Payroll

401k

A 401(k) plan allows employees to make pre-tax elective deferrals through payroll deductions. In addition, employers have the option of making matching contributions on behalf of all participants, making matching contributions based on employees' elective deferrals, or both. These employer contributions can be subject to a vesting schedule as well.

National Automated Clearing House (NACHA)

A banking industry trade association that promotes the rules and operating guidelines for electronic payments through the ACH Network. NACHA's members provide automatic debit and deposit service for companies and consumers.

Social Security Number (SSN)

A nine-digit number issued to U.S. citizens, permanent residents, and temporary (working) residents by the Social Security Administration.

Net Pay

Remaining portion of an employee's wages after all deductions have been subtracted (taxes, health insurance, benefits, etc.)

Advice of Deposit/Vouchers

Statement for employees who opt for Direct Deposit.

Minimum Wage

The lowest hourly amount an employer can pay employees under federal or state law.

State Unemployment Insurance (SUI)

Taxes assessed by states to cover unemployment benefits paid to unemployed workers who have been laid off or terminated by a company for specified reasons. Limit and rate varies by state and are usually filed quarterly.

1099 - Misc, Div, R, Int

The 1099 form is a series of documents the Internal Revenue Service (IRS) refers to as "information returns." There are a number of different 1099 forms that report the various types of income you may receive throughout the year other than the salary your employer pays you. Retirees, Independent Contractors, people with dividends or Investment income may receive these at year-end.

Form W-2 or W-2C (correction form)

The W-2 is a form an employer must send to an employee and the Internal Revenue Service (IRS) at the end of the year. The W-2 reports an employee's annual wages and the amount of taxes withheld from his or her pay.

Disposable Pay

The amount of an employees' pay remaining after deduction of any amounts required by law to be withheld, for example taxes etc. Generally the amount subject to garnishment or withholding orders.

System: (On Demand) Create Replacement Payment

All deductions including taxes will come out of this payment.

ACH

Automated Clearing House Federal Reserve Bank acting on behalf of an association of financial institutions that operates a system that serves as a clearinghouse for direct deposit or other electronic payment transactions.

Experience Rate

The state unemployment insurance tax rate that is based on the amount of unemployment benefits paid out as a percent of total wages. Issued directly to employers based on unemployment claims.

403b

A pre-tax retirement savings plan available for public education organizations, some non-profit employers (IRS 501(c)3), cooperative hospital service organizations, and self-employed ministers.

State Disability Insurance (SDI)

A state-established compensation plan for the support of employees unable to work due to illness or injury. Some states require employee and employer (EE/ER) contributions to a disability insurance fund for payment of SDI benefits.

Local Taxes or Earned Income Taxes

A tax assessed and levied by a local authority such as a city, county, school district or municipality. (ex: Pennsylvania)

Pre-Note

A zero-dollar ACH transaction used to verify the accuracy of bank account information prior to automatic debits or credits, as in the case of direct deposit.

Quarter to Date (QTD)

Accumulated totals from the start of the quarter to current pay period. Quarters begin Jan 1, April 1, July 1, Oct 1.

System: Batch ID

Able to group entries together

Year to Date (YTD)

Accumulated totals from the start of tax year Jan 1, to the current pay period ending with 12/31.

Exempt from Withholding

Certain employees who meet specific tax criteria may be considered to be exempt from having those taxes deducted from their pay.

Employee Stock Purchase Plans

Company run plan allowing employees to purchase shares of company stock usually at a discounted price.

Fringe Benefit

Compensation other than wages provided to an employee such as health and life insurance, vacation, employer-provided vehicles, public transportation subsidies, etc., that may be taxable or non-taxable.

Supplemental Wages

Compensation received by employees other than their regular pay; such as bonuses, commissions, and severance pay. Income taxes may be withheld from such payments at a flat rate or supplemental rate under certain circumstances.

COBRA

Consolidated Omnibus Budget Reconciliation Act of 1985 Act requires continuation of group insurance coverage (benefits) is offered to covered persons who lose health or dental coverage due to a qualifying event (ex. Termination) as defined in the Act.

Wage Garnishment / Withholding Order/IWO (Income Withholding Order)

Court order directing that money or property of an employee (usually wages paid by an employer) is seized to satisfy a debt owed by a debtor to a plaintiff creditor. Examples include Child Support, Creditor Garnishment, Student Loan Repayment, Federal/State Levy for owed taxes etc.

EFT

Electronic Funds Transfer Some states and federal agencies require employers to pay taxes by electronic funds transfer.

ERISA

Employee Retirement Income Security Act of 1974 Federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. ERISA requires plans to provide participants with plan information, including facts about plan features and funding; sets minimum standards for participation, vesting, benefit accrual, and funding; also provides fiduciary responsibilities for those who manage and control plan assets. https://www.dol.gov/ebsa/faqs/faq_compliance_pension.html

Form 941

Employer's Quarterly Federal Tax Return. Filed by Employers who withhold income taxes, social security tax, or Medicare tax from employee's paychecks or who must pay the employer's portion of social security or Medicare tax, use Form 941 to report those taxes. Additional info here: https://www.irs.gov/pub/irs-pdf/p15.pdf

Group Term Life

Employer- provided life insurance coverage. The premium for coverage in excess of $50,000 is taxable and must be reported as additional income on an employee's Form W-2.

FLSA

Fair Labor Standards Act Establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

FMLA

Family and Medical Leave Act of 1993 The Family and Medical Leave Act is a federal law requiring covered employers to provide employees job-protected and unpaid leave for qualified medical and family reasons.

FICA

Federal Insurance Contributions Act

Medicare

Flat rate tax of 1.45% unlimited. All covered wages are subject to Medicare. Medicare is used provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.

Withholding Allowances/Exemptions

For each withholding allowance claimed (W-4), the employee reduces the amount of wages subject to federal income tax withholding.

I-9

Form I-9 is used for verifying the identity and employment authorization of individuals hired for employment in the United States. It is a U.S. Citizenship and Immigration Form.

Transmittal of Income and Tax Statements (Transmittal Form for W-2s)

Form summarizing a company's total wages and tax withholdings. The W-3 accompanies W-2 statements, and is filed by the employer with the Social Security Administration.

Tax Year

From January 1st to December 31st. In the U.S., this will include payments to employees for pay periods with pay dates included in those dates.

Gross Wages

Gross wages are the total amount an employee is paid before any taxes, deductions, insurance premiums, and other withholdings.

HCE

Highly Compensated Employee In the context of certain fringe benefit plans, an employee who is an owner or officer of a business or whose salary exceeds a certain amount (indexed each year for inflation).

Constructive Receipt

IRS doctrine stating that wages generally are taxable and subject to employment tax withholding (e.g., Social Security, Medicare, Federal Income Tax, and Federal Unemployment Tax) when actually paid or when made available to employees.

Imputed Income

Imputed income refers to non-cash compensation like Group Term Life Insurance benefits, personal use of company car, domestic partner coverage etc. that isn't otherwise exempted from federal income and employment taxes.

IRA

Individual Retirement Account A tax-deferred retirement account that can be established by any employed person.

Employer Identification Number (EIN)

Issued and used by Federal, State and Local government to identify Employers. This number must be used on all documentation submitted to the agency. In some states, the EIN is the same as the Federal Employer Identification Number (FEIN).

LTD

Long Term Disability An employee benefit that pays partial or total medical wages to an employee on extended medical leave.

Form W-4 Employee's Withholding Allowance Certificate

New hires and existing employees complete this form so employers can determine the correct amount of taxes to withhold from their pay. Can be used for federal as well as some states to calculate taxes.

System: (On Demand) Create Additional Payment

No other medical, dental, any type of standard deductions will come out of this. Just regular taxes.

OASDI

Old Age Survivor's Disability Insurance or Social Security, FICA Flat rate tax based on a taxable wage base that changes(currently 6.2% of $118,500 limit for 2016)Employee and Employer match totals 12.4%

Supplemental Tax Rate

Payments classified as "supplemental wages" are often taxed at a flat rate for federal and state income tax withholding. There is a two-tiered system for withholding federal income tax from supplemental wages at a flat rate: • Optional flat rate: 25% for supplemental wages up to and including $1 million. No other percentage is allowed. • Mandatory flat rate: 39.6% for supplemental wages over $1 million.

Federal Unemployment Tax Act (FUTA)

Payroll tax paid by employers (not employees), and goes into a federal fund that pays the cost of administering the unemployment insurance and job service programs in all States. FUTA is filed annually on Form 940

Pay Card

Prepaid cards an employer can use to pay their employees as an alternative to direct deposit or paper checks.

STD

Short Term Disability Short term disability pays a percentage of an employee's salary if they become temporarily disabled, or are not able to work for a short period of time due to sickness or injury (excluding on-the-job injuries, which are covered by workers compensation insurance).

Subject Wages

Subject wages are the wages to be considered for a given tax.

State Income Tax

Tax levied on income at the state level. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status. State income taxes have their own set of deductions and credits that may be awarded for certain activities.

Taxable Wages

Taxable wages are the subject wages up to a statutory limit for a particular tax. Each tax is different and therefore the taxable wage base will vary.

Lock in Letter

The IRS may send an employer a letter (commonly called a lock-in-letter) specifying the withholding rate and allowances to use to calculate the amount of Federal tax to withhold from wages paid to a specific employee. Usually issued for employees who under-withhold based on their W-4 exemptions.

3PSP

Third Party Sick Pay Third Party Sick Pay (3PSP) is a disability insurance benefit that provides employees with partial or full wage benefit payments while on long-term medical leave. The payments are made to employees through an insurance company, union plan, or a state temporary disability plan instead of through their employer.

415 Compliance

To ensure that employee benefit plans do not violate certain standards that the DOL (Dept. of Labor)and IRS believe are important, plans are subjected to annual compliance tests. These tests are designed to ensure that the amount employees are deferring is within certain maximum limits and that plans are not operating in a manner that discriminates against certain classes of employees.

Form 940

To report Annual Federal Unemployment Tax Act (FUTA) tax. Together with state unemployment tax systems, the FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only employers pay FUTA tax.

Trans/ABA code

Transit/ American Bankers Association Code 9-digit numeric code created by the American Bankers Association that identifies an employer's bank and routing for electronic transactions like direct deposit

Internal Revenue Service (IRS)

U.S. government agency responsible for tax collection and tax law enforcement and a bureau under the Dept. of Treasury.

Federal Deposit Liability, FTD

When taxes are deducted and collected from employee's pays, Employers must deposit federal income tax withheld, and both the employer and employee portion of social security and Medicare taxes on a regular schedule determined by the IRS. There are two deposit schedules, monthly and semi-weekly.

FIT or Federal

Withholding tax levied against employees. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status. Employees use form W-4 to determine withholding exemptions.