Payroll Support Document

Life Insurance Fringe Benefit

Life Insurance Over $50,000

The cost of Life Insurance over $50,000 is considered a fringe benefit to the employee and therefore must be reported on the W2 as a taxable fringe. This dollar amount has to be reported in boxes 1, 3 and 5 on the W2. If the Life Insurance was not set up as a fringe this year, you will have to make the following adjustments:

Go into the Payroll Module
Select "6. Employee Maintenance" from the Main Menu.
Select an employee
Go to the "Paytype" tab.

To set up a Fringe:

Click on "Add"
Click "Fringe Benefit"
Choose the Number/Letter that will refer to this Fringe Benefit.
Click "OK"
Continue by filling in all information
In the LTD field enter the dollar amount that it cost you, the employer, for premiums for coverage over $50,000.00
Click "Save" to save this Fringe Benefit.
Click on the "W4" tab
In the "W4" tab, in the field "Life Insurance Coverage Provided by Employer," put in the face value of the life insurance policy - i.e. 60,000
Click "Save" to save.
Click on the "History" tab.
In the "History" tab, adjust the employee's FICA and MEDI fields and the employer FICA and MEDI fields.
Click "Save" to save.
You will have to manually adjust your 941 for the employee and the employer FICA wages and MEDI wages
You will also have to do journal entries in the General Ledger for these FICA and MEDI adjustments