Processing the Final Pay for a Deceased Employee

1
Processing the Final Pay for a Deceased Employee

• OSPS Users Forum
• April 18, 2007
• Revised May 22, 2007

2
Presentation Will

• Provide an overview of the process, including
• A basic checklist
• A list of resources

3
Checklist

• Decide if payment from OSPA or RSTARS
• Determine payee(s) and obtain payment information

4
Checklist Contd

• If from OSPA,
• Confirm data make entries in OSPA
• Request manual check(s)
• Notify agency accounting for Form 1099-MISC
  process

5
Payment from OSPA or RSTARS?

• If payment in year of death, make payment through
  OSPA
• If payment is made in a subsequent year
• Make payment in RSTARS
• Not subject to social security and Medicare taxes

6
Determine Payee(s)

• ORS 652.190 Payment of wages to surviving spouse
  or dependent children. All wages earned by an
  employee, not exceeding 10,000, shall, upon the
  employees death, become due and payable to the
  employees surviving spouse, or if there is no
  surviving spouse, the dependent children, or
  their guardians or the conservators of their
  estates, in equal shares, to the same extent as
  if the wages had been earned by such surviving
  spouse or dependent children. As used in this
  section, wages means compensation of employees
  based on time worked or output of production and
  includes every form of remuneration payable for a
  given period to an individual for personal
  services

7
ORS 652.190
8
Payees Do Not Include

• Domestic partners
• Legally divorced spouse
• Life insurance beneficiaries, if different from
  spouse or children
• Beneficiaries of will, if not spouse or children
• Grown, non-dependent, children

9
Dependent Children Defined

• ORS is silent
• Use IRS definitions
• Publication 501, Exemptions, Standard Deduction,
  Filing Information (http//www.irs.gov)
• If questions, contact BOLI

10
Dependent Children Generally

• Child by birth or adoption, stepchild, foster
  child if lived in household entire year
• Under 19 or student under 24 or 3,100 gross
  annual income
• Employee provided ?50 of support

11
Obtain Payment Information

• U.S. Code Title 26 Subtitle C Chapter 24 3406
  requires a TIN or back-up withholding
• Legal name
• Mailing address (optional for OSPS)

12
Make Entries in OSPA

• Confirm the PPDB separation
• Confirm final time entered
• Enter final check dates on P010
• Adjust leave on P435 and pay-off leave on P050

13
OSPA Entries Contd

• Outdate deductions on the P070
• Review P080 and P050
• Deduct any overpayments
• Make RGD and DEC entries on the P050

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1. Confirm Data from the PPDB on the P030

• JOB STAT STOP date of death
• PERSONNEL TRANS CD
• Temporaries 567
• Other employees 540
• SEPARATION DT/REASON
• Temporaries 65
• Other employees 40

15
P030 Example

• P030 ,,1,101905 JOB STATUS
  DATA 030
• EARP, WYATT
• JOB STATUS INFO
  CONCURRENT JOB INFO
• JOB STAT START/STOP 070105/101905
  REPORT DISTR CD 509
• PERS AGY/POS/DFC/SC /9902021/0/0
  RECOG SVC DT 012800
• PT-FT CD/PCT F/1.0000
  CITY CNTY CD 30/K
• APPOINTMENT TYP DT/CD 012800/P
  STANDARD HRS PER DAY 8.000
• EMP REPR/CLS/OPT/STEP AAON/C6783 /A/A/06
  MASS TRANSIT DIST X
• PERSONNEL TRANS CD 540
  TIMESHEET CD 2
• BENEFIT PKG CD AC
• LEAVE ACCRUAL SVC CD 3
  EMPLOYEE ID OR0060789
• PERS JOB CLASS CODE 2
• CREW-UNIT 509
• WAGE BASIS CD S
• PERSONNEL BASE RATE 4347.00 ---FUND
  SPLITS--- -FIXED MLY DIFFS--
• ADJUSTED BASE 4520.88 LABOR
  COSTING PCT PAY PCT/ PCT/
• PERSONNEL PAY RATE 4347.00
  TYPE AMT AMT
• EQUIVALENT RATE 26.08
  CD

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2. Confirm Final Time Entered
17
P001 Dates

• Timesheet start date first of the month
• Timesheet end date JOB STAT STOP from the P030
• Pay period ending date last day of the month

18
P001 Example

• P001
• 
  TC20 CUR DEFAULTS
• payroll time capture
• establish session default
  values
• agency timesheet start date
  100105
• timesheet end date
  101905
• pay period ending date
  103105
• batch number 000

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P003 Example

• P003 ,1,01
  TIME CAPTURE BTCH 000
• NAME EARP, WYATT ssn
  TC91 TRANS COMPLET
• total reg 110.00 lwop .00 other .00
  f/t hours 170.00 wcd days 17
• LN TYPE HOURS WORK CHARGE OVERRIDE
  ERR SESSION DEFAULTS
• 1 RG 110.00
  AGENCY 0
• 2
  t/s 100105/101905
• 3
  period end 103105
• 4
  job change data
• 5
  LABOR COST/PCT
• 6
  920745902300 100.00
• 7
• 8
• 9
• 10
  j/c 070105/101905
• 11
  CREW 509 POS 9902021
• 12
  APP P CL AAONC6783 06
• 13
  WS BA7 BASIS S O/T YN
• 14
  forecast 110.0
• 15
  f/t hours 170.0

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3. P010 Final Check Dates

• FINAL CHECK ISSUED date printed on check
• FINAL CHECK PERIOD ENDING end of pay period for
  FINAL CHECK ISSUED

21
P010 Withholding Data / Locator Data

• P010 OR
  WITHHOLDING DATA / LOCATOR DATA 010
• EARP, WYATT WH02
  ENTER UPDATES
• RDC/CREW/CST CTR 509
  ----------MANDATORY WITHHOLDING----------
• ? TAX DATA FOLLOW-UP FLAG N BEG
  DATE STAT EXEM ADDL END DATE
• ? FINAL CHECK ISSUED 102605 ? FED
  000000 00 0000 000000
• ? FINAL CHECK PERIOD ENDING 103105 ? STATE
  000000 00 0000 000000
• ? RETIREMENT START DATE 000000
• EFF ----FEDERAL---- -----STATE----- EIC
  RTMT RTMT RTMT FICA SAIF UNEM
• DATE STAT EXEM ADDL STAT EXEM ADDL CD
  SYST STAT ACCT SUBJ SUBJ SUBJ
• ? 053196 S 00 0000 S 00 0000 N
  S D Y Y Y
• ----WAIVERS----
• CLASS DATE CLASS DATE CLASS DATE CLASS
  DATE CLASS DATE CLASS DATE
• ? ? ? ?
  ? ?

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4. Adjust Pay-off Leave

• Accrue SL VA
• Transfer SL to the Clearing Account
• Pay-off VA CT
• Adjust other leave balances to .00

23
Accrue SL VA
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Pro-rating Leave Accrual

• If death occurs before the end of the month

25
P435 Example SL

• P435 SL EMPLOYEE
  LEAVE DATA
• EARP, WYATT
• J SVC LV USE ACCR ACCR MAX MAX MAX
  ACCRUAL REMAIN TIME LAST
• B CD TP WAIT MO RATE ACCR USE MO
  BAL ADV LOST ACTV
• 1 3 SL 00 00 8.00 9999.0 .0 00 FWD
  50.20 .00 .00 083105
• LV BAL DT CUR/CONT 083105/022900 CUR
  .00 5.18- .00
• ADJ OR CLR ACCT HOURS REMAIN TIME
  LV EXP ENTRY
• TRFR FM/TO OTHR JOB LEAVE ADV LOST
  DATE DATE COMMENTS
• A A 5.18 5.18- .00
  000000 102105 ACCRUE 1005
• A T C 55.38- .00 .00
  123105 102105 DEATH 1005
• ?
• ?

26
P050 Example

• P050 ,,1,103105 GROSS PAY
  ADJUSTMENTS ON FILE
• EARP, WYATT GP93
  TRANSACTION COMPLETE
• PAY STRT STOP ADJ
  DAYS TRAN
• TYP DATE DATE TYP RATE UNITS AMOUNT
  WRKD DATE ERROR MSG
• ? IR 013100 999999 .00 .00
  .00 031400
• INS RETURN PRO
  COMMENT INS RETURN
• a vap A 26.08 151.47
• 
  COMMENT death 1005
• ? A
• 
  COMMENT

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P435 Example VA

• P435 VA EMPLOYEE
  LEAVE DATA
• EARP, WYATT LV09
  ENTER UPDATES OR NEW KEY
• J SVC LV USE ACCR ACCR MAX MAX MAX
  ACCRUAL REMAIN TIME LAST
• B CD TP WAIT MO RATE ACCR USE MO
  BAL ADV LOST ACTV
• 1 3 VA 00 00 12.00 300.0 .0 00 FWD
  145.71 .00 .00 083105
• LV BAL DT CUR/CONT 083105/022900 CUR
  .00 7.76- .00
• ADJ OR CLR ACCT HOURS REMAIN TIME
  LV EXP ENTRY
• TRFR FM/TO OTHR JOB LEAVE ADV LOST
  DATE DATE COMMENTS
• ? A 7.76 7.76- .00
  000000 102105 ACCRUE OCT
• ? 151.47- .00 .00
  000000 103105 GR PAY ADJ
• ?
• ?
• ?
• ?

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Adjust Other Leave to Zero

• E492 Terminated Employee Having Leave Balance
  Report
• Includes CT, ML, PB, PR, SL, VA
• Accrued leave positive balance, negative
  transaction
• Other leaves negative balance, positive
  transaction

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5. Outdate P070 Deductions

• PEBB Benefits
• Garnishments
• Voluntary Deductions

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PEBB Benefits Include

• Medical
• Dental
• Vision
• Basic optional life
• Accidental death dismemberment
• Long short-term disability
• Long-term care
• Flexible spending accounts

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OSPA / pebb ? benefits Interface
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PEBB Benefit Eligibility

• Only alter P070 entries interfaced from PDB if
  directed by PEBB
• Deduction pays for insurance for the next month
• If hours worked paid leave lt 80 hrs, employee
  not eligible for benefits for the next month

33
PEBB Benefit Eligibility Cont

• PEBB ? benefits calculates of business days
  between 1st of month separation date
• If 9 business days, benefits for spouse /
  dependents will end in current month
• If gt9 business days, benefits will end next month

34
Voluntary Deductions

• Parking
• Direct Deposit(s)
• Charitable Fund Drive
• Food Bank

• Deferred Comp
• Union Dues/Fair Share
• Savings Bonds
• Union insurances

35
Voluntary Deductions Cont

• DAS Parking is for the current month
• Pro-rated if death during month
• Private parking for next month
• Union dues / fair share are for the current month

36
Voluntary Deductions Cont

• Delete OSGP for final month
• Deduct direct deposits 3 months prior
• Outdate other deductions for final pay

37
P070 Example Not in Final Pay

• P070 ,,103105
  DEDUCTIONS AND DEDUCTION ADJUSTMENTS
• EARP, WYATT
• DA98
  PRESS ENTER FOR NEXT PAGE
• A DED PLAN OPE DATE -EMPLOYEE---SHARE-
  JOB EMPLR BOARD VENDOR
• D CODE CODE CD BEGIN END PCT PCT FIXED
  SHR SHARE SHARE SHARE
• J DESC DESC GRS NET AMOUNT
  PCT
• ? DKTA 111 N 073105 103105 .00
  .00 .00 .00
• AFSCME L3743 DUES COMM
  TRANS DATE 102405
• ACH ACCT ACCT CD
• ? ADNN 050 N 083104 999999 .00
  .00 .00 .00
• EMP/DEP ADD POSTAX/50K COMM
  TRANS DATE 081104
• ACH ACCT ACCT CD
• d DCNN 100 N 022805 999999 100.00
  .00 .00 .00
• DEF/COMP REGULAR COMM
  TRANS DATE 020705
• ACH ACCT ACCT CD

38
P070 Example In Final Pay

• P070 ,,113005
  DEDUCTIONS AND DEDUCTION ADJUSTMENTS
• EARP, WYATT
• DA98
  PRESS ENTER FOR NEXT PAGE
• A DED PLAN OPE DATE -EMPLOYEE---SHARE-
  JOB EMPLR BOARD VENDOR
• D CODE CODE CD BEGIN END PCT PCT FIXED
  SHR SHARE SHARE SHARE
• J DESC DESC GRS NET AMOUNT
  PCT
• ? ADNN 050 N 083104 999999 .00
  .00 .00 .00
• EMP/DEP ADD POSTAX/50K COMM
  TRANS DATE 081104
• ACH ACCT ACCT CD
• ? DCNN 100 N 022805 999999 100.00
  .00 .00 .00
• DEF/COMP REGULAR COMM
  TRANS DATE 020705
• ACH ACCT ACCT CD
• d DKTA 111 N 073105 999999 .00
  .00 .00 .00
• AFSCME L3743 DUES COMM
  TRANS DATE 062705
• ACH ACCT ACCT CD

39
P070 Example Direct Deposit

• P070 ,,073105
  DEDUCTIONS AND DEDUCTION ADJUSTMENTS
• EARP, WYATT
• DA98
  PRESS ENTER FOR NEXT PAGE
• A DED PLAN OPE DATE -EMPLOYEE---SHARE-
  JOB EMPLR BOARD VENDOR
• D CODE CODE CD BEGIN END PCT PCT FIXED
  SHR SHARE SHARE SHARE
• J DESC DESC GRS NET AMOUNT
  PCT
• d XDNN 130 N 033103 999999 2.00
  .00 .00 .00
• DIRECT DEP FIXED 3 COMM XXXXXXXX
  TRANS DATE 032503
• ACH ACCT ACCT CD C
• d XDNN 222 N 022900 999999 250.00
  .00 .00 .00
• DIRECT DEP FIXED 6 COMM XXXXXXXXXXX
  TRANS DATE 022500
• ACH ACCT ACCT CD S
• d XDNN 333 N 013102 999999 125.00
  .00 .00 .00
• DIRECT DEP FIXED 7 COMM XXXX
  TRANS DATE 011502
• ACH ACCT ACCT CD S

40
6. Review P050 and P080

• If employee was purchasing savings bonds
• Delete P070 and P080
• If prior to run 1, delete for current month
• If after run 1, delete for next month

41
Review P050 Cont

• If employee opted out of medical insurance,
  delete IR for final pay
• If employee had domestic partner insurance
  worked 80 hours, delete DPT / DPN for next pay
  period

42
7. Identify Outstanding Overpayments

• OAM 45.50.00 PO PR
• If employee has outstanding overpayment, deduct
  from final paycheck
• If final pay does not cover the amount owed, work
  with Accounting Staff to set-up A/R

43
Overpayment Cont

• Use OAM Chapter 35 to manage and collect A/R
• If not successful in collecting, ORS 292.170
  Procedure when employees leaves employment
  provides the authority to refer the account to
  DOR for collection

44
8. P050 Tax Entries

• Final pay in year of death
• Withhold social Medicare taxes
• Do not withhold FIT SIT
• Included in employees final W-2
• Social security Medicare wages
• Social security Medicare taxes withheld

45
P050 Tax Entries Cont

• Two entries
• PAY TYP RGD, gross pay, negative number
• PAY TYP DEC, gross pay, positive number

46
P370 Before P050 Entry

• P370 ,,103105,102605,O
  CALCULATION OF CURRENT PAYOFF 370
• EARP, WYATT
• INCOME TYPE RATE UNITS AMOUNT TAX /RET
  AMOUNT DEDUCTIONS AMOUNT
• TOTAL-R T 4520.88 110.00 2925.28 FIT
  805.80 ADNN150 EMP/ 6.30
• AVAC PAY T 26.08 151.47 3950.34 SIT
  510.00 DKDG690 AFCM 38.75
• FICA
  426.15 RGNNCCC REGE
• MEDR
  99.66 RGNN901 REGE
• WCD
  1.87 VSNNCCC VSP
• ERETS
  597.49 WDNNCCC WILL
• SRETS
  412.54 WDNN901 WILL
• 
  
• 
  

47
P050 Example

• P050 ,,1,103105 GROSS PAY
  ADJUSTMENTS ON FILE
• EARP, WYATT
• PAY STRT STOP ADJ
  DAYS TRAN
• TYP DATE DATE TYP RATE UNITS AMOUNT
  WRKD DATE ERROR MSG
• ? VAP 103105 103105 A 26.08 151.47
  3950.34 102105
• VAC PAYOFF
  COMMENT DEATH 1005
• ? IR 013100 999999 .00 .00
  .00 031400
• INS RETURN PRO
  COMMENT INS RETURN
• a rgd A
  6875.62-
• 
  COMMENT death 1005
• a dec A 6875.62
• 
  COMMENT death 1005

48
P370 After P050 Entry

• P370 ,,103105,102605,O
  CALCULATION OF CURRENT PAYOFF 370
• EARP, WYATT
• INCOME TYPE RATE UNITS AMOUNT TAX /RET
  AMOUNT DEDUCTIONS AMOUNT
• TOTAL-R T 4520.88 110.00 2925.28 FICA
  426.15 ADNN150 EMP/ 6.30
• ADECEASE R 6875.62 MEDR
  99.66 DKDG690 AFCM 38.75
• A(RG)DEC T 6875.62- WCD
  1.87 RGNNCCC REGE
• AVAC PAY T 26.08 151.47 3950.34 ERETS
  597.49 RGNN901 REGE
• SRETS
  412.54 VSNNCCC VSP
• 
  WDNNCCC WILL
• 
  WDNN901 WILL
• 
  

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Tax for Domestic Partner Insurance

• Imputed value for premium for medical insurance
  coverage for domestic partner and/or partners
  eligible children is taxable
• Because final premium is paid after date of
  death, imputed value is Form 1099-MISC reportable

50
Gross Wages when Domestic Partner Insurance
EE worked 80 hrs?
Medical for DP / children?
P370 Gross pay P050 DPT amount
Yes
Yes
Start
No
No
EE had out-of-pocket?
- DPN amount
Yes
End
No
51
Request Manual Check(s)

• Make screen print of final P370
• List legal name of each payee with TIN, amount,
  and optional address
• Signed by staff member on current Signature
  Authorization Form
• To OSPS by noon

52
Back-up Withholding

• Required if no TIN
• Consult OSPS Help Desk or IRS Pub 15 (Circular E)
  for current rate
• Multiply rate gross wages
• Request manual check for DAS for the amount of
  withholding
• Payee should receive 1099-MISC

53
Back-up Withholding Cont

• If gt10,000
• Report 10,000 of gross wages for spouse or
  children
• Report remainder of gross wages to estate

54
1099-MISC Reporting
Payment in year of death?
Agy enters payee in RSTARS vendor profile
Agy makes payment from RSTARS
RSTARS produces 1099-MISC
No
Start
Not subject to social security or Medicare taxes
Yes
OSPS sends ANNLDEC to SFMS Agy
End
Gross amt for payee 600?
Back-up withholding?
Payee already in RSTARS?
No
No
No
Yes
Yes
Yes
Agy enters payee in RSTARS vendor profile
Agy adds payee to 1099 Change Request Form
End
55
PERS EDX/jClarety

• File sent after final run 2
• Does not include reason for separation

• Includes
• Separation date
• Last hours worked / paid
• Contributions
• Sick leave in Clearing Account

56
Resources

• OSPA reports
• IRS publications
• State statute, policies, and procedures

57
OSPA Reports

• ANNLDEC Deceased Employee Report
• E492 Terminated Employee Having Leave Balance
• XREF17 Regular Contributions for Terminated
  Employees

58
IRS Publications

• 26 U.S.C. 3406
• Publication 15 (Circular E), Employers Tax Guide
• IRS Publication 501, Exemptions, Standard
  Deduction, and Filing Information

59
IRS Publications Contd

• General Instructions for Forms 1099, 1098, 5498,
  and W-2G
• Instructions for Form 1099-MISC
• Publication 559, Survivors, Executors, and
  Administrators

60
To Apply for TIN

• http//www.irs.gov/businesses/small/international/
  article/0,,id96696,00.html
• Social Security Number (SSN) for an individual
• Employer Identification Number (EIN) for the
  estate

61
State Statutes

• ORS 652.190, Payment of wages to surviving spouse
  or dependent children
• ORS 292.170, Procedure when employee leaves
  employment after overpayment

62
ORS Cont

• ORS 293.231 Collection of liquidated and
  delinquent accounts by private collection agency
  or Department of Revenue

63
State Controllers Resources

• OAM Chapter 35, A/R Management
• OAM 45.50.00 PO PR, Collection of Overpayment
• OAM 50.50.00 PO PR, 1099 MISC Reporting

64
SCD Resources Cont

• OSPA Reference Manual, Recommended Practices,
  Deceased Employees
• SFMS Desk Manual PAYM.2, Issuing Survivor /
  Estate Payments on Behalf of Deceased Employees

65
Questions?
66
The End