Automated Clearing House (ACH)- A Federal Reserve Bank acting on behalf of an association of financial institutions that operates a facility (system) that serves as a clearinghouse for direct deposit or other electronic payment transactions; entries are received and transmitted by the ACH under the rules of the association. Funds moved from bank A to bank B must go through the ACH.

Catch Up Contribution- The 2016 retirement catch up contribution for 50 and older $6,000 making the employee total contributions for 2016 $18,000 plus $6,000 Total $24,000. 

Exempt Employee- According to the FLSA an exempt employee is not subject to overtime. For more information visit https://www.dol.gov/whd/regs/compliance/hrg.htm

Gross Wages- Total remuneration paid an employee before taxes and deductions.

Medicare wages- Employee’s share of the Medicare tax is a percentage and is withheld from his or her income. For example the Medicare tax was 1.45% of wages in 2016 and other employment compensation. The employer would contribute a matching 1.45%, for a total Medicare tax of 2.9%.The rate can change and there can be additions. For example, as of 2013 an additional 0.9% hospital insurance tax is assessed on earned income exceeding $200,000 for individuals and $250,000 for married couples filing jointly, bringing their Medicare tax to 3.8%. The employer does match on the additional 0.9% the rate will remain the same in 2017

 

Non-Exempt Employee- Most employees are entitled to overtime pay under the Fair Labor Standards Act. They are called non–exempt employees. Employers must pay them one-and-a-half times their regular rate of pay when they work more than 40 hours in a week. For more information visit https://www.dol.gov/whd/regs/compliance/hrg.htm

Payroll Cycle- Refers to the length of time between payrolls. For example, if an employer processes payroll every week, each week is considered a new payroll cycle.
Pay Period- This is how often you are paid based on the company frequency Weekly (52 paychecks per year), every other week (26 paychecks per year), Twice a month (24 paychecks per year), and monthly (12 paychecks per year), and annually (one paycheck per year). A pay period consists of seven consecutive days 7*24 = 168 hours in a week.
Pretax payroll deductions-Are qualified deductions that lower your employees’ taxable wages. You subtract their contributions from their gross wages before figuring their tax withholding. Some pretax deductions reduce taxable wages for income tax; others reduce taxable wages for Social Security and Medicare taxes.

Pre-Note or Pre-Notification- A zero-dollar ACH transaction used to verify the accuracy of bank account information prior to automatic debits or credits, as in the case of direct deposit. The pre-note transmission serves as a notification to the bank of a GPS client or client’s employee that actual ACH transactions will be processed against the account.

Retirement Savings- A 401(k) plan is a qualified employer-established plan to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings in a 401(k) plan accrue on a tax-deferred basis.A 403(b) plan is a U.S. tax-advantaged retirement savings plan available for public education organizations, some non-profit employer’s cooperative hospital.The 457 plan is a type of nonqualified, tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre-tax basis.The limit for 2016 is $18,000. The limits will remain unchanged for 2017.
Section 125 is part of the IRS Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under a Section 125 program you may choose to pay for qualified benefit premiums before any taxes are deducted from employee paychecks. What are Pre-tax health deductions FSA, HSA (exceptions of AL, CA, and NJ) HRA, health insurance premiums, FSA Dependent care. For more information visit www.irs.gov Publication 15B

Social security wages- “: Social security wages are calculated as Federal Taxable Gross (Box 1) plus Retirement Deductions (Box 12). The maximum social security wage amount for 2016 is $118,100. Box 4 “Social security tax withheld”: The maximum social security tax withheld for 2016 is $7,347.00 For2017 the maximum social security wage amount is $127,200 * 6.20% $7,886.40 tax withheld for 2017

Taxable Fringe Benefit- The value of certain noncash fringe benefits received from an employer is considered part of an employee’s compensation. An employer generally must withhold income tax on these benefits from an employee’s regular pay for the period the benefits are paid or considered paid. For moreinformation on taxable fringe benefits, see Fringe Benefits under Employee Compensation in www.irs.govPublication 15B.

Taxable Wage Base- The maximum amount of employee compensation subject to Social Security, FUTA, and state unemployment insurance taxes.

Taxpayer Identification Number (TIN)- A social security number, employer identification number, or an individual taxpayer identification number which serves as the taxpayer’s account number with the IRS.