With year end almost upon us, human resources and payroll professionals are busier than ever! Reduce your administrative headaches by preventing problems. Check the list below to make sure you’re on top of important requirements and changes in the new year.
1. Report health insurance costs on W-2s. The 2012 W-2s that you issue in January, 2013 must reflect the cost of employer-sponsored health insurance in Box 12 with a code of DD. Note that small employers, i.e. those who issued less than 250 W-2s for 2011, have been given a one-year reprieve but are expected to report the cost in their 2013 W-2s to be distributed in January, 2014.
2. New Health FSA limit. The employee contribution limit for health flexible spending accounts is reduced to $2500 per year for plan years beginning in 2013 and beyond. Be sure to update your plan document and let employees know of the change. (Note that dependent care accounts are not changed.)
3. Social Security Tax Rate. Unless extended by Congress, the 2% temporary reduction in the social security tax rate is about to expire. Most likely, therefore, effective January 1, 2013 the rate will revert to 6.2% of wages up to $112,300 (an increase from $110,000.)
4. Additional Medicare Tax. If you have employees who earn more than $200,000 per year, you are required in 2013 to withhold an additional 0.9 percent Medicare payroll tax (an increase from 1.45 percent to 2.35 percent) to the amount of their pay that exceeds $200,000.
5. Loss of Adoption and Education Assistance Tax-free Status. The income tax exclusion of up to $12,650 in qualified adoption assistance and up to $5,250 in employer-provided tuition assistance are set to expire on December 31, 2012 unless extended by Congress. If applicable to your organization, let employees know about these likely changes. Consider ways to assist employees with educational reimbursements that qualify as a business expense.
6. Minimum Wage Increases. Where the state minimum wage exceeds the federal rate, you must use the higher wage. States with minimum wage hourly rate increases in 2013 are: Arizona $7.80; Colorado $7.78; Florida $7.79; Missouri $7.35; Montana $7.80; Ohio $7.85; Oregon $8.95; Rhode Island $7.75; Vermont $8.60; and Washington $9.19. The federal rate will remain at $7.25 per hour.
7. IRS standard mileage rate increases are as follows:
56.5 cents per mile for business miles
24 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations
8. Defined contribution retirement plan limits. Increased amounts for 2013 are:
Maximum elective deferral by employee $17,000
Catch-up provision limit for ages 50+ $ 5,500
Total maximium (employer + employer) $51,000
9. Health Savings Account/High Deductible Health Plan increases. Note the following HSA limits and related HDHP dollar amounts for 2013:
HSA contribution limit (employer + employee) $3,250 individual $6,450 family
HSA Catch up contribution limit (age 55+) $1,000
HDHP minimum deductible amounts $1,250 individual $2,500 family
HDHP maximum out-of-pocket amounts $6,250 individual $12,500
For a full year-end checklist, HR Made Simple subscribers may view the Year End Payroll & Benefits Checklist (under HR Topic Modules on the Knowledge Menu.)