Accounting, Payroll & Pension Issues/payroll from biweekly to semi monthly

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QUESTION: Our company is switching from bi weekly to semi monthly on April 15.
On Jan 2, 2014 we received a pay for the pay period of Dec 16-28. Should we take this into account in 2014 or not since it pertains to 2013.

ANSWER: The January 2 pay will be included in 2014 wages because it was paid in 2014. This would be your first payroll of the year. Depending on when you pay payroll the last payperiod of 2014 will be paid in 2015 and will be wages for 2015.

Shirley

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QUESTION: An employee makes $30,000 per year. As of April 3, 2014 he has earned $9,230. Johnís biweekly salary is $1,154 ($30,000/26 pay periods) and his semimonthly salary is $1,250($30,000/24 pay periods).The switch to semi monthly is effective April 15,2014.
Total annual salary:      $30,000
Semimonthly payments due to him   $   8,750  ( 7 semimonthly pay periods @ $1,250 - from Jan. 1-April 15,2014
Biweekly payments made to him   $ (9,230)  (Jan. 01 Ė April 3, 2014-
(includes the pp of dec 16-28,2013)         
Adjustment overpayment          $ (   480) one time adj. to reflect semimonthly payments   
Payroll April 30, 2014      $      770 ($1,250-480)
All future semimonthly payments:$    1,250
Does this calculation make sense. Should the 1 pay in 2014 not be included to calculate our semi monthly payments, since we are going from biweekly to semi monthly pays?

ANSWER: Okay first of all the January payroll must be included in the calculation for 2014 as it was paid in 2014 and constitutes one of the payperiod of the year and is included on the 2014 W-2 form.

This is what I would do to make it correct.

Total Wage = 30,000   Total paid through 1st pay period in April = 9230.00

30,000 - 9230 = 20,770.00 remaining to be paid for 2014

You are going to have 25 payperiods this year but are still only paying 30,000 to this employee. this is because of the change in pay period from 26 to 24 and you have already paid 3 in January.

Now he was paid 30,000 divided by 26 or 1153.85 for 8 payperiods so 8X 1153.l85 is 9230.80.

30,000.00 minus 9230.80 is equal to 20769.20 balance remaining for the year.

changing to Semi-monthly you have 1 payperiod left in April and 2 each of the remaining months for a total of 17 remaining pay periods.

20,769.20 is the balance due for the employee for the remainder of the year.

20,769.10 divided by 17 payperiods is 1221.71 amount per pay period for the remainder of 2014.

In 2015 you will divide the 30,000.00 by 24 and the amount per pay period will be 1250.00 per payperiod for 2015. You will now only have 24 payperiods for 2015.

Shirley

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QUESTION: Shouldn't  the earnings in 2014 be more than 30k, since I worked 52 weeks in 2014 plus the last two week of dec 2013 which was paid in the first week of Jan 2014

Answer
No because your last two weeks of 2014 will be paid in January of 2015 making it the same amouont of time worked each year. The last two weeks always carries over to the next year.

Shirley

If the last two weeks of the year for 2014 do not carry over to 2015 than there will need adjustment made to your pay, but with processing time needed for payroll there is always time that is worked in one year and paid the next at the end of the year. The government consideres the wages when paid and not when earned.

Shirley

Accounting, Payroll & Pension Issues

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Shirley McAllister, CPP, PHR

Expertise

I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.

Experience

25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.

Organizations
SHRM, APA, I.O.M.A.

Publications
I.O.M.A. and BNA

Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration. Boise State University Human Resource Certification

Awards and Honors
APA Hotline Citation of Merit for last 8 years.

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