E-pay

form I-9

admin — Wed, 09 May 2012 17:56:25 +0000

Purpose of Form I-9 :

All U.S. employers must complete and retain a Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. On the form, the employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and relate to the individual and record the document information on the Form I-9. The list of acceptable documents can be found on the last page of the form.

Where to File form I-9 :
Do not file Form I-9 with U.S. Immigrations and Customs Enforcement (ICE) or USCIS. Form I-9 must be kept by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later. The form must be available for inspection by authorized U.S. Government officials (e.g., Department of Homeland Security, Department of Labor, Department of Justice).
The Spanish version of Form I-9 may be filled out by employers and employees in Puerto Rico ONLY. Spanish-speaking employers and employees in the 50 states and other U.S. territories may print this for their reference, but may only complete the form in English to meet employment eligibility verification requirements.

Payroll Tax Cut Extended to the End of 2012

admin — Tue, 24 Apr 2012 18:20:36 +0000

IR-2012-27, Feb. 23, 2012
The Internal Revenue Service today released revised Form 941 enabling employers to properly report the newly-extended payroll tax cut benefiting nearly 160 million workers.
Under the Middle Class Tax Relief and Job Creation Act of 2012, enacted yesterday, workers will continue to receive larger paychecks for the rest of this year based on a lower social security tax withholding rate of 4.2 percent, which is two percentage points less than the 6.2 percent rate in effect prior to 2011. This reduced rate, originally in effect for all of 2011, was extended through the end of February by the Temporary Payroll Tax Cut Continuation Act of 2011, enacted Dec. 23.
No action is required by workers to continue receiving the payroll tax cut. As before, the lower rate will have no effect on workers’ future Social Security benefits. The reduction in revenues to the Social Security Trust Fund will be made up by transfers from the General Fund.
Self-employed individuals will also benefit from a comparable rate reduction in the social security portion of the self-employment tax from 12.4 percent to 10.4 percent. For 2012, the social security tax applies to the first $110,100 of wages and net self-employment income received by an individual.
The new law also repeals the two-percent recapture tax included in the December legislation that effectively capped at $18,350 the amount of wages eligible for the payroll tax cut. As a result, the now repealed recapture tax does not apply.
The IRS will issue additional guidance, as needed, to implement the newly-extended payroll tax cut, and any further updates will be posted on IRS.gov.

What is a cafeteria plan?

admin — Thu, 08 Mar 2012 00:18:27 +0000

A cafeteria plan is an employee benefit plan that permits participating employees to choose among two or more benefits consisting of cash and qualified benefits. In making this choice, the employee may obtain nontaxable benefits by foregoing taxable cash compensation. Participants must be permitted to choose among at least one permitted taxable benefit (e.g., cash) and at least one qualified benefit. A plan offering only elections among nontaxable benefits or only elections among taxable benefits is not a cafeteria plan.
References: IRC §125(d)(1) ; see ¶5940.01.A .
What are the general requirements of a cafeteria plan?
A cafeteria plan must be maintained pursuant to a written plan document that contains certain required information including a description of benefits, rules and procedures for electing benefits, the maximum amount of employer contributions available, and other requirements. Only employees may participate in the plan. Benefit elections must be made annually and generally must be irrevocable for the plan year.
References: IRC §125(d)(1) ; see ¶5940.02.B.1 , B.2 , B.4 .
Are cafeteria plans subject to ERISA?
Generally, no. However, if the cafeteria plan offers “employee welfare” benefits such as medical, sick leave, and vacation benefits and no other plan offered by the employer offers them, then the cafeteria plan may be subject to additional requirements under the Employee Retirement Income Security Act of 1974 (ERISA).
References: ERISA § 3(1) ; see ¶5940.02.A .
Can a cafeteria plan offer deferred compensation?
Generally, no. However, certain exceptions apply with respect to contributions to §401(k) plans, health savings accounts, and cafeteria plans maintained by educational institutions providing post-retirement group life insurance coverage.
References: IRC §125(d)(2)(A)-(D) ; see ¶5940.02.B.5.a .
What benefits can be provided in a cafeteria plan?
A cafeteria plan must include in its choices cash or another taxable benefit and cannot offer only qualified nontaxable benefits. The qualified benefits that can be offered under a cafeteria plan include:
• group term life insurance;
• accident and health plans (including health flexible spending accounts);
• COBRA premiums;
• disability coverage;
• dependent care assistance (including a dependent care flexible spending account);
• adoption assistance;
• §401(k) plan contributions; and
• contributions to health savings accounts.
Long-term care insurance may not be included in the benefits.
References: IRC §125(f) ; see ¶5940.03 .
May a cafeteria plan offer dependent care assistance?
Yes. Generally under a dependent care assistance plan, employers may pay or reimburse dependent care expenses incurred by employees for qualified dependents – dependents who are under age 13 or are physically or mentally not able to care for themselves. Dependent care assistance plans included in cafeteria plans are not only subject to the dependent care rules, but also are subject to the rules relating to cafeteria plans.
References: IRC §§125 , 129 ; see ¶5940.03.E .
Can a cafeteria plan offer §401(k) contributions as an elected benefit?
Yes, but including contributions to a §401(k) plan in a cafeteria plan subjects the §401(k) plan to greater restrictions and may jeopardize the qualification of the §401(k) plan if the cafeteria plan as a whole is found to be discriminatory.
References: Prop. Regs. §1.125-1(o)(3)(ii) ; see ¶5940.03.F .
What benefits are not available under a cafeteria plan?
A cafeteria plan may offer only cash or qualified benefits. It may not offer scholarships, employer-provided meals and lodging, educational assistance programs, long-term care insurance and other nonqualified benefits.
References: IRC §125(d)(1)(B) , 125(f)(1) ; see ¶5940.04.A.1 , B .
Are there nondiscrimination requirements for cafeteria plans?
Yes. A cafeteria plan may not discriminate in favor of highly compensated individuals as to eligibility, contributions or benefits. Furthermore, benefits provided to key employees (a defined term that covers certain officers and part-owners of the employer) must not exceed 25% of the aggregate of such benefits provided for all employees under the plan. If a plan violates either of these requirements, the highly compensated individuals and key employees must include in income the value of the taxable benefit with the greatest value that they could have elected to receive, even if they elected to receive only nontaxable benefits. A highly compensated individual is an officer, shareholder owning 5% or more of the voting power or value of all classes of stock of the employer, or the spouse or dependent of any of the above.
References: IRC §§125(b) , (e) , 416(i)(1) ; see ¶5940.05.A – J .
Are there recordkeeping and reporting requirements for cafeteria plans?
Yes. Records must be kept to show that the Code’s requirements have been satisfied. The IRS no longer requires that Form 5500 or the Schedule F be filed for cafeteria plans, but a Form 5500 still may be required if the cafeteria plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA).
References: IRC §6039D(b) ; see ¶5940.06 .
Are there substantiation requirements for cafeteria plans?
Yes. Before a cafeteria plan may pay or reimburse expenses for qualified benefits, it must require substantiation for all claims. The substantiation must be information prepared by a third party that is independent of the employee. An explanation of benefits (EOB) prepared by an insurance company indicating the employee’s share of the cost for a service or product, along with a statement by the employee that the expense has not been reimbursed, generally will satisfy the substantiation requirements.
References: Prop. Regs. §1.125-6(b)(2) , Prop. Regs. §1.125-6(b)(3) ; see ¶5940.07.B .
Are the elections made by participants in cafeteria plans irrevocable?
Generally, yes. In order for employees to exclude the value of qualified benefits from income, elections under a cafeteria plan must be made before the earlier of:
• the date when the taxable benefits are currently available; or
• the first day of the year.
Such elections generally must be irrevocable by that date. However, a cafeteria plan may permit employees who experience a specified “change in status” event to change their elections after the period of coverage has begun.
References: Prop. Regs. §1.125-2(a)(1) , Prop. Regs. §1.125-2(a)(2) , Prop. Regs. §1.125-2(a)(4) ; see ¶5940.02.B.4 .
Under what circumstances can an employee revoke an election under a cafeteria plan due to a change in status?
A cafeteria plan may permit a participant to revoke an existing election and make a new election for the remaining period of coverage if (1) a change in status occurs, and (2) the election change is consistent with the change in status. The following events, among others, are considered changes in status:
• a change in the employee’s marital status;
• a change in the employee’s number of dependents; and
• a change in the employment status of the employee, spouse or dependent.
Only the employee, and not the employee’s spouse or dependent, is permitted to change the cafeteria plan election. Cafeteria plans are not required to permit new elections due to a change in status.
References: Regs. §1.125-4(c) ; see ¶5940.02.B.4.c .
What is a flexible spending account?
A flexible spending account is a feature of a cafeteria plan where the employee forgoes cash and the amount forgone is credited to a bookkeeper’s account maintained by the employer that the employer draws upon to reimburse the employee for uninsured medical or dental expenses or for dependent care expenses.
References: Prop. Regs. §1.125-5 ; see ¶¶5940.01.B.3 , 5940.03.B.4 , 03.E.3 .
Is a self-employed individual eligible to participate in a cafeteria plan?
No. Neither a self-employed individual nor a 2% shareholder of an S corporation is considered an employee, and thus such individuals may not participate in a cafeteria plan. For example, sole proprietors, partners and directors solely serving on boards of directors may not participate in a cafeteria plan.
References: Prop. Regs. §1.125-1(g)(2) ; see ¶5940.02.B.2.d .

Importance of an Employee Handbook to your Business:

admin — Thu, 15 Dec 2011 00:18:03 +0000

As Organizations grow it becomes increasingly important to have a known, structured set of rules and guidelines to address everyday issues. The Handbook is a statement of the policies of the business and how the business is to be conducted. The company employee handbook is one of the most important communication tools between your company and their employees. Not only does it set forth your expectations for your employees, but it also describes what they can expect from the company. It is essential that your company has one and that it be clear and as unambiguous as possible. Misunderstandings or misstatements can create legal liabilities for your business. In legal disputes courts have considered an employee handbook to be a contractual obligation, so word it carefully.
The company employee handbook and related personnel policies should be one of the first formal communications that you will have with an employee after they are hired. Make sure the first impression is a good one. Similarly, in the event of a dispute or poor performance review, this will be the first place that the employee turns.
The handbook should contain enough detail to avoid confusion, but not so much as to overwhelm, don’t try to recreate the information in the handbook. Instead, offer a brief summary and refer to the other document in the employee handbook. Make sure that you are familiar with the myriad of laws and regulations for employment. It is always wise to consult with a lawyer on any topics that you don’t understand.

Take the Time to Hire

admin — Fri, 11 Nov 2011 18:47:17 +0000

The longer the period between an employee’s resignation and the hiring of a replacement, the longer other staff must take up the slack; or, even worse, the longer work goes undone and you lose revenue. You may find yourself under enormous pressure to hire someone quickly. But the recruitment process requires a great deal of patience, especially when work is backlogged because of delays inherent to the hiring process. Take the time to do it right, and you will not regret it.
You may ask, Why take the time? Consider the following:
• Make the right decision the first time. Seldom will good hires turn bad—nor bad hires, good. Common effects of a bad hire, such as reduced employee morale and increased customer dissatisfaction, can be long-term.
• Hire someone who has the same goals and work ethic as your valued employees and management personnel.
• Hire the best person for the job. The pesticide application industry requires people who are willing and able to learn, who take their responsibilities seriously, who work effectively with customers, and who know how to solve problems.
• Determine if any of the job candidates have the skills to exceed core job functions. Technical know-how, foreign language fluency, research experience, and public speaking skills can add value to your organization.
• Hire a qualified individual who will work and interact well with others. One of the least desirable managerial responsibilities is dealing with an employee who is not a team player. Disruptive employees can turn other employees against you; change friends into enemies; drive trained, trusted employees to seek employment elsewhere; and transform a good business into a poor one.

Decide how to spend your training dollars to transform the new employee into an asset. This requires an understanding of the knowledge, skills, and abilities he brings to the job. Today’s successful pesticide applicator must be physically fit to work under less-than-ideal conditions, both indoors and out. In addition to meeting the job’s physical demands, the employee must be able to pass state and federal certification examinations; will-ing to use new technologies and methodologies; receptive to new ideas; capable of working harmoniously with others; and attentive to completing paper-work properly and professionally. It may take years for a person to achieve the level of training, education, and performance that meets your expectations.

• Make your company attractive to job applicants. You probably remember the good employee who got away, or the one who would have been a perfect fit for the job but declined your offer. Remember that, while you are evaluating a candidate’s qualifications, he is considering whether he really wants to work for your company. It is important to make a good, honest impression throughout the entire evaluation process to reflect the level of professionalism you maintain.
• Comply with all laws applicable to hiring employees. The hiring process poses legal pitfalls if conducted incorrectly. The more informal the process, the more vulnerable you are to regulatory investigation, charges of dis-crimination and negligent hiring, and lawsuits.

Benefits of employees Trainings

admin — Mon, 19 Sep 2011 20:18:10 +0000

Training

Taking the time and effort to training employees is an essential activity for all businesses big or small. Training provides employees with the key knowledge and skills that they need to perform their job especially in tough economy.

Benefits of training

• As the business world is continuously changing, businesses will need to provide their employees with training about the new product or services. If the employee is not well trained about the product or services the business offer to their customer or clients they will find it difficult to stay ahead of the competition and can be very expensive.

• The other benefit of training is that it will keep your employees motivated. New skills and knowledge can help to reduce boredom. It also demonstrates to the employee that they are valuable enough for the employer to invest in them and their development.

• Training can be used to create positive attitudes through clarifying the behaviors and attitudes that are expected from the employee.

• Training can be cost effective, as it is cheaper to train existing employees compared to recruiting new employee with the skills you need.

• Training can save the organization money if the training helps the employee to become more efficient.

Induction training

This is training that an employee will receive when they first join an organization or begin a new role. This type of training is designed to provide the employee with the essential skills needed to perform their job. Induction training can also include an introduction to the company ethos, values and culture so that the employee is aware of the behaviors expected of them.

On the Job training

As the name suggests, on the job training, is training provided during the regular performance of duties. This can take a variety of forms including:

• The employee being guided through a task or process by a colleague or supervisor, so that the employee knows how to perform the task and to what standard.

• Shadowing, spending time with an expert so that the employee can observe how the expert performs their daily duties.
• Observations, the employee is observed whilst they perform their duties. At the end of the observation, the observer will provide the employee with feedback on their performance.

• Coaching, the employee will learn new skills (not knowledge) and have the opportunity to practice the skills with the coach before using the skills in the workplace. An effective coach will review the employee’s performance to ensure that the employee uses the newly learnt skills until they become habit.

• Mentoring, the employee is partnered with an experienced employee so that they can discuss performance. The experienced person is known as the mentor and the employee they are partnered with we will call the mentoree. The mentoree will discuss their performance and problems with the mentor.

Off the Job training

This is training provided away from the employee’s usual work environment and the employee will stop their usual duties/work during the training. Off the job training may be in the same building or off site. This training may be provided by trainers working for the same employer as the employees being trained or an outside company hired by the employer.

Benefits of Outsourcing Payroll for Small Businesses

admin — Tue, 23 Aug 2011 18:21:08 +0000

To many small businesses outsourcing payroll can have many benefits. As a business owner, you’ve no doubt learned to hire professionals for tasks that require specific expertise. Payroll is no different. Hiring a professional saves the time and money that can be a consequence of costly mistakes, and ensures that you’ll have the time to do what you do best- manage your business.
The time spent sorting out the pay of its employees, could be spent productively elsewhere. By out sourcing payroll service it allows for the company’s human resource department, accounting department or whomever may have previously been tasked with sorting the small businesses payroll to focus on more strategic tasks.
Here some of the most commonly cited reasons for hiring a payroll Service company like epay:

No need for in-house payroll

Hiring a bookkeeper or accountant to do you payroll can be expensive. Salaried bookkeepers that perform tasks like invoicing, recording paid bills, and estimating job costs can run upwards of $45,000 a year, plus benefits if the person is a full-time employee in most cases. Even hiring a part-time bookkeeper will put a dent in your budget.
Bookkeepers are invaluable professionals when it comes to other financial functions of your business, but the simple fact is that a payroll company can perform the same administrative payroll tasks as a bookkeeper for less. With epay payroll Company there is no need to train a new employee your payroll methods, and no delay in paychecks or benefits if the bookkeeper is out or gets behind on work. Most businesses appreciate this important function being taken off their plate, as payroll is a tedious administrative task.
With a payroll company, you have a reliable source for payroll needs if your business gets busy, needs to hire a new bookkeeper, or doesn’t have the budget to hire an in-house payroll employee.

Expertise

Number one reasons businesses hire payroll companies is for the peace of mind that comes with hiring a professional. It’s hard to stay up to date on the myriad different tax laws, statutes, and state and federal regulations. Filing documents just a few days late or filing the wrong paperwork with the wrong agency can cost thousands in fees and penalties. A payroll company won’t make these mistakes. We at epay even guarantee to pay penalties or fees as a condition of a contract so you can rest at ease that you won’t incur any additional tax charges.

We at epay as payroll company also specialize in different types of industries and the services small business require. Some businesses offer flexible savings accounts, cafeteria plans, or retirement account contributions. Epay a payroll company has the necessary experience to guide you through what could be a complicated process.

Cost Savings

Outsourcing payroll help small business to frees up time for the business owner, or the bookkeeper time that payroll would take up. Time is money, and the more time you spend on payroll, or on hiring and training a bookkeeper, the less time you’re spending managing your business. Payroll companies can take advantage of years of specific experience in performing your payroll processing what takes most business owners or bookkeepers all day will take a payroll staff person a few hours. Outsourcing is a great way to take advantage of these savings.

To do that means to identify those business function, where the small business is best served relying upon outside help. Outsourcing payroll services is that one business function that helps to both reduce costs and free up company resources.

Employee vs Independent contractor 20 questions

admin — Tue, 26 Jul 2011 18:31:56 +0000

Because there are many grey areas regarding what results in a reclassification from independent consultant to employee, the IRS has adopted 20 criteria to determine if you are an employee or an independent contractor.
The following are a list of 20 questions the IRS uses to determine if a worker is an independent contractor or employee. The answer of yes to any one of the questions (except #20) may mean the worker is an employee.

1. Is the worker required to comply with instructions about when, where and how the work is done?
2. Is the worker provided training that would enable him/her to perform a job in a particular method or manner?
3. Are the services provided by the worker an integral part of the business’ operations?
4. Must the services be rendered personally?
5. Does the business hire, supervise, or pay assistants to help the worker on the job?
6. Is there a continuing relationship between the worker and the person for whom the services are performed?
7. Does the recipient of the services set the work schedule?
8. Is the worker required to devote his/her full time to the person he/she performs services for?
9. Is the work performed at the place of business of the company or at specific places set by the company?
10. Does the recipient of the services direct the sequence in which the work must be done?
11. Are regular oral or written reports required to be submitted by the worker?
12. Is the method of payment hourly, weekly, monthly (as opposed to commission or by the job?)
13. Are business and/or traveling expenses reimbursed?
14. Does the company furnish tools and materials used by the worker?
15. Has the worker failed to invest in equipment or facilities used to provide the services?
16. Can the worker terminate his/her relationship without incurring a liability for failure to complete the job?
17. Does the worker perform services exclusively for the company rather than working for a number of companies at the same time?
18. Does the worker in fact make his/her services regularly available to the general public?
19. Is the worker subject to dismissal for reasons other than non-performance of the contract specifications?
20. Does the arrangement put the person in a position or realizing either a profit or loss on the work?

Required Workplace Forms

admin — Thu, 26 May 2011 19:43:53 +0000

FORM I-9

NOTE 1: Be sure you are using the correct form. There have been multiple revisions.

Rev. 08/07/09 is the most recent revision, and has an expiration date 8/31/12.

Rev. 02/02/09 is also an acceptable version.

The revision date can be found on the lower right hand corner of the form.

The expiration date is posted in the upper right hand corner of the form.

Use this Link to download the current version of the Form I-9 Employment Eligibility Verification.

http://www.epaypayroll.com/images/1306183078_I-9%20.pdf

NOTE 2: I am frequently asked if there is a Spanish version of the Form I-9.

Yes there is, but the Spanish version of Form I-9 may be filled out by employers and employees in Puerto Rico ONLY. Spanish-speaking employers and employees in the 50 states and other U.S. territories may print a copy for their reference, but may only complete the form in English to meet employment eligibility verification requirements.

Section 1 of the Form I-9 in English has a space for Preparer and/or Translator Certification which is to be completed by a person other than the employee if such assistance is provided to the employee while completing the form.

The Spanish version of the Form I-9 can be downloaded using the above link to the Form I-9.

Family & Medical Leave Act – FMLA

Significant changes have been made to the Family and Medical Leave Act (FMLA) which became effective January 16, 2009.

A summary of the new changes and some useful links for helping you understand them can be found in the December 18, 2008 issue of HR Update.

A copy of the new required FMLA poster is available for downloading from our Federal Posters page.

The Department of Labor has provided optional forms for use by employers and employees during the FMLA process:

The Department has revised its Certification of Health Care Provider form (WH-380), and divided it into two separate forms:

Employee’s Serious Health Condition (WH-380E) and

Family Member’s Serious Health Condition (WH-380F)

The Department has also revised its

Notice of Eligibility and Rights and Responsibilities form (WH-381)

In addition, the Department has added new forms for

Designation Notice to Employee of FMLA Leave (WH-382)

Certification of Qualifying Exigency for Military Family Leave (WH-384) and

Certification for Serious Injury or Illness of Covered Servicemember for Military Family Leave (WH-385)

The new poster and forms became effective on January 16, 2009. Additional FMLA compliance assistance materials are available from the U.S. Department of Labor at http://www.dol.gov/whd/fmla/index.htm

http://www.dol.gov/whd/fmla/

FORM W-4 and W-9

Click here to download the 2011 Form W-4 directly from the IRS website.

Click here to download the 2010 Forma W-4 (SP) in Spanish directly from the IRS website.

Click here to download the Form W-9 from the IRS website.

Click here for other IRS forms available for search and download in both English and Spanish.

FEDERAL OSHA RECORD KEEPING FORMS

Be sure to post your OSHA Form 300A from February 1 to April 30 each year.

Use the links below to download theFederal OSHA 300, 300A and 301 recordkeeping forms directly from the OSHA website.

PDF FILE of OSHA Form 300, 300A and 301: http://www.osha.gov/recordkeeping/new-osha300form1-1-04.pdf

MS Excel file of OSHA Form 300, 300A and 301 (tabbed spreadsheet) http://www.osha.gov/recordkeeping/new-osha300form1-1-04.xls

TIP: Download the PDF file even if you plan to use the spreadsheet version of the documents. The PDF file contains the form instructions and “how-to” etc.

FOROREGON EMPLOYERS: Oregon-OSHA Record Keeping Documents

The link below will allow you to download the required Oregon OSHA (OR-OSHA) recordkeeping documents directly from the OR-OSHA website. You have several options to choose from: a pdf file, an MS Word document or an Excel spreadsheet. If you have difficulty downloading any of the forms, please contact me and I will email any of the forms directly to you.

You can also obtain you own copy of the OR-OSHA Recordkeeping, Division 1 rules in an Adobe Acrobat file and the Workers’ Compensation forms by clicking the link below. The rules also detail the industries that are partially exempt from the recordkeeping requirements, as described in the January 20, 2009 HR Update article.

http://www.orosha.org/standards/recordkeeping.html

Social Security Wage Base for 2011

admin — Thu, 21 Apr 2011 22:40:32 +0000

Pending legislation may change some of the information below, always consult a tax professional for current rules and regulations.

As the year ends, it’s important for employers to be aware of some deadlines, reporting requirements and changes that may affect taxes, payroll, or benefits. Here are some highlights and links to more information.

Social Security Wage Base for 2011
For the second year in a row, the Social Security Administration will not be increasing the Social Security wage base which will remain at $106,800. At the newly released Social Security rate of 4.2%, the maximum amount an employee may have withheld in 2011 is $4,485.60.

Standard Mileage Rate Increases
Effective Jan. 1, 2011, the standard mileage rate employers can use to reimburse employees who drive their owned or leased automobiles for business purposes is 51 cents per mile, according to the IRS. This is up from a standard mileage reimbursement rate of 50 cents per mile for 2010.

HIRE ACT Changes for 2011
The deadline for qualifying individuals under the New Hire Tax credit is Jan. 1, 2011. The employer Social Security match on qualified new hire wages will be reinstated for wages paid after Dec. 31, 2010. Although the credit is expiring, employers should retain Form W-11 with payroll and income tax records in the event of an audit.

Additionally, businesses become eligible for the new hire retention credit of 6.2% of wages paid to each qualified employee retained for at least 52 consecutive weeks. The maximum credit is $1,000, contingent upon wages paid in the last 26 weeks equaling at least 80% of wages paid in the first 26 weeks. The credit will be claimed on the employer’s 2011 income tax return. The deadline for qualifying employees under the New Hire Retention Tax Credit is Jan. 1, 2011.

Pension & Retirement Plan Limits for 2011
The IRS will not increase pension plan limits for 2011. Plan limitations are as follows:

Plan Type	Annual Limit	Catch Up for employees 50 and older
401(k)	$16,500	$5,500
403 (b)	$16,500	$5,500
408(p) Simple IRA	$11,500	$2,500

The annual compensation limit under Section 401(k) remains unchanged at $245,000, meaning no more than $245,000 of an employee’s compensation can be taken into account when figuring contributions.

There are other limits that restrict contributions made on your behalf. In addition to the limit on elective deferrals, annual contributions to 401(k), 403(b) accounts – this includes elective deferrals, employee contributions, employer matching and discretionary contributions and allocations of forfeitures to your accounts – may not exceed the lesser of 100% of your compensation, or $49,000 for 2011.

The limit on the annual benefit for a defined benefit plan under section 415(b)(1)(A) remains $195,000. The limit for defined contribution plans in that section remains $49,000. The definition of a highly compensated employee remains $110,000 and the definition of a key employee in a top-heavy plan remains at $160,000.

More information can be found at http://www.irs.gov/newsroom/article/0,,id=229975,00.html which contains a link to the revenue procedure http://www.irs.gov/pub/irs-drop/rp-10-40.pdf.

Advanced Earned Income Tax Credit Repealed
H.R. 1586 Education, Jobs, and Medicaid Assistance Act, signed into law Aug. 10, 2010, repeals the Advanced Earned Income Tax Credit (EITC) for tax years 2011 and after.

The credit had been designed to supplement the earnings of low income workers by allowing tax credits in small payments on each paycheck.

Employees will no longer receive advanced EITC on their paychecks after Dec. 31, 2010, although eligible individuals may still claim EITC on their income tax returns.

APS Customer Note: No changes are required to employee records that are claiming the advanced EITC. The APS payroll engine has been adjusted to exclude this income from employee paychecks after Dec. 31, 2010.

Reporting Coverage Cost Not Mandatory on 2011 W-2s
The Patient Protection and Affordable Care Act of 2010 will require the aggregate cost of applicable employer-sponsored health care coverage to be reported on Form W-2; however, the reporting requirement will not be mandatory on the W-2s issued for 2011, allowing employers time to prepare for compliance. See http://www.irs.gov/pub/irs-drop/n-2010-69.pdf for more information.