Deceased Employee Payout Process for Payroll
Purpose: To provide detailed instructions within the Payroll for North America module for accurate payment to the deceased employee's beneficiary or estate. *Information provided in this document is based on instructions from The Office of Financial Management document "Indebtedness of State of Washington to Deceased Employees Procedures on How to File Claims".
Audience: Payroll Administrators.
You must have at least one of these local college managed security roles:
- ZC Payroll Data Maintenance
- ZZ Payroll Data Maintenance
- ZZ Payroll Processing
If you need assistance with the above security roles, please contact your local college supervisor or IT Admin to request role access.
Deceased Employee Payout Process
Workforce Administration
- Follow standard Termination process for terminating Job Data using the following criteria:
- Action = Termination
- Reason = Death
- HR Status changes to Inactive
- Payroll Status changes to Deceased
- Follow standard Termination process for terminating Base Benefits.
- Follow standard Termination process for terminating Absence Management.
- Follow standard Termination process for terminating Time and Labor.
- Review the below information carefully and then make the appropriate changes within the Payroll module to ensure accurate final payment.
Any payroll payments made to a deceased employee (in the calendar year of death as well as future calendar years) are not subject to Federal income tax withholding.
There is one step needed to address this requirement:
- Change employee tax status to "No taxable gross, no tax taken."
- The next section demonstrates how to change the employee federal tax withholding status for this requirement.
Update Employee Tax Data
Navigation: Payroll for North America > Employee Pay Data USA > Tax Information > Update Employee Tax Data
- The Update Employee Tax Data Search page displays.
- Enter the Empl ID.
- Select the Search button.
- The Update Employee Tax Data page displays.
- In the Special Withholding Tax Status field, select No taxable gross, no tax taken from the drop-down menu.
- Select the Save button at the bottom, lower-left corner of the page..
With the exception of sick leave buyouts, all wage payments (pay, overtime, comp time, annual leave, etc.) to a deceased employee are subject to social security and Medicare taxes if payment is made in the calendar year of death (excluding payments to employees who have reached their social security maximum).
If payment is made in the calendar year subsequent to the date of death, the payment is not subject to social security or Medicare withholding.
There is one step needed to address this requirement:
- Change employee active job record(s) to FICA Status = Exempt.
The next section demonstrates how to change the FICA status for this requirement.
FICA
You must have at least one of these local college managed security roles:
- ZC HR Employee Maintenance
- ZD FWL HCM View Pay
- ZD HR Central Config VW
- ZD HR Admin View Job Data
- ZD Benefits Employee Data Inq
- ZD HR Employee Maintenance VW
- ZD HR Limited Person Job Info
- ZZ HR Employee Maintenance
- ZZ SS Workforce Administrator
- ZZ FWL HCM Pay Process
If you need assistance with the above security roles, please contact your local college supervisor or IT Admin to request role access.
Navigation: Workforce Administration > Job Information > Job Data
- The Job Data page search page displays.
- Enter the Empl ID.
- Select the Search button.
- The Job Data page displays.
- From the Work Location tab, Add a New Row in the employee job record by selecting on the plus sign [+] in the Work Location Details section.
- Select the Payroll tab.
- Change the FICA Status to "Exempt".
- Select the Save button.
The earning period being processed is not relevant - only the actual pay date.
Sick leave buyouts made to deceased employee’s survivors are exempt from social security and Medicare taxes.
Use the Sick Leave earn code of LPN: Sick Leave Payoff-no OASI/Medicare on the Payline to address this requirement.
- The next section demonstrates how to change the Sick Leave earn code for this requirement.
Sick Leave Buyout
You must have at least one of these local college managed security roles:
- <there are no college-assignable roles>
If you need assistance with the above security roles, please contact your local college supervisor or IT Admin to request role access.
Navigation: Payroll for North America > Payroll Processing USA > Update Paysheets > By Payline Security
- The By Payline Security search page displays.
- Enter the Search Criteria and select the Search button.
- The By Payline Security page displays.
- On the Payline tab, in the Other Earnings section, select LPN in the Code field.
- Select the Save button.
After a pay calc has been completed, validate your entries on the paycheck for the deceased employee.
If all is correct, note the Net Pay amount of the payment and then go back to the Payline and enter a One Time Deduction to the deduction code: 000038 "Deceased Employee Cashout".
This prevents the system from generating a paycheck for the deceased employee and sends the net pay for deduction code 000038 to AP for payment.
- Select the One-Time Deductions tab.
- In the One-Time Deduction Data Override section, enter the Deduction Code: 000038.
- Select the Save button.
Final Payroll Steps
- Run another pay calc to confirm a net pay of 0.00 for this employee.
- When it's time to generate the payment to the required payee (estate, attorney, etc.) create a manual invoice for AP with the following information:
- deduction code 000038
- amount to be paid
- name of the payee
- total gross amount of the pay for the deceased employee for 1099 purposes
- sample voucher
The deceased employee payout process for payroll is now complete.
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