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Payroll Standard Operating Procedures
SUBJECT:

Payroll Procedures for Payments after Death

SOURCE:

Financial Management Services

ORIGINAL DATE
OF ISSUE:

October 1990

DATE OF
LAST REVISION:
March, 2011
PSOP NO: 3.0
RATIONALE:

To outline the procedures for departments to follow concerning the death of an employee

PSOP: When you receive notice concerning the death of an employee, the following procedures should be used to process their final payment. No further payments should be processed in HRMS payable to the employee. Final payments are processed by FMS using a Disbursement Voucher (DV) in the FIS and made payable to the estate after the appropriate approval process.
  1. Any payments that are pending after the date of death should be stopped. If there are pending direct deposit transactions, the payroll office should submit a request to have it returned if possible prior to check date.

  2. The department will prepare and submit the normal termination documents to Human Resources/Payroll; eDoc and paper adjustment voucher for final payout including all terminal pay earn codes.

  3. The payroll office can direct the department to the FMS website; Payroll; Special Processing Procedures; Payroll Procedures for Payments after Death.  In the document are 4 links to the required documentation that must be completed by the family of the deceased.  These documents will explain our procedures for making final payments to employees.
    1. How to Claim a Final Paycheck
    2. Paycheck Claim
    3. Affidavit of No Administration
    4. W-9 Request for Taxpayer Identification Number and Certification

  4. When the adjustment voucher for the final payment from the department/campus is received in payroll, the 45-day waiting period will be calculated from the date of death provided an estate has not been opened. The termination payout should be approved following normal procedures.

  5. All paperwork will be monitored and maintained in FMS by the Termination Coordinator.

  6. Provided an estate has not been opened, upon receipt of the Paycheck Claim, Affidavit of No Administration, W-9 Tax form and the completion of the 45-day waiting period, the payment will be issued. In accordance with Indiana law, if an estate is opened and the “Letters of Administration” and W-9 Tax form are received, the 45-day waiting period does not apply.

  7. The Retirement Coordinator in FMS will process the final payment on a Disbursement Voucher including all wages, refunds, etc. due. Retirement contributions will be calculated and wages will be adjusted as needed. If an estate was opened, the check will be issued “to the estate of” the deceased. If an estate is not opened, the check will be issued to the claimant signing the Paycheck Claim form.

  8. Social Security and Medicare taxes will be withheld if the final payment is made in the same tax year in which the death occurred and will appear in boxes 3 and 5 of the employee’s form W-2. If the final payment is made in the year following the date of death, social security and Medicare taxes will not be withheld and will not be reported in boxes 3 and 5 of the employee’s form W-2. The FMS tax area will update Deceased (DCD) wages in HRMS.

  9. The check will be disbursed according to instructions indicated on the Paycheck Claim form. At tax year-end a 1099 form will be issued to the person claiming the final paycheck.
CROSS
REFERENCE:
See the following policy,
Payroll Administration Policy IV-150, Disposition of Final Pay for Deceased Employees: FIN-PAY-IV-150
RESPONSIBLE
ORGANIZATION:
Financial Management Services

Block IU Last Updated 5/14/2012
400 E. 7th Street, Poplars 527, Bloomington, IN 47405
FMS Customer Service:(812) 855-0375
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