Supplemental Pay Essentials - Severance Pay, Deferred Compensation, Recordkeeping and Fringe Benefits

Supplemental pay includes compensation such as overtime premiums, bonuses, severance pay and fringe benefits. It is an important component of employee compensation but has its own set of withholding rules. Computing an appropriate amount of withholding for supplemental pay can be a challenge. Payroll departments often hear complaints of too much withholding from employees and sometimes too little withholding from highly compensated employees. The introduction of mandatory flat rate withholding for certain employees changed the definitions of supplemental and regular wages and created additional recordkeeping responsibilities for employers.

The rules for withholding from supplemental pay involve compliance issues for employers related to tracking supplemental wages paid to each employee during the calendar year, selecting the appropriate method to use to compute withholding from supplemental pay, and proper application of options and exceptions to the general rules. Failure to know and correctly apply the rules can result in costly penalties for failure to withhold the correct amount of tax.

This fast paced and detailed webinar will provide crucial information to effectively manage supplemental wage payments. It will discuss when optional methods may be elected and when they may not and the effect of Form W-4 claims and regular pay period on supplemental pay withholding.