1 Zortec Payroll Common Issues and New Options

2 Employee Information screens

3 Primary Payroll Required field. Used with TCRS Great-West Import. Used when building Affordable Care Act employee file. Utility program available to set flag on Primary Payroll field. Available with UDRs; DDF field #450. General Information

4 G-W Opt Out Used with TCRS Great-West Import. Available with UDRs; DDF field #850. Tax Information screen Member ID Used at TCRS and KY Start retirement agencies. Member ID assigned to employee by retirement agencies. Available with UDRs; DDF field #1340.

5 Ret/Job Date Date employee began job. Does not default from screen 1. Available with UDRs; DDF field #1350. Tax Information screen

6 Valid options: 02-Probationary 03-Seasonal 04-Temporary Day Temporary 06-Limited Re-Emp Ret Teacher 07-Interim Tax Information screen Job Stat Position Status field of TCRS reporting. Used to override Full/Part from screen 1, for TCRS reporting. Available with UDRs; DDF field #1360.

7 # Hours Per Day Scheduled Hours Per Day field of TCRS file. Available with UDRs; DDF field #1370. Contract Months Contract Months field of TCRS file. Should be 9, 10, 11 or 12. Available with UDRs; DDF field #1365. Tax Information screen

8 Valid options: 02-Leave Without Pay 09-Furlough 11-Summer Months 16-Final Salary Pay Reason Used to override payment reason from pay types in TCRS file. Available with UDRs; DDF field #1375. Tax Information screen

9 Detour to discuss Other Payment Reasons – Office Manager, Pay Types, Pay Code field

10 TCRS Concord options: 00-Regular Pay 01-Regular Pay w/Addtl Credit Comp 02-Leave w/o Pay 03-Bonus 08-Sick Leave Bank Payment 13-Career Ladder Payment 14-Longevity 15-Summer School Bonus 16-Final Salary 17-Shift Work Payment Reasons - Office Manager, Pay Types, Pay Code field KY START options: 00-Regular Pay 01-Regular Pay w/Addtl Credit Comp 02-Leave w/o Pay 03-Bonus/Severance 06-Lump Sum Comp Payment

11 Valid options: 01-Monthly Alt Pay Type Used to override ‘S’alary or ‘H’ourly in TCRS file. Available with UDRs; DDF field #1380. When used, Rate of Pay and Salary in TCRS file will be the same. Tax Information screen

12 End Date End Employment Date field in TCRS Concord file. If employee changes positions that require reporting to TCRS, report the date. Does not default from Term Date on screen 1. Available with UDRs; DDF field #1390. Tax Information screen

13 Valid options: 01-Retirement 02-Death 03-Termination 04-Change in Position Status 05-Transfer (End) Employment Reason End Employment Reason in TCRS Concord file. Represents general reason member terminated, changed contribution group or position status. Available with UDRs; DDF field #1385. Tax Information screen

14 Utility programs  Set Primary Payroll  Set retirement fields Contract Months Hrs Per Day Service Credit Alt Pay Type Job Status G-W Opt Out

15 Setup and program options for Great-West

16 Deduction codes  TCRS Hybrid Deduction Type  TCRS/Great-West 401k program 1-Before Tax Deduction 2-After Tax Deduction 3-Roth IRA Deduction 4-Age Catch-Up Deduction 5-Roth Catch-Up Deduction 6-401k Variable Bonus Deduction 7-Roth Variable Bonus Deduction 8-Variable Bonus Employee Catch-Up Deferral 9-Variable Longevity Deduction 10-Roth Variable Longevity Deduction 11-Variable Longevity Emp Catch-Up Deferral 12-Loan Payment Deduction 13-Employer Contribution

17 Deduction codes  TCRS Hybrid Deduction Type  TCRS/Great-West 457 program Before Tax Deduction After Tax Deduction Roth IRA Deduction Age Catch-Up Deduction Roth Catch-Up Deduction k Variable Bonus Deduction Roth Variable Bonus Deduction Variable Bonus Employee Catch-Up Deferral Variable Longevity Deduction Roth Variable Longevity Deduction Variable Longevity Emp Catch-Up Deferral Loan Payment Deduction Employer Contribution

18 Option #6-Period End Process from Payroll main menu Followed by option #10-Retirement Tape and Report from Period End Process menu

19 Option #7-Build Great-West PDI File to build the file that will be sent to Great-West. Enter valid Check Date. Select appropriate plan file being built. File lands in user’s home directory. File for 457 plan will be in format ‘#####-01_pDDDDccmmdd.prn’ File for 401k plan will be in format ‘####-02_pDDDDccmmdd.prn’

20 Option #8-Print Great-West PDI File to print report from previous build process. Enter valid Check Date for file previously built. Select appropriate plan file being built.

21 Option #9-Great-West Import File Maintenance. File Type to Process: D-deferral L-loan Filename – PPENDEF. File must be in payroll data files directory. Records to Display: A-all E-errors

22 Option #10-Process Great- West Import File. File Type to Process: D-deferral L-loan

23 HSA - Health Savings Account We have implemented changes to LGC’s Zortec Payroll software to accommodate specific requirements for the Tennessee HealthSavings CDHP, a Consumer Driven Health Plan with Health Savings Account (CDHP/HSA). A HSA is a tax-exempt trust or custodial account set up with a qualified HSA trustee to pay or reimburse qualified medical expenses. Benefits Administration has contracted with PayFlex to manage employee HSAs.

24 Deduction Codes New deduction codes are needed for the Health Savings Account. Under #9-Office Manager, #15-Deduction Codes, create a new deduction code. The screen prints below can be used as a guide. Your deduction numbers may be different. There is a new parameter on the deduction code “HSA Y/N”. This should be answered Y…

25 Deduction Codes Employee Deduction Code set up:

26 Deduction Codes Employer Deduction Code set up (if needed):

27 NOTE: If you use general ledger links and create payroll packet, general ledger links must be created. Deduction ledger links are defined under Payroll, #10 General Ledger Links, #1 Define Link Parameters. If you are unsure or have questions about the setup of deduction links, contact LGC Customer Support. If you print vendor checks, be sure to answer Y to Print Vendor CK each Payroll and create a new vendor code.

28 W2 Deduction Parameters for PayFlex HSA You will need to update the W2 Deduction Parameters for both the employee and employer contributions. The screen print below can be used as a guide. Your deduction code numbers may be different. Under #6-Period End menu, #52-W Processing, #1-Deduction W2 Parameters, select update mode and enter the deduction code created in the step above.

29 Employee deduction set up for PayFlex HSA The new deduction code(s) will need to be added to the Employee Master screen 5 for all employees that participate in the HSA plan. SAMPLE

30 HSA Extract After a payroll that includes HSA/PayFlex deductions has been processed and updated you will need to create a file to upload to PayFlex. To create the file, enter a valid Check Date. Beg/End Employee # is optional. Enter Payrolls to Select is optional, but if nothing is entered all payrolls for the specified check date will be included. Enter the HSA ID supplied by the State. The file will land in the Payroll Files directory and will have the following naming pattern: PF.PFM.[employer number provided by the State]_Deposit_[current date in yymmdd format]_[current time in hhmmss format].txt. Example: PF.PFM _Deposit_ _ txt. Once created, the file needs to be upload to PayFlex.

31 The deductions default in based on the HSA question on the deduction code. Employees must have a check date with a HSA deduction in the range specified to be included in the file. Be sure the totals on the Extract Report match the deduction report for the check date specified. Sample Report

32 Voided checks are not included in the file. Any corrections or changes to contributions must be made outside of the payroll system. The file must be upload the PayFlex using their guidelines. NOTE: You must submit a test file to the PayFlex before going live. Please contact LGC Support for assistance in creating a test file.

33 Miscellaneous Topics  Medicare Gross exceeds $200,000 Employee rate additional.09% Employer rate does not change  Online Check Stub files  Tennessee New Hire report  Employee address Screen 31 of employee information

34 Employee addresses 15 possible address lines. TCRS file. (screen 31)

35

36 Selection criteria Report (Payroll, #58-Additional Reports, #10- Report)

37 Sample report

38 TCRS file has positions for address Import address

39 Tennessee Unemployment – change in taxable maximum

Zortec Payroll - Reporting of Employer- Sponsored Group Health Plans

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. Reporting the cost of health care coverage on the Form W-2 does not mean that the coverage is taxable. The value of the employer’s excludable contribution to health coverage continues to be excludable from an employee's income, and it is not taxable. This reporting is for informational purposes only and will provide employees useful and comparable consumer information on the cost of their health care coverage.

Q. Does the cost of an employee’s health care benefits shown on the Form W-2 mean that the benefits are taxable to the employee? A. No. There is nothing about the reporting requirement that causes or will cause excludable employer-provided health coverage to become taxable. The purpose of the reporting requirement is to provide employees useful and comparable consumer information on the cost of their health care coverage.

Q. When will employers have to start reporting the cost of health care coverage on the Form W ‑ 2? A. Reporting for the 2011 calendar year (meaning the Form W-2 generally required to be furnished to employees in January 2012) was optional. For years after 2011, employers generally are required to report the cost of health benefits provided on the Form W-2. Transition relief is available for certain employers and with respect to certain types of coverage.

Transition Relief For certain employers, types of coverage and situations, there is transition relief from the requirement to report the value of coverage beginning with the 2012 Forms W-2. This transition relief first applied to the 2013 Forms W-2 that were issued in The relief applies for the 2015 tax year and will continue to apply to future calendar years until the IRS publishes additional guidance.

Q. Which employers are subject to this reporting requirement? A.Except as provided in the transition relief, all employers that provide "applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement. This includes federal, state and local government entities. Third-party sick-pay providers that provide the Forms W-2 to the employees of the employers with which they have contracted do not have to report the cost of coverage. However, a Form W-2 provided by the employer to the employee must report the cost of coverage regardless of whether that Form W-2 includes sick pay or whether a third-party sick pay provider is furnishing a separate Form W-2 reporting the sick pay.

Q. What types of health care coverage must be included in the amount reported on the Form W-2? A. See IRS chart “Form W-2 Informational Reporting of the Cost of Employer-Sponsored Group Health Plan Coverage” located at Employer-Sponsored-Health-Coverage. The chart lists many types of health care coverage and various other situations, and explains whether reporting is required, prohibited, or optional.

Q. What amount should the employer report on the Form W-2 for health coverage? The amount the employer paid? The amount the employee paid? Or both? A. In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee. In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions. See Notice for more detail on the interim rules that apply to reporting contributions to a health FSA.

Q. Where on the Form W-2 should the employer report the cost of these health care benefits? A. The cost of these health care benefits will be reported in box 12 of the Form W-2, with Code DD to identify the amount.

Over the next few slides we will discuss how you can begin tracking the cost of coverage of group health insurance.

The easiest way to begin tracking the cost of employer-sponsored health coverage is to set up deduction code(s)… The deduction code(s) are defined to not be withheld from the employee’s check… Once the deduction code is defined, it is added to the employee’s deduction screen (screen 5.)

The amount that is entered on the deduction code on screen 5 is the amount the employer pays. This amount is entered as a weekly, bi-weekly, semi-monthly, monthly, etc frequency amount.

How a deduction code is defined: Deduction codes are maintained in Office Manager, Deduction Codes…

Screen print of deduction code setup screen…

Once the deduction code is defined, you will add the deduction code to screen 5 of the employee(s.)

If the deduction is defined to link to general ledger, the General Ledger Link must be defined. Deduction code general ledger links are defined in Payroll, General Ledger, Define Link Parameters…

Once these steps are done, and payrolls are processed, you will see the amounts start to accumulate on the employee’s record:

In order for the deduction to print on the W-2, it needs to be defined to print there. Do this under Period End Process, W Processing, Deduction W2 Parameters:

If you take the steps mentioned above before the first payroll check run in the calendar year which IRS makes the reporting mandatory, you system will accumulate the amounts. Also keep in mind if your rate changes, the amounts on screen 5 will need to change. We have programs that will allow you to mass change the amounts. View our website or call our support number for assistance in running the mass change deduction amount options.

Discussion on how to get your amounts: Insurance billing Spreadsheet/File from insurance company Manually tracking amounts in spreadsheet Discuss other possibilities of getting information on W2’s. Import from spreadsheet during W2 process

Begin now to think about these changes so you will be ready when IRS makes this reporting mandatory.

62 This completes our presentation on Zortec Payroll New Features section of Resource If you have questions about any of these processes contact LGC Software Support Help Desk at