This topic will discuss how to enter and submit Group Term Life (GTL) Insurance in excess of $50,000.00.

What is Group Term Life Insurance

Group Term Life Insurance is a type of term insurance offered by employers as a group benefit to eligible employees. Employers typically pay most or all of the premiums for basic coverage. Additional coverage may be offered for an extra premium charged to/paid by the employee.

How is Group Term Life taxed

There are no tax consequences if the total amount of coverage does not exceed $50,000. If an employer offers Group Term Life in excess of $50,000.00, the employer’s portion of the premium in excess of $50,000.00 must be included in taxable wages for the employee.

Group Term Life in Excess of 50,000.00 is taxable for the following per IRS regulations:

• FICA (SS/MED) - Taxable
• Federal Withholding – Taxable
• State Withholding – Taxable (PA Exempt)
• Local Withholding – Taxable (PA Exempt)
• Federal Unemployment - Taxable
• State Unemployment – Taxable

Who needs to report Group Term Life and what amounts should be recorded

Any employee that has Group Term Life in excess of $50,000.00 will need to report the GTL amount through payroll. The amount will be specific to each employee. Your accountant or insurance plan administrator should be able to advise on the amount that should be reported.

How do I add Group Term Life to an employee’s W-2

To add the Group Term Life amount to an employee’s W-2, you must record the amount on a payroll check.

When should I process Group Term Life amounts

You can record the amounts:

• On the same check as standard wages for a scheduled pay date (recommended)
  Recording Group Term Life on the same check as standard wages for a scheduled pay date will allow you to enter the amount as an additional line item on the same check as the employee’s regular wages. With this option, the Group Term Life amount will be combined with the regular wages for your standard pay period and the required taxes will be deducted from the employee’s regular wages. There are no additional processing fees associated with this option.
• On a separate check and separate/unscheduled pay date

How can I record the Group Term Life in Excess of $50,000.00 on the same check as regular wages for a scheduled pay date

Since Group Term Life is entered for reporting and tax calculation purposes but excluded from the net pay or subtracted during the calculation to net pay, the applicable Social Security, Medicare, federal, *state, and *local taxes that calculate on the Group Term Life will be deducted from the employee’s regular wages for the period and will reduce their standard net pay. Social Security, Medicare, the employee portion of state unemployment tax and *local tax withholding are required, but employees typically do not want the additional federal and state income tax withheld. In those instances, you will need to make note of the federal and state tax amounts that calculate prior to entering the Group Term Life. After you enter the Group Term Life, you’ll need to override the calculated tax amounts and adjust the totals back to the amounts you noted before entering the Group Term Life.

Group Term Life in Excess of $50,000.00 is exempt from PA state and PA local tax withholding

Click here for detailed instructions.

1. Choose Actions > Enter Time.
2. In the Payroll schedule field, select the appropriate payroll schedule.
3. Enter the standard hours and payroll figures as you normally do each pay period.
4. In the Detail payroll view, for each employee that will have Group Term Life recorded, take note of the net pay, federal and state tax amounts that calculate on just the regular wages. Do this before you enter the Group Term Life amounts. Show me.
   

   Note: If additional payroll items that are set to calculate as a percentage of wages (such as retirement deductions, employer match amounts, etc.) apply and those items should calculate exclusively on the regular wages (not on the Group Term Life amounts), take note of the amounts that calculate on just the regular wages (before you enter the Group Term Life). If those amounts increase after you enter the Group Term Life, you will need to reset the amounts to the original totals.

5. Enter the Group Term Life amounts. This will cause increases to the Social Security, Medicare, federal, *state and *local tax amounts, and any items that calculate as a percentage of wages (i.e. 401k). The net pay will be decreased accordingly. Show me.
   

   Note: Group Term Life is exempt from PA State and PA Local tax withholding.

6. If the employee wants the additional tax amounts withheld on the check, skip to step 8 to preview the payroll.
7. If the employee does NOT want the additional amounts withheld from their check, you will need to manually override the appropriate tax and deduction fields and reset the amounts to the totals you noted prior to entering the Group Term Life (step 4 above). Once the amounts are adjusted, the Group Term Life will only reduce the net pay by the additional required taxes (Social Security, Medicare, employee paid state unemployment and applicable local tax withholding). Show me.
   
8. Click the Preview Payroll button to review payroll checks before submitting them to myPay Solutions for processing.
9. Click the Submit Batch option once you are ready to submit the figures for processing.

Important notes

• Watch out for additional payroll items that are set to calculate as a percentage of wages such as retirement deductions, employer match amounts, etc. If those items should calculate exclusively on the regular wages (not on the Group Term Life amounts), you may need to manually adjust the calculated amounts. Note: When you override calculated amounts, be cautious of the annual limits and ensure your changes will not take employees over the set limits for the year.
• The taxes will calculate based on the total gross taxable wages (Regular Wages + taxable Group Term Life), your standard payroll period and the employee’s filing status/allowances. Please be sure to adjust the taxes if the employees do not want additional income tax amounts withheld for the Personal Use of Company Car. For employees with fixed amounts or fixed percentages set up for income tax withholding, the fixed rates will be applied.
• Please refer to the myPay Solutions Year-End Guide for current year-end submission deadlines.

How can I record Group Term Life on a separate check

Since Group Term Life is excluded from net pay but Social Security, Medicare, federal, state and local tax withholding amounts are required (exempt PA State and PA Local), entering Group Term Life without wages will cause a negative check. Negative checks cannot be submitted or processed. To process Group Term Life on a separate check without additional wages, you will need to add wages to cover the required taxes (gross up) or the company will need cover the cost of the taxes for the employee. Please contact your Payroll Specialist if you need to process group term life on a separate check without additional wage.

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