Preparing for a Stress-Free Year End

ByCandace Anderson - Managing Consultant and Certified Diversity Practitioner

It is hard to believe that we are already thinking about year end, but — like it or not — it is coming. And in true 2020 form, this year will be a little different. Since Jan. 1, 2021 falls on a Friday and a payday for a lot of employees, there are a few additional things to consider this year. 

Annual limits will have an extra paycheck included this year, so be sure to check those Health Savings Account (HSA), Flexible Spending Account (FSA) and 401(k) year-to-date totals. Below is a reminder of the 2020 limits:

  • The contribution limit for employees who
participate in 401(k), 403(b) and most 457 plans is $19,500 (this does not
include employer match). The “catch-up” contribution limit for age 50 or older
who participate is $6,500.
  • HSA maximum contribution amounts are $3,550
for self-only and $7,100 for families. The annual “catch-up” contribution
amount for age 55 or older is $1,000.
  • An individual can contribute up to $2,750
to a health care FSA or limited FSA (employer contributions are in addition to
this amount).

Have your employees verify personal information such as social security number, date of birth and home address within your payroll system. Suggest employees review their withholding allowances and sign up for a paperless W-2.

Year-End-is-coming

This is also a good time of year to remind your employees of your PTO carryover policy so that they can plan to use any accrued time that they do not want to lose. If your PTO accrues per pay period, keep in mind the accrual for the Dec. 31 check date. 

 

As an employer, to ensure accurate W-2s:

  • Make sure employee totals are correct;
verify earnings and deductions.
  • Review third-party sick pay (if
applicable)
  • Report fringe benefits (if applicable)

Year end can be a very busy and challenging time of year. But by getting a head start, it can be stress free for you and your employees.

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