Accounting, Payroll & Pension Issues/Voluntary payroll deductions

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Question
We are paid bi-weekly. Our company has always withheld benefit deductions out of 24 pay periods instead of the 26. This year the Accounting dept decided to change this and begin withholding benefits deducts out of 26 pay periods. This is fine if someone is employed all year; however I wonder about new hires and how this effects their pay. For instance EE is hired April 14th and their benefits become effective May 1st.  They elect Employee child health insurance at $232.00 per month. This comes to 107.08 per pay (232.00x12/26). The month of May happens to have three payrolls (May 2, 16 and 30th). This new hire would actually pay 321.24 for health ins for the month of May. If you figure the entire year (May-Dec) 232.00 x 8 months=1856.00; however if we withhold 107.06 per pay x18 remaining pay periods new hire would pay 1927.44 instead of only $1856.00. How is this fair? How can it be remedied?
Thank you for your time

Answer
Hi Mary,

When I have a new hire I take his insurance amount which yours would be 232.00 per month. so if you have 8 months left May-Dec you would take 232.00 x 8 for a total of 1856.00.  Now you have 17 payperiods left so you would divide the 1856.00 by 17 for a total of 109.18 which would be taken out every payperiod for this employee. Than you can fix it next year for the 26 payperiods next year.

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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