HR/Payroll Accounting

VPF Learning Series

April 16th, 2010

Presentation Outline

• Who are we?

• What do we do?• Pay people and post salary/wage expenses • Collect and remit taxes• Collect and remit/distribute deductions• Provide tax reports

• Employees• Institute

• Reconciliations

Organization Chart

What We Doo Pay peopleo Issue Tax Forms (i.e. W-2s)o Customer Service – Ticket Queue and phoneo Off-Cycle Check Processing & Postingo Timesheet Correctionso Vacation Processing & Researcho Benefits Support

o Payroll Processing

o Pension Payroll

o Salary Distribution & Issues Resolution

o Salary Overpayment Claims Processing

o Long Term Disability/ SSDI overpayment Claimso Remittance (Tax, Garnishments, Dues, 401(k), Home/Auto, etc)o Sick Buy-Back Processingo Jury duty Pay Processingo Military Differential Processingo Swiss Francs Payo Tax Inquirieso Year End Reconciliation o Reporting & Documentationo Garnishment and Levy Setupo Tax Filing o Late Distribution Change Processingo Taxable Travel Processingo Workers’ Comp Setupo Account Reconciliation

What We Do

Salary and Wages

Salary and Wages - Statistics

Active Employees

• $1.08 billion/year• 4,000 weekly paid employees• 12,500 monthly paid employees• 357 different pay categories• Direct deposit – 97%

Pensioners• $104 million/year• 5,600 pensioners • Direct deposit – 91%

Salary and Wages - PostingPayroll Runs (and posting)

• Weekly paid employees - 52 times a year• Monthly paid employees - 12 times a year• Off-cycle payroll runs – 1,800/year

• Late Paperwork• Terminations• Awards

What this means• 1,864 payroll postings/year• ~155 posting/month• ~7 posting/day• Off-Cycle Issues

• Unstable posting• Manual process

Salary and Wages - DistributionDistribute to 4,600 accounts

Weekly – post weekly• Paid – Posted/Distributed

Monthly and Supplements – post at month end• Paid-Posted-Distributed (via -Cost Distribution Utility/CDU)

o

Paid(Payroll Results in

P/R Module)

Posted to GL(CC 1134400)

Distributed

Salary and Wages – Suspense Accts

• 110 suspense account• DLCs• Central

• Temporary holding place for salary and wage expenses• Invalid cost object, closed cost object, no cost object• Total accounts with balances - 72 • Balance in suspense accounts March 2010 –$2.5 million

Salary and Wages - DACCAso Salary and Wage Distribution Reports (created by CDU)o Tie to SAP FI Postingso Redistribution

• Electronic Salary Distribution System (eSDS)• Late Salary Change Process

Taxes - Withholdings

Taxes - WithholdingsTotal employee tax withheld CY 2009 - $250 million !!!o Fed Tax withheld - 59.12%o TX EE Social Security Tax - 17.38%o TX EE Medicare Tax -5.13%o Fed Tax NRA - 0.38%o MA State tax - 17.90%o VA state tax - 0.05%o CA state tax - 0.04%o AL state tax - 0.02%o NM state tax - 0.01%o DC state tax - 0.01%o NY state tax - 0.01%o CO state tax - <0.01%o MD state tax <0.01%o OH state tax - <0.01%o Kwaj tax for US citizen - <0.01%

Taxes - RemittanceRequired by law to withhold taxes and remit• Federal

• One-day rule • Income tax, EE FICA, and ER FICA (each week and EOM) – active and pension

payroll• Income tax on long term disability (EOM)• Income tax on non-resident aliens (EOM)

• Massachusetts State Income Tax• 4 payments/month

• Other States Income Tax (withhold in 10 states)• Monthly

• Unemployment (excluding MA)• Quarterly

Taxes – Why On Time?

Penalties • Federal – 2% penalty if 1 to 5 days late

• Weekly – $880K x 2% = $17,600• Monthly - $18M x 2% = $360,000

Levies• Withhold other payments (refunds, scholarships, partnership

payments) if we do not remit• Levy our accounts and related accounts (i.e. alumni clubs…anyone

using MIT’s EIN)

Deductions

Deductions - Statistics

• 340 deduction types in SAP• Used 63 types CY2009• $160 million in deductions in CY2009• Deductions taken based on priority settings in SAP

• Group A - I.R.S. Tax Levy, Summons, State Tax Levy, Child Support,Student Loan)

• Group S and T – TechCash, Alumni Fund, 457(b) Plan

Deductions - Statistics

Retirement Plan 39.7%

o Retirement Plan Catch Up 4.3%o Credit Union 16.8%o Network Blue New England 9.0%o M.I.T. Trad Health Plan 6.8%o Delta Dental Plan 2.3%o Life Insurance Plan 2.3%o Tufts Assoc Health Plan 2.2%o Medical Expenses 2.2%o 457(b) Standard Plan 2.0%o Athletic Card 1.9%o Dependent Care 1.3%o Parking Fee – Annual 1.2%o BlCross-BlShld PPO 0.9% o M.I.T. Flex Health Plan 0.8%o MBTA Pass – PreTax 0.8%o Educational Loans 0.8%o Long Term Care Insurance 0.6%o Child Support 0.4%o Union dues 0.4%

Deductions -Remit/DistributeExternal (Remit)

• Fidelity• Credit Union• Garnishments (Child Support, Levies, Summons, etc)

Internal (Distribution)• Health Plan – Delta, Vision, Network Blue• Parking• Tech Cash

Reconcile

Deductions - Arrears

When an employee’s gross is less than the sum of all taxes and deductions

• Leave without pay• Low gross (reduced effort, reduced hours)• Prior period payroll overpayment claim taken from current pay

General guide – direct bill when >3 months

Tax Filings

Tax Filings - InstituteMonthly

• Other States (PIT, State Disability, State Training)Quarterly

• Form 941 – Federal Income & FICA Tax • Form M941D – MA State Income Tax • Unemployment

• MA (WR1 and 1700-HI)• Other States

Annual • Fed

• W-3 (with W-2s)• Form 945 Pension & LTD• Form 1042

• MA – File Fed Form 945 Pension & LTD• Other States annual reconciliation

Tax Filings - Individual

W2s – Regular Employees• 22,000

1042S – Non- resident Aliens• 1,600

1099R• 5600 pensioners • 150 LTDs

Reconciliation - Types

Accounts• Approximately 170 accounts (Active & Pension)• Types of accounts

• Liability • Suspense• Claim Receivable• Clearing

Filings• W-2s to 941s• 945s to 1009Rs• 1042 to 1042S

Reconciliation - Pentagram

Payroll Results(Reconciliation Report)

General Ledger (Summary Statement)

Filing Remittance

Warehouse(Gross to Net - Brio)

Contact Information

Email – payroll@mit.edu• Linked to the REQUEST TRACKER• Assigned to individual by moderator• 2009 – 12,350 total tickets (approx. 47/day)

Phone - 3-3337