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Suggested Answer
ChrisReu asked a question on 20 Mar 2015 2:24 PM

Hello,

We have an employee who is leaving our medical insurance. He wanted to make one last HSA contribution. After the payroll was completed, I was informed by our bank that he exceeded the amount he was able to contribute since he was leaving the plan early in the year. This employee has $600.00 that did not go in to his HSA account and needs to be refunded/paid to him.

What would be the best way to reverse this in GP? A separate payroll for this employee for $600.00 and a journal entry reversing the HSA? Or is there a better solution?

Thanks for any advice

Chris

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Suggested Answer
Harry Lee responded on 21 Mar 2015 7:48 PM

I am by no means a Payroll Expert, we have multiple people within our organization, which bear that designation.  Your solution sounds like the simplest one. That being said, our team tends to recommend the following 3rd party solution from Integrity Data for just such occasions.

www.integrity-data.com/.../negative-payroll-transactions

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Suggested Answer
Jeff Rowles responded on 26 Mar 2015 3:37 PM

Our Best Practice suggestion for refunding deductions and benefits is to process negative transactions using the exact same deduction and benefit codes used in the original transaction.  Processing this way provides the following benefits:

  • Will reflect the accurate Year-To-Date and Life-To-Date amounts associated with the code
  • Taxability issues are handled correctly.  If deduction code is set to reduce taxes when deducted, then when entered as a negative, it will correct the taxable wages appropriately.  (same effect for taxable benefit codes).
  • General Ledger will be affected appropriately because same G/L number is used with negative transaction so reverses original erroneous entry.

 There are typically two variations on this process as follows:

  1. Refunding on the next pay period when employee has other regular earnings
  2. Refunding between pay periods with no regular earnings

Refunding on the next pay period:

  1. Open the deduction and/or benefit code for which you need to enter a negative transaction, and mark the “Transaction Required” checkbox.  This means that the deduction will only occur if a transaction is entered for the employee.  (by doing it this way, you avoid possibility of inadvertently automatically process a negative deduction on future pay periods.)
  2. Follow same procedure if there is an associated Benefit code (i.e. 401k match)
  3. Now, open an existing (or create a new) payroll transaction batch, and enter a line item for the negative deduction and/or negative benefit.
  4. Process payroll as normal.  Once done, if you wish to use the deduction code to withhold normally again, you need to unmark the “Transaction Required” checkbox.

 (Note about negative deductions with percentage method:  On any deduction code that is a fixed amount, you can simply enter in a negative fixed amount in a payroll transaction batch.  However, whenever you are using a deduction code that is a “percent” type like 401k, you can’t enter a negative percent.  However, for the one-time refund, all you have to do is simply go to the deduction code for that employee and change it temporarily to a “Fixed Amount” method, process the negative transactions and then put the deduction code back to percent method. )

Refunding between pay periods:

GP won’t allow you to process a negative deduction unless there is at least $0.01 of earnings.  Therefore, if you must refund between payperiods, you can follow same process as outlined in the “Refunding on next pay period” above, however you will also need to enter a pay transaction entry for earnings of a penny ($0.01).

Best Regards,

Jeff :)

Jeff Rowles, MCP

P/R & H/R Specialist

L. Kianoff & Associates, Inc.

Reply
Suggested Answer
Harry Lee responded on 21 Mar 2015 7:48 PM

I am by no means a Payroll Expert, we have multiple people within our organization, which bear that designation.  Your solution sounds like the simplest one. That being said, our team tends to recommend the following 3rd party solution from Integrity Data for just such occasions.

www.integrity-data.com/.../negative-payroll-transactions

Reply
Suggested Answer
Jeff Rowles responded on 26 Mar 2015 3:37 PM

Our Best Practice suggestion for refunding deductions and benefits is to process negative transactions using the exact same deduction and benefit codes used in the original transaction.  Processing this way provides the following benefits:

  • Will reflect the accurate Year-To-Date and Life-To-Date amounts associated with the code
  • Taxability issues are handled correctly.  If deduction code is set to reduce taxes when deducted, then when entered as a negative, it will correct the taxable wages appropriately.  (same effect for taxable benefit codes).
  • General Ledger will be affected appropriately because same G/L number is used with negative transaction so reverses original erroneous entry.

 There are typically two variations on this process as follows:

  1. Refunding on the next pay period when employee has other regular earnings
  2. Refunding between pay periods with no regular earnings

Refunding on the next pay period:

  1. Open the deduction and/or benefit code for which you need to enter a negative transaction, and mark the “Transaction Required” checkbox.  This means that the deduction will only occur if a transaction is entered for the employee.  (by doing it this way, you avoid possibility of inadvertently automatically process a negative deduction on future pay periods.)
  2. Follow same procedure if there is an associated Benefit code (i.e. 401k match)
  3. Now, open an existing (or create a new) payroll transaction batch, and enter a line item for the negative deduction and/or negative benefit.
  4. Process payroll as normal.  Once done, if you wish to use the deduction code to withhold normally again, you need to unmark the “Transaction Required” checkbox.

 (Note about negative deductions with percentage method:  On any deduction code that is a fixed amount, you can simply enter in a negative fixed amount in a payroll transaction batch.  However, whenever you are using a deduction code that is a “percent” type like 401k, you can’t enter a negative percent.  However, for the one-time refund, all you have to do is simply go to the deduction code for that employee and change it temporarily to a “Fixed Amount” method, process the negative transactions and then put the deduction code back to percent method. )

Refunding between pay periods:

GP won’t allow you to process a negative deduction unless there is at least $0.01 of earnings.  Therefore, if you must refund between payperiods, you can follow same process as outlined in the “Refunding on next pay period” above, however you will also need to enter a pay transaction entry for earnings of a penny ($0.01).

Best Regards,

Jeff :)

Jeff Rowles, MCP

P/R & H/R Specialist

L. Kianoff & Associates, Inc.

Reply