must be selected from the Reimbursement pop-up menus in the main window of the Cafeteria Plan Administrator.
The program will correctly maintain your employee's Flexible Spending Account registers ONLY if the reimbursement payroll items are linked appropriately in the Cafeteria Plan Administrator.
Adding a reimbursement to a paycheck
This method includes the reimbursement amount in the paycheck's Net pay as a non-taxable item.
1. Access the Pay Employee window and process payroll as you normally do.
2. When you get to an employee who is to receive a reimbursement, verify that the amount pending for reimbursement displays.
When you record the paycheck, a copy of the paycheck is placed in Pay History and the reimbursement amount is recorded in the Flexible Spending Account register.
Viewing Flexible Spending Account registers
1. Access the Human Resources tab window.
2. Click the Cafeteria Plan tab.
3. From the Employee list, select the employee whose register you want to view.
4. Click the Register button, and then select the appropriate register from the Register pop-up.
If you have to reprint a check that contains a Medical and/or Dependent Care reimbursement, reprint the check from the Pay History window.
Writing reimbursement checks
Use the following instructions to write out a separate reimbursement check.
Writing a reimbursement check
1. In the Human Resources window, click the Cafeteria Plan tab.
2. Select the employee for whom you are writing a reimbursement check.
3. Click the Pay Claim button.
If the claim has not yet been entered in the employee's file, click the Make Claim button, enter the claim information, then click the Reimburse a Claim button. For information on how to make a claim, please see Entering a reimbursement claim.
4. In the dialogue for the employee's claim, select whether the reimbursement claim type is for a Medical or Dependent Care expense.
5. Enter the relevant information (i. e. , date, amount, check number, description) in the text boxes.
If applicable, the Reimbursement amount field will contain the cumulative dollar amount for the claims currently pending for the selected claim type.
6. From the Check Register pop-up menu, select the register you want this check recorded in.
7. (Optional) If you want to print the check, set up the bottom check printing portion of the window.
Print a check. . .
Select the Print a check. . . checkbox. If this option is not selected, the check will be recorded only.
Pay to the order of
Enter the name of the employee you are printing this check for.
Checkform
From the Checkform pop-up menu, select the checkform you want to use for printing.
8. Click the OK button.
If you are printing the reimbursement check, the print dialogue will appear. Insert your checkform in the printer, then click the Print button. The check will be printed and then recorded in the appropriate Flexible Spending Account register and selected check register.
If you aren't printing the check, the check is recorded in the appropriate Flexible Spending Account register and selected check register.
Closing out a Plan Year
At the end of your Plan Year, you will need to zero out the balances in your employees' FSA registers. If your Cafeteria Plan has a provision that allows your employees a certain amount of time (e.g., 90 days) after the end of the Plan Year to submit claims, you will want to wait to close out your Plan Year until that time.
Money left in Flexible Spending Accounts and not paid out in reimbursements are forfeited to the company.
Closing out a Plan Year
1. Before opening your payroll program, make a backup of your Flex Register file.
Normally, this is located in the Registers ƒ folder located in the Company Folder.
2. In the Human Resources window, click the Cafeteria Plans tab.
3. Select any employee name from the list to make the Clear File command active.
Selecting an employee name simply makes the Clear File command active. The Clear File process will remove ALL the employee records, not just for the selected employee.
4. Click the Clear File button.
A warning dialogue reminding you to back up your Flex Register appears.
5. Click the Cancel button to cancel the operation, or the Continue button to proceed to the next dialogue.
6. If you choose Continue, the next dialogue will offer the following choices:
Delete all entries (the new Plan Year hasn't started)
Deletes all entries in the Flex register.
Delete all entries dated before. . .
Deletes only all the entries before the date you enter in the text box.
7. After making your selection, click the OK button.
The entries you specified will be deleted from the Flex Register file.
Pension Plans tab window
The Pension Plans tab window gives you the ability to track employee pension deductions and employer-paid pension contributions for your 401K, Simple IRA, or any other pension plans you may have. Also, you can provide your employees with a detailed record of the deductions and the total contributed to their pension from the registers maintained by the Pension Administrator.
Buttons in this window
Edit Titles
Click the Edit Titles button to open the Edit Titles dialogue that allows you to edit existing titles or create new titles.
Update
The Update button is only active when the New Employee Settings or Employee List Settings selection is made from the Employee List. Clicking this button will update any settings you make for all employees.
Clear File
At the end of each Plan Year, all employee account balances must be zeroed out. The Clear File button will zero the balances for all employees and delete the Flex Register file.
Make sure that your Flex Register file (located in the Top Pay folder or Aatrix Payroll Folder) is backed up before continuing.
Register
Click the Register button to display the Pension Plan register window.
Save
If you have made any changes to the setup of an employee's Pension Plan Account(s), click the Save button to save these changes.
Setting up Pension Plans
Before setting up your employees in the Pension Plans tab window, you should have finalized all the details of your company's pension plan with your pension plan provider. In addition, all your deduction pensions and employer-paid contribution pensions need to be set up in the payroll program and assigned to the appropriate employees. For information on creating deductions and employer paid items, please see Creating payroll items.
1. In the Human Resources window, click the Pension Plans tab.
2. In the Pension Plans tab view, click the Edit Titles button.
3. In the Enter/Edit Additional Plans dialogue, enter or edit titles for your pension types in the order you want them to appear in the Pension Plans tab window.
4. Click the OK button to return to the Pension Plans tab window.
Located at the top of the Employee List is an option called New Employee Settings. It is a file that acts like a template. If all (or most) of your employees have the same Pension Plan setup, it will save you time and frustration if you first configure the New Employee Settings file and then update the Employee List instead of setting up each employee individually.
5. Decide whether you want to set up all employees at the same time, or to individually set up each employee.
• To set up all your employees at the same time, select the New Employee Settings option located at the top of the Employee List.
• To set up an individual employee, select the name of the employee in the Employee List.
6. Select from the pop-up menus all those deductions and employer-paid payroll items that apply to the designated pension types.
Leave the pop-up menu selection as None if no deductions or employer-paid contributions apply.
6. Click the Save button.
7. If you are setting up the New Employee Settings file, click the Update button.
When you click Update, the setup in the New Employee Settings file is assigned to all employees in the Employees List. A message will appear stating that this has been done. Click the OK button.
8. If you need to personalize the setup of any particular employee, simply select the employee from the Employees List, make the necessary changes.
Creating pension registers
When processing payroll for an employee who does not yet have a pension register, an alert message will inform you of the fact and offer several options. Choose the option that applies to your needs.
Build with YTD Balances
Build with 0. 00 Balances
Don't Build Registers
Choose whether you want to build (i. e. , create) a register for the employee with a 0. 00 balance, with the pay history year-to-date balance, or not to create one at all.