Set Up Group-Term Life Insurance
You can set up life insurance benefits for your employees. Group-term life insurance is a special benefit because coverage less than $50,000 is not taxable, while coverage more than $50,000 is taxable. For more on group-term life insurance, see IRS Publication 15-B.
- On the Payroll tab, click .
- On the List of Benefits tab, enter the necessary information.
- Name—Enter a unique name for the benefit.
- W2 Letter—Enter a letter code for this type of benefit from the list on the back of the W-2 form. The code letter prints in Box 12 of the W-2. Some common codes used for Box 12 include:
- Code C – Taxable cost of group-term life insurance over $50,000.
- Code AA – Designated Roth contributions under a section 401(k) plan.
- Code DD – Cost of employer-sponsored health coverage.Note: The Affordable Care Act requires employers to report employer-provided health coverage costs on employees' Form W-2. For more information, see the IRS requirements for reporting employer-provided health coverage.
- Exempt From—Select the appropriate checkboxes if the benefit is exempt from that tax. If an item is selected as exempt, the benefit is subtracted before taxes are calculated.
- Use a Multiplier of the Salary—Select and enter a multiplier if you want to use a multiplier of the salary.
- Use a fixed amount—Select and enter a fixed amount if you want to use a fixed amount.
- On the IRS Age Multiplier Table and Coverage Limits tab, enter the necessary information.
- You can adjust the ages or cost multipliers for group-term life insurance. Click Load Defaults to fill in the table or to get the current rates. For more information, consult the IRS Publication 15-B.
- Coverage Limits—Enter the current coverage limit.
- Round the Coverage Amount over the limit to nearest—Enter the amount to round the coverage to when it exceeds the limit.
- At the top, click Save.
After setting up benefits, you can add them to employees' Wages/Master Paycheck windows.