How to Set Up Group Term Life Insurance

Transcription

1 Task Sheet How to Set Up Group Term Life Insurance This document explains how to set up Group Term Life Insurance in Millennium. Group term life insurance (GTL) is treated as an in and out earning in Millennium 3, which means: the taxable employer s cost is added to the check as an earning, that amount is taxed, and then it is removed as a deduction. Millennium has the ability to automatically calculate the taxable employer cost of group term life insurance. This calculation runs with each payroll and cannot be used to perform a once a year calculation, as required by some companies. If your organization requires a once a year calculation, you can enter Group Term Life information manually (for W 2 purposes). See Set Up a One Time Calculation on page 6. Set Up a Per-Payroll Calculation To set up group term life insurance and add a GTL calculation to a company, you must follow three major steps: Step A: Create the Deduction Code Step B: Create the Earning Code Step C: Add GTL to an Employee Step A: Create the Deduction Code Note See the Company Setup Deductions Tab reference sheet in KB 1165 for more detailed steps and information on setting up deductions. The first major step in setting up GTL is to set up the deduction code that will be used to remove the GTL amount from the employee s check. Perform the following steps: 1. Select [company] > Company Maintenance > Company Setup > Deductions tab. The system displays the Deductions page and associated sub pages. 2. Select Deductions option in the page header drop down list, as shown in Figure 1: M3-GTLSetup-TS-SB

2 Figure 1: Options drop-down on the Deductions page header 3. Create a new deduction. The code can be any valid deduction code (six alphanumeric characters or less). A simple label such as GTL is recommended. The system creates a new deduction, adds it to the items list, and puts the cursor in the Desc field of the Deduction Setup sub tab, which is shown in Figure 2: Figure 2: Deduction code fields for setting up GTL 4. Fill in the appropriate information for this new deduction. The only fields under the Deduction Setup sub page that you must fill in for GTL (others are optional) are as follows: Desc Short Desc Priority Auto Drop Enter a full description for the code. Enter a short (12 alphanumeric characters or less) description for the code. A simple label such as GTL is recommended. This field is used to determine the order in which deductions are dropped if there is not enough money on the check. Deductions with lower priority numbers will be taken before deductions with higher numbers. If you do not know what to use for a priority number, leave it at 0 and override it at the employee level, if necessary. Put a check in this check box so Millennium drops this deduction when there is not enough money in the check to cover it. This field should always be checked. 2 Group Term Life Insurance Task Sheet

3 How to Set Up Group Term Life Insurance Partial Drop Auto Make-up Chk Stub? Put a check in this check box if you want Millennium to take as much of the deduction as possible when there is not enough money to cover the full amount. Put a check in this check box if you want Millennium to attempt to make up any dropped amounts on the next check for this employee. Use this drop down list to define whether the GTL deduction will appear on the check stub. Valid entries are: Y Yes, display the deduction on the stub N No, do not display the deduction on the stub 5. Save your work by pressing [F11] or clicking the diskette (Save) icon. Step B: Create the Earning Code Note See the Company Setup Earnings Tab reference sheet in KB 1165 for more detailed steps and information on setting up deductions. The second major step is to create the earning code that will be used to add the taxable employer cost to the paycheck. Perform the following steps: 1. Select [company] > Company Maintenance > Company Setup > Earnings tab. The system displays the Earnings page and associated sub pages. 2. Select Earnings option in the page header drop down list, as shown in Figure 3: Figure 3: Options drop-down on the Earnings page header 3. Create a new earning. The code can be any valid earning code (six alphanumeric characters or less). A simple label such as GTL is recommended. The system creates a new earning, adds it to the items list, and puts the cursor in the Desc field of the Earnings Setup sub tab, which is shown in Figure 4: Release

4 Figure 4: Earning code fields for setting up GTL 4. Fill in the appropriate information for this new earning. The only fields under the Earning Setup sub page that you must fill in for GTL (others are optional) are as follows: Desc Short Desc Earn Type Rate x Match Ded Chk Stub? W2 Field Taxability Enter a full description for the code. Enter a short (12 alphanumeric characters or less) description for the code. A simple label such as GTL is recommended. Select earning type GTL if you want Millennium to automatically do the calculation. If you do not select GTL, Millennium will not calculate the taxable employer cost. Enter 1 in this field. Select the deduction code that will be used to remove the taxable employer cost from the paycheck after it is taxed. You should select the code you set up in Step A: Create the Deduction Code. Use this drop down list to define whether the GTL deduction will appear on the check stub. Valid entries are: Y Yes, display the deduction on the stub B Yes, but display it in the benefits section, not the earnings section N No, do not display the deduction on the stub Use this drop down list to define the W 2 box in which the earning will appear on Form W 2. Ensure 12C is selected. Millennium treats the taxable employer cost of GTL as taxable income for all tax codes. If you would like to make it exempt from specific taxes, click this button. 5. Save your work by pressing [F11] or clicking the diskette (Save) icon. 4 Group Term Life Insurance Task Sheet

5 How to Set Up Group Term Life Insurance Step C: Add GTL to an Employee The final step in setting up GTL is to add the earning code to the appropriate employees. Note Prior to performing this final step, ensure the employee has a valid date of birth. Look at the Birth Date field under the [company] > Employees > [employee] > Demographics tab. Millennium uses this birth date to determine the employee s age. If no birth date is entered, the system calculates the highest possible GTL amount based on the value in the Units field in Figure 5, using the age the employee will be as of December 31st of that current year. GTL is typically entered as a recurring earning on the employee. To add the earning code, perform the following steps: 1. Select [company] > Employees > [employee] > Fringe tab. The system displays the Fringe page and associated sub pages. 2. Create a new fringe benefit, selecting the GTL you defined in Step B: Create the Earning Code on page 3. The system creates the new fringe benefit, adds it to the items list, and puts the cursor in the Calc Code field of the Fringe sub tab, which is shown in Figure 5: Figure 5: Fringe fields for setting up GTL 3. Fill in the appropriate information for this new fringe benefit. The only fields under the Fringe sub page that you must fill in for GTL (others are optional) are as follows: Release

6 Units Enter the dollars of insurance coverage for the employee. Note Use the Units field to enter the total insurance coverage for the employee, not the coverage over 50,000. The units must be over 50,000 for the calculation to work properly. Start Date Enter the date you wish to start giving the employee the GTL earning. Set Up a One-Time Calculation If you need to record GTL once (for example, at year end) over using the per payroll setup explained in the previous sections, use the instructions below to set up an additional calculation. Perform the following steps: 1. Add a new deduction code, different from the one described in Step A: Create the Deduction Code on page Define this deduction code with the same logic (settings) as the one in Step A: Create the Deduction Code, noting the following: Ensure the Ded Type field is blank do not set it to GTL. 3. Add a new earning code, different from the one described in Step B: Create the Earning Code on page Define this code with the same logic (settings) as the one in Step B: Create the Earning Code, noting the following: The options you set up using the Taxability button must match those of the original GTL earning code. Ensure 12C is the value for the W2 Field field. Ensure the Earn Type field is blank do not set it to GTL. Set the Match Ded accordingly. When you run the payroll in which you are going to record the one time GTL, make a single entry for the amount calculated according to the IRS guidelines as the amount that should be taxed. If you: Add this amount to a live payroll, it will be added to taxable wages and tax will be withheld. Cannot add the entry to a live payroll, enter the amount on a manual check. Taxable wages will be created, but no tax will be calculated. 6 Group Term Life Insurance Task Sheet

7 How to Set Up Group Term Life Insurance This is an earning with a matching deduction, so there is no money available to take for taxes, plus no tax was ever taken. You are only updating wages for W 2 purposes. If you need to correct prior GTL entries, you must use this same strategy. You cannot make adjustments using the earning code that is associated with the GTL earnings type. Release

8 8 Group Term Life Insurance Task Sheet