Customer Support during COVID-19
Updated: May 7, 2021
We at Paychex remain dedicated to serving you, your employees, and your business. We’re continually monitoring the guidance provided by the Centers for Disease Control (CDC) and are adjusting our COVID-19 contingency plans as necessary to continue providing the same high level of service as always.
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Paycheck Protection Program (PPP)
Paycheck Protection Program (PPP)
How can I maximize PPP loan forgiveness?
How did the PPP Flexibility Act impact forgiveness?
This law amended the SBA rule requiring that not more than 40% of the borrower’s loan forgiveness amount could be attributed to non-payroll costs. If a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs.
Additionally, it extended the time a borrower can qualify for the FTE and Salary/Hourly Wage reduction safe harbors to Dec. 31, 2020 if they fully restored FTEs and/or salary/hourly wages.
The Act also created a new FTE Reduction Exemption that provides loan forgiveness will not be impacted if the FTE reduction was due to being unable to re-hire employees (or hire similarly qualified employees) or return to pre-COVID-19 business activity.
PPP Loan Forgiveness Application Process
The PPP loan forgiveness application process is complicated. We've created an instructional sheet to help make it easier, including details on how Paychex Flex clients can use our Loan Forgiveness Estimator to pull together preliminary data required to complete the 11-page loan forgiveness application for the SBA, as well as save and print their own signature-ready loan forgiveness application. Check out the instruction sheet and this short video below. Updated 3/12/2021: We've created a 2021 and a 2020 PPP Forgiveness Data Report Explainer for Paychex Flex® customers to help you better understand these reports. We've created a similar explainer for Paychex Preview® customers.
For Paychex Flex clients, we've also created a new COVID-19 Wages Data Report explainer to help you understand your in-app reports.
Executive Memorandum on Employee Payroll Tax Deferral
Executive Memorandum on Employee Payroll Tax Deferral
What is this payroll tax deferral?
An Executive Memorandum issued in August 2020 allowed for the deferral of withholding, depositing and paying of the employee portion (6.2%) of the Social Security tax until Dec. 31, 2020. Although not mandated, employers were given the option of offering the choice of deferral to employees.
Read the article in our WORX library
When would deferred taxes need to be repaid?
Employers will be required to withhold and remit any deferred employee Social Security tax ratably between Jan. 1 and Dec. 31, 2021 from its employees who took the deferral.
- Employees who took the deferral will have both their regular 6.2% Social Security tax obligation and a ratable portion of their deferred amount withheld from their checks for 12 months. To withhold ratably means that if the employee deferred $800 and there are 26 pay periods between Jan. 1 and Dec. 31, the employee will see about an extra $31 withheld (in addition to their required Social Security tax) from their paycheck for 26 straight pay periods.
Are there any penalties if the deferred tax is not repaid in time?
Yes, interest and penalties begin to accrue Jan. 1, 2022 on any unpaid amounts.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
Coronavirus Aid, Relief, and Economic Security (CARES) Act
Families First Coronavirus Response Act (FFCRA)
Families First Coronavirus Response Act (FFCRA)
Employee Retention Credit
Employee Retention Credit
What is the Employee Retention Credit under the CARES Act?
The enactment of the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act changed some of the provisions under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, including the employee retention tax credit that has been expanded and extended under the new law.
Employers who qualify, including borrowers who took a loan under the initial PPP, can claim the credit against 50 percent of qualified wages paid, up to $10,000 per employee annually for wages paid between March 13 and Dec. 31, 2020. Due to the ongoing impact of the COVID-19 pandemic, the credit was extended through Dec. 31, 2021. For 2021 the credit is calculated at 70% of up to $10,000 in eligible wages per employee per quarter. Learn more about opportunities in our full article on Employee Retention Credits.
How Do I Receive the Employee Retention Credit?
Are all wages eligible for the employee retention credit?
Wages/compensation, in general, that are subject to FICA taxes, as well as qualified health expenses qualify when calculating the employee retention credit. These must have been paid after March 12, 2020 and qualify for the credit if paid through Dec. 31, 2021. For more information on determining eligible wages, please refer to our full article on Employee Retention Credits. You can also learn more on retention credit podcast episode.
Note: FICA Exempt Wages shouldn’t be Included in the Employee Retention Credit When you’re reporting the retention credit, only the FICA taxable portion of the wages should be entered in the information pay component.
For example, if a you paid $1000 to an employee for wages that are eligible for the credit, but there was a $100 FICA exempt deduction withheld from that payment, only $900 should be reported, as you’re only eligible to claim $900 in credit for those wages.
When reporting your payroll to Paychex, make sure you don’t include these wages in the Employee Retention Credit earnings codes.
For more information about interaction with other tax credits, go to COVID-19-Related Employee Retention Credits: Interaction with Other Credit and Relief Provisions FAQs.
Can I receive the Employee Retention Credit Using Form 7200?
Paychex will apply the amount of the credit to the federal tax liability, which in most cases is the quickest way to use the credit. If the amount of the credit exceeds the federal liability, and you choose not to carry the credit forward to the liability for the next check date, you can complete a Form 7200 to apply for an accelerated credit from the IRS.
Note: You must inform Paychex if you are filing a Form 7200. If you do not inform Paychex, we will continue to apply the credits to your next payroll, which may result in potential liability for your business and incorrect reporting on form 941.
Can I receive both the Paycheck Protection Plan Loan and the Employee Retention Credit under the CARES Act?
Yes. An eligible employer that receives a Paycheck Protection Program (PPP) loan can claim the Employee Retention Credits.
Keep in mind, the credit can only be taken on wages that are not forgiven or expected to be forgiven under PPP. It is expected that guidance from the federal agencies will clarify and define the limitation on what wages PPP recipients can consider for the retention credit.
Can I receive Employee Retention Credits after the PPP loan is forgiven?
Yes. The law passed in December allows businesses with a forgivable PPP loan to retroactively claim the employee retention tax credit—with the caveat that businesses can’t use the PPP loans and claim the credit for the same payroll costs. Paychex is awaiting additional guidance from the IRS on how to appropriately apply these credits retroactively.
May I receive both the paid family and medical leave credit (section 45S of the Internal Revenue Code) and the Employee Retention Credit?
Note: Internal Revenue Code Section 45S provides a tax credit for employers who provide paid family and medical leave to their employees. Eligible employers may claim the credit, which is equal to a percentage of wages they pay to qualifying employees while they’re on family and medical leave.
Yes, but not for the same wage payments.
Any qualified wages for which an Eligible Employer claims the Employee Retention Credit may not be taken into account for purposes of determining a section 45S credit. You may not claim a credit under section 45S for wages you claimed the Employee Retention Credit on; however, you may be able to take the 45S Credit on additional wages paid.
Where can I get additional information on COVID-19 Employee Retention Credits?
- Paychex WORX article: What is the Employee Retention Credit? How It Works and What Businesses Qualify
- The IRS published extensive FAQs about these credits on their website at FAQs: Employee Retention Credit under the CARES Act
- IRS Publication: New Employee Retention Credit helps employers keep employees on payroll
When would a 7200 form be necessary?
The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act both provide refundable tax credits for qualifying wages. There are three reasons you might file a Form 7200:
- Employee Retention Tax Credit (CARES Act)
- Refund of wages paid for qualified sick leave ((FFCRA)
- Refund of wages paid for qualified family leave (FFCRA)
Paychex will apply the amount of the credit to the federal tax liability, which in most cases is the quickest way to use the credit. If the amount of the credit exceeds the federal liability, and you choose not to carry the credit forward to the liability for the next check date, you can complete a Form 7200 to apply for an accelerated credit from the IRS. NOTE – you must inform Paychex if you are filing a Form 7200. If you do not inform Paychex, we will continue to apply the credits to their next payroll which may result in potential liability for your business.
Is Paychex processing the 7200 form for clients?
Yes, after you let us know that you’ve filed one or more Form(s) 7200.
If you submit a Form 7200, provide a copy of it to Paychex before the end of the quarter for which it was filed. Include the following:
- Contact name, phone number, and email address
- Date you filed the Form 7200
You are not required to file Form 7200; Paychex will apply the amount of the credits to your federal tax liability, which in most cases is the quickest way to use the credit
If you file Form 7200, you must inform Paychex. If you do not inform Paychex, that you filed these forms, we may apply credits that you’ve already requested; you most likely will incur penalties assessed by the IRS.
Does Paychex need to know if I submit a Form 7200?
Yes, Paychex will need to know of each Form 7200 that you submit so that we don’t also apply a credit that was requested, and so that we reflect it properly on the 941.
Can I file more than one Form 7200?
Yes. You can file as many Form 7200s as necessary to request excess credit amounts as an expedited refund through Dec. 31, 2021.
Is the Form 7200 related to both FFCRA and CARES?
Yes. Form 7200 can be used to apply for expedited refunds of credits related to sick leave wages and family leave wages (FFCRA) and also for the credits related to employee retention (CARES).
How can I submit a Form 7200?
You can fax the form to 855-248-0552.
Is there a minimum amount I can request on Form 7200?
Yes. The Internal Revenue Service (IRs) released new guidance stating that after July 2, 2020, Forms 7200, Advance Payment of Employer Credits Due to COVID-19, that are filed must request a minimum credit amount of $25.00. Any credit advance requested on the form that totals less than $25.00 will not be processed by the IRS. Any credit advance under $25 can be claimed by reducing a future deposit or claimed on Form 941 at the end of the quarter.
Can I still pick up my payroll at the Paychex office?
We have temporarily suspended pick up in our offices. We have alternatives – access all your payroll information online, get overnight delivery from a courier service, set up direct deposit or other payment methods, or receive your package through the U.S Mail. Contact your Paychex service representative for more information about these services.
Now more than ever, you and your employees need the security of knowing that payroll wages will be deposited on time as expected. This is the perfect time for you to set up employees without direct deposit for this service.
Additionally, we have flexible payroll payment options, such as Pay On Demand that allows employees easy access to earned wages, in advance of payday, at no cost to you.
Contact your Paychex service representative for more information about these services.
How are your systems being set up to handle sick leave under COVID-19?
We’re in the process of developing and testing software to support the leave that can be taken by eligible employees for qualifying reasons under FFCRA.
- Emergency Sick Leave – Employee Self-Care
- Emergency Sick Leave – Family Care
- Expanded Family Medical Leave
If circumstances require you to pay wages before software changes are implemented, we’ll work with you to pay the wages now and manually update our systems.
We’ll send another message closer to the release of the software changes to give you additional detail about how these earnings will be reported in our systems.
Can I run payroll while working remotely?
You can easily run payroll from anywhere through Paychex Flex® and our mobile app while saving time on payroll-related tasks. This gives you time to focus on other things, such as checking on your employees’ well-being.
You’ll be able to:
- Enter and submit payroll using self-service functionality in as few as two clicks
- View critical data at a glance, such as check dates and cash required for your next payroll
- Set up direct deposit, so your business can pay employees on time
- Track hours for employees working remotely
- Run reports, such as your payroll journal, cash requirements, and tax deposit notices
You can also give your employees the freedom to:
- View paystubs online
- Set up or change direct deposit
- Update their banking information
- Update their personal contact information (phone, email, address) to help with contingency planning
- Check time-off balances
I would like to start using the Paychex online application to report payroll, what do I need to do?
Contact your Paychex service representative, they’ll work with you to set up our online payroll application, Paychex Flex.
How do I set up direct deposit for my employees who don’t currently use it?
If you use our Paychex Flex online payroll service, you can add/change employee direct deposit information using these instructions. Employees can add/modify their direct deposit accounts through their self-service Paychex Flex account.
If you don’t use Paychex Flex, contact your payroll service representative.
How can I track time for employees working remotely?
Paychex provides online, cloud-based solutions for employees to use while working remotely. Learn more about these options and more in this WORX article on the benefits of time and attendance tracking.
Health insurance, HSAs, and FSAs
Health insurance, HSAs, and FSAs
Are the costs of personal protective equipment used to prevent the spread of COVID-19 tax deductible if they are considered medical expenses?
Yes, if certain requirements are met. Amounts paid by an individual taxpayer for COVID-19 personal protective equipment (PPE) such as masks and hand sanitizer for use by the taxpayer, the taxpayer’s spouse or the taxpayer’s dependent(s) that are not compensated for by insurance are deductible provided that the taxpayer’s total medical expenses exceed 7.5 percent of adjusted gross income.
The amounts — because they are considered expenses for medical care in the Internal Revenue Code — are also eligible to be paid or reimbursed under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs) or health savings accounts (HSAs). However, if an amount is paid or reimbursed under a health FSA, Archer MSA, HRA, HSA or any other health plan, it is not deductible.
Is COVID-19 screening and diagnostic testing covered by my health benefits package?
Many health insurers are responding to the threat of COVID-19 by offering members no-cost screening and diagnostic testing. Please contact your insurance provider or visit their website for detailed information.
Several of our carrier partners have specific COVID-19 information and policies. A few of them are listed here. Be sure to check your carrier’s website for more detail:
Is there anything employees currently without health insurance can do?
Certain states have recently announced an individual market special enrollment period for qualified individuals currently without health insurance. Other states may soon follow. Paychex has a team that specializes in helping employees find coverage that fits their individual insurance needs.
Do Medicare and Medicaid provide COVID-19 coverage?
Centers for Medicare and Medicaid Services (CMS) issued FAQs that intend to clarify how COVID-19 coverage applies to Essential Health Benefits. Note that EHBs may vary by state, and cost-sharing requirements may vary by plan.
Can HSA participants use their funds to pay for testing and treatment?
HSA participants can use their accounts to pay for qualified medical costs, such as COVID-19 treatment. Regarding carriers and what’s allowed to maintain an HSA-qualified plan, the IRS has announced that high-deductible health plans (HDHPs) can pay for COVID-19-related treatment before the deductible applies without jeopardizing their plan status. This means that an individual with an HDHP that covers these costs may continue to contribute to a health savings account (HSA).
How is Paychex handling the economic stimulus provisions available for Medical and Dependent Care Flexible Spending Account (FSA) plans based on The Consolidated Appropriations Act 2021, signed into law in December 2020?
The Consolidated Appropriations Act 2021 (the Act), signed into law in December, provides economic stimulus provisions as a result of the COVID-19 pandemic. We wanted to make you aware of provisions included in this spending bill that are available for your Medical and Dependent Care Flexible Spending Account (FSA) plans.
- FSA Medical Carryover - According to our records, your plan offers the Carryover Provision which allows participants to carryover up to $550 in contributions to the next plan year. In accordance with the Act, we are enabling you to amend your plan to allow participants to carryover any unused benefits from 2020 to 2021 and from 2021 to 2022 plan years.
- Dependent Care Assistance Carryover- You can elect to amend your plan so that participants may now carryover any unused funds from their 2020 Dependent Care Assistance account to the 2021 plan year and from the 2021 to the 2022 plan year.
- Dependent Care Assistance Age Extension- You may amend your plan so that participants who had a dependent who attained age 14 during the pandemic (typically reimbursements would cease after attaining age 13) may continue to receive reimbursements of any unspent funds for childcare for plan year 2020, and any unspent funds at the end of the 2020 plan year may be carried over to 2021.
- Mid-Year Election Changes - The Act continues to permit mid-year plan election changes in 2021 for health flexible spending arrangements (FSAs) and dependent care assistance programs. The changes, which would require an amendment to your FSA plans, are intended to help employees who may see an increase or decrease in dependent care costs or medical expenses due to the pandemic and its related events.
Please Note: Elections cannot be decreased to less than the year-to-date claims paid amount.
- Post-termination Reimbursement from Unreimbursed Medical FSA- The Act will allow you to amend your plan so that participants who have ceased participation during 2020 or 2021 may continue to receive reimbursements through the end of the plan year in which they ceased participation. This extends their ability to submit claims from the typical 90-day closeout period until the end of the plan year.
- Grace Period - Per our records, your FSA plan offers a Grace Period and has participants who have leftover 2020 balances. In accordance with the Act, we are enabling you to amend your 2020 and 2021 plans to allow the extension of the grace period for both plan years 2020 and 2021 to 12 months after the end of the plan year (typically 2½ months following the end of the plan year) for any amounts unspent at the end of the plan year.
Please review the options above, complete the attached type form link, and submit it to Paychex to indicate which options you would like to implement for your FSA plan.
Note: You must use Google Chrome as your internet browser to open this form.
Once we receive the form, Paychex will update our system with the changes, and send you plan amendment paperwork by the end of 2021 to formally adopt the election changes.
If you have any questions, please email us at PaychexBenefitAccount@paychex.com
Will workers’ compensation cover COVID-19 illness if contracted at work or during work-related travel?
Each state has their own workers’ compensation policy and specific coverage requirements that are usually based on a business’s industry, size, and general structure.
Typically, workers’ compensation does not cover community-spread illnesses, such as colds or the flu, because they generally cannot be tied to an individual’s place of employment. However, due to the COVID-19 pandemic, many states have or are attempting to pass executive orders, general legislation, or policy changes to extend workers’ compensation coverage for first responders, health care workers, and other essential personnel who are at greater risk of being impacted by COVID-19.
For more information about state-specific requirements, navigate to your applicable state’s workers’ compensation website, or contact your insurance carrier directly for specific coverage information
Is there any change to workers’ compensation insurance for businesses with employees who begin to work remotely as a result of the COVID-19 pandemic?
If a compensable injury happens while a remote employee is conducting work-related activities, they will typically be covered under your applicable state’s workers’ compensation laws. However, the nature of and specific details surrounding that injury will ultimately factor into an employee’s eligibility for benefits.
If an employee begins to work remotely from a different state, the employer should work with their insurance representative to ensure that their workers’ compensation insurance extends to that location. It’s also important to specifically describe an employee’s general job duties and work hours, if they will change.
For more information about state-specific requirements navigate to your applicable state’s workers’ compensation website.
How has the COVID-19 pandemic and related regulations affected workers’ compensation insurance premiums?
Workers’ compensation premiums tend to be determined by how many people are employed and what type of industry that they’re employed in, so higher national and/or state unemployment rates can affect premiums.
Many states have announced or proposed changes that may affect workers’ compensation insurance class codes. These changes vary, but most include the ability for businesses to temporarily reclassify for the purposes of workers’ compensation coverage employees who are being paid but not working, and some states allow businesses to reclassify employees temporarily reassigned to clerical roles.
For more information about state-specific changes to workers’ compensation insurance class codes and premium payments, please visit your applicable state’s workers’ compensation website.
Have workers' compensation regulations changed due to the COVID-19 pandemic?
Many states have either effectively passed new legislation, have proposed legislation that is currently pending, or have proposed legislation that has since failed regarding changes to their state-specific workers’ compensation (WC) policy. Although legislation topics vary by state, most tend to focus on, but are not limited to:
- Adding COVID-19 as a recognizable and compensable disease under state-specific WC policy
- Extending WC eligibility/coverage to "essential employees" as defined by individual states
- Adding/editing who constitutes as "essential employees" as defined by individual states
- Reworking existing policies to account for COVID-19-positive "essential employees" as defined by individual states
For more information about changes to state-specific WC regulations, navigate to your applicable state’s workers’ compensation website.
Have workers' compensation class codes changed due to the COVID-19 pandemic?
Many states have announced or proposed changes that may affect workers’ compensation insurance class codes and premium payments.
Workers’ compensation class codes are three or four-digit numbers that insurance companies can use to easily identify specific classifications or categories of work. Insurance companies use class codes to estimate workers’ compensation rates based upon the associated risk with the type of work being done.
Although most states utilize the National Council on Compensation Insurance (NCCI) workers’ compensation insurance class code system, there are a few states that use independent bureaus or are monopolistic.
For more information about changes to state-specific workers’ compensation insurance class codes, visit the NCCI website, explore your applicable state’s workers’ compensation website, or reach out to your insurance representative for information on your specific situation.
Where can I find support for human resources?
Explore our COVID-19 Help Center, review our library of WORX articles, webinars, and podcasts, visit our Customer Support Center, or for customers using our HR Services offerings, please contact your Paychex HR professional.
If I need to lay off my employees, would they still be eligible for our employer-sponsored health insurance?
If employees are no longer eligible for their group health plan because of termination or reduction in hours, they would likely be eligible for COBRA or state continuation of health insurance coverage. Note that in the case of a layoff that is intended to be temporary, employers should review their plan documents or speak with their account manager or insurance agent to determine if and how long employees may stay on their group health plan before coverage is terminated.
- If you process payroll through Paychex and you subscribe to our COBRA administration service, entering a termination in our payroll system will trigger sending your affected employees a notification from us of their right to enroll in COBRA or state continuation of coverage.
- If you don’t subscribe to our COBRA administration service, please consult your COBRA administrator for information on how to notify your affected employees.
- If you are a Paychex Insurance Agency client, please contact your account manager with any questions.
- If you are a PaychexOne, Oasis, or HROi client, please contact your HR professional with any questions.
- If you are a BeneTrac client, please contact your account manager or account executive with any questions.
Where can I find training resources on COVID-19 for my company and employees?
We’ve added training courses to the Paychex Learning solution in Paychex Flex®, including topics such as important precautionary and prevention measures, business continuity, and communication strategies.
Professional Employer Organization (PEO)
Professional Employer Organization (PEO)
If I need to lay off my employees, would they still be covered for health insurance?
If an employee is terminated, has hours reduced, or is moved to a different status (Full Time to Part Time) that results in a loss of health insurance eligibility, the client is responsible for notifying Paychex PEO to have the correct status applied. Once Paychex has been notified of any change and this has been updated in our system, the employee will receive their COBRA notification.
Additionally, the eligibility for PEO plans is 30 hours per week, therefore if an employee’s hours have been reduced to less than 30 a week, the employee’s status should be updated to “PT” or “terminated” to start the COBRA notification process.
If you are a PaychexOne or Oasis client, please contact your HR professional with any additional questions.
When I’m ready to rehire employees that were let go, would the benefits waiting period still apply?
If the employee is reinstated within 30 days of the date employment is discontinued, benefits are automatically reinstated without a waiting period, effective the first of the month following the date employment is discontinued to avoid a lapse in coverage. If there is a break in service of more than 30 days, the employee would begin a new waiting period.
Example: An employee is let go on 3/20 and rehired on 4/5 (less than 30 days apart); benefits would be reinstated 4/1, and any missed premiums would be deducted on the monthly PEO Benefits Administration Summary, if applicable.
I will be reducing employees’ hours, potentially to below 30 hours/week. How will my benefits be affected?
You are responsible for determining Full Time (FT)/Part Time (PT) status, tracking changes to employee average hours worked, and making updates to FT/PT status in payroll. Under the benefit plans offered through the PEO, if you change an employee from FT to PT, their benefits will terminate on the last day of the month in which the change is effective. An employee who works at least 30 hours a week is full-time under the PEO plan. A small dip in average hours worked does not necessarily require a change to FT/PT status. We recommended that you use discretion when making changes to an employee’s FT/PT status during this time. If you self-retain benefits, you should contact your broker/administrator for direction.
Keep in mind that Applicable Large Employers (ALE) under the Affordable Care Act’s Employer Shared Responsibility (ESR) provisions have additional considerations. An ALE that utilizes the Look-Back Measurement Method must offer adequate and affordable coverage to employees determined to be full-time employees for the duration of the stability period or risk potentially being assessed a penalty if a full-time employee receives a premium tax credit when purchasing insurance in a government marketplace. An offer of COBRA coverage qualifies as an offer of coverage for ESR purposes but is less likely to be affordable under ESR provisions, putting the ALE at risk of an assessment.
Note: If employees don’t have enough gross wages to cover their benefit premiums, they will not be deducted. Premiums will be captured on your monthly PEO Benefits Administration Summary. For more information, see the "When I’m ready to rehire employees that were let go, would the benefits waiting period still apply?" FAQ.
Will PEO-sponsored short- and long-term disability plans work in coordination with any other pay (state disability, proposed PSL/FMLA, etc.)?
No, Short-Term Disability (STD)/Long-Term Disability (LTD) plans do not coordinate with any other benefits.
What is my Paychex PEO account number?
Paychex PEO account numbers are not provided to our clients. We understand that some states are requiring PEO account numbers when a claimant is filing, however, we advise employees to put “on file” when the account number is requested.
401(k) and retirement
401(k) and retirement
Where can I find support for my retirement plan?
For customers using Paychex Retirement Services offerings, please contact a Paychex representative or visit our customer support page.
How does the Consolidated Appropriations Act, 2021 (CAA) impact retirement plans?
Among other things, the Consolidated Appropriations Act, 2021 (CAA) includes some optional provisions for retirement plans regarding non-COVID-19-related disaster assistance and temporary relief for partial plan termination rules.
Are the retirement provisions under the CAA required?
The retirement plan provisions introduced by the CAA are optional, which means that a plan sponsor is not required to adopt them. If a plan sponsor were to accept any of these new provisions, they would have to provide notice of new plan provisions to any impacted employee(s).
What non-COVID-19-related disaster relief is available under the CAA and who is eligible?
The CAA allows qualified individuals, defined as those who live in an area where a major disaster was declared by the President during a designated incident period and suffered an economic loss as a result, the ability to take up to $100,000 from their retirement account via a loan or withdrawal without experiencing a tax penalty. This provision is only for non-COVID-19 related disasters as declared by the President on or after January 1, 2020 and extending through February 25, 2021, and the related incident period must have started on or after December 28, 2019 and on or before December 27, 2020.
Loans or withdrawals are not be subject to the 10% early distribution penalty, are taxable over a three-year period (unless elected otherwise by the individual) and may be repaid to a tax-qualified retirement plan or IRA within a three-year period beginning on the day after the distribution.
The CAA also allows for participants to recontribute hardship distributions taken for the purchase or construction of a home in a qualified disaster area, if the funds were not used due to the qualified disaster.
Does COVID-19 qualify as an eligible hardship expense?
No. If your retirement plan offers hardship withdrawals, and the state in which the qualifying plan participant resides (or is employed) is declared a federal disaster area by the Federal Emergency Management Agency (FEMA), the participant may be eligible for a 401(k)-hardship withdrawal for expenses and losses incurred because of the disaster. FEMA is updating the state list regularly at fema.gov/disasters.
For more information, please review the Retirement Plans FAQs provided by the IRS.
Can a 401(k) plan participant refinance an existing plan loan?
Paychex does not allow for refinancing or increasing existing loan amounts. The plan would have to allow for two loans, and the participant would need to take a second loan if desired.
Can an employer suspend retirement plan participant contributions for 401(k) temporarily?
Plan administrators can notify their plan participants that they can update their payroll deferrals to 0% via the Paychex Retirement Services website. Participants can then adjust that deferral any time they see fit.
Can an employer suspend 401(k) plan match contributions temporarily? Is it different for safe harbor and non-safe harbor?
If the 401(k) plan employer match is not a Safe Harbor match, the plan administrator can amend the plan to stop the employer match immediately and restart at a later time. If the plan is Safe Harbor, participants will need 30 days advance notice of the change that the match and Safe Harbor will be discontinued. The plan will also be subject to ADP/ACP compliance testing for the plan year. Safe Harbor plans cannot restart the match until the following plan year.
State Unemployment Insurance (SUI)
State Unemployment Insurance (SUI)
How do I file a claim for unemployment insurance (UI)?
Eligible workers must file claims through their applicable state’s unemployment insurance website.
For information on state-specific eligibility requirements, how to apply for, and how to file unemployment insurance claims, please visit the U.S. Department of Labor’s website or review their COVID-19 Unemployment Recourses.
What type of information do I need in order to file for unemployment benefits?
Specific information that is required to apply for unemployment benefits may vary by state, however, information that is generally required includes:
- Social Security Number
- Driver’s license or state ID card number
- Up-to-date personal contact information (complete mailing address and telephone number)
- Name and dates of previous employment
- Most recent paystubs
- Amount of any separation pay (severance, vacation, etc.)
- A specific reason for filing for unemployment
Additional information may be required for non-U.S. Citizens, federal employees, or former military service members.
For more information, please visit your applicable state’s unemployment insurance website.
Is unemployment insurance a state or federal program?
Unemployment insurance is a shared state and federal program. Although each state has its own unemployment insurance program, all states abide by the same general guidelines set by federal law.
What is the typical turnaround time for a SUI Claim?
Specific turnaround times vary by state agency; however, it generally takes two to three weeks to receive the first benefit check after filing a claim. Due to the increased number of claims filed in the wake of the COVID-19 pandemic, turnaround times may be longer than normal and can sometimes extend up to six weeks.
Please visit the U.S. Department of Labor’s website or your applicable state’s unemployment insurance website for more information.
Is there a resource for my employees that describes where to go and how to file for unemployment?
Employees must file claims through their applicable state’s unemployment insurance website or by phone. For information on state-specific eligibility requirements, how to apply for, and how to file unemployment insurance claims, please visit the U.S. Department of Labor’s website or review their COVID-19 Unemployment Recourses.
We’ve also created a state-by-state breakdown to help direct you to your applicable state’s COVID-19 resource pages.
Can my employees work partial hours and be eligible for unemployment insurance benefits at the same time?
Employees working reduced or partial hours may be eligible to receive supplemental unemployment benefits. Eligible employees must meet specific state requirements before receiving unemployment benefits.
For more information, please visit the U.S. Department of Labor’s website, or check with your applicable state's unemployment insurance office or website.
Will Paychex be sending out updates on how to apply for emergency unemployment that might become available in the different states?
Yes, that’s why we’ve created a state-by-state breakdown to help direct you to your applicable state’s COVID-19 resource pages. These resources contain up-to-date information on unemployment insurance benefits, as well as general FAQs, on other programs available during this time.
What do I need to do to help my employees that were partially or fully laid off (temporarily or permanently) apply for unemployment insurance?
Any employee who has been partially or fully laid off (temporarily or permanently) should be directed to your applicable state’s unemployment website, with instructions on how to file an unemployment claim and what information is required. Our state-by-state breakdown was created to help direct individuals to their applicable state’s COVID-19 resource pages. You can also visit the U.S. Department of Labor’s website for more information or review their COVID-19 Unemployment Recourses.
When partially or fully laying off (temporarily or permanently), it is important to remember that, when terminating an employee from the system, that the process is completed in a timely manner. This will help provide us with important information required to respond to unemployment claims timely and accurately. Such information includes the employee’s first and last day worked, job title, rate of pay and the reason for the separation.
Ensuring we have up-to-date contact information is also important when utilizing Paychex for administrative support with claims processing.
Is paid time off (PTO) considered disqualifying pay?
Disqualifying income varies by state. To determine what types of payments are considered disqualifying, please visit your applicable state’s unemployment insurance website.
Will the additional $300 per week from former President Trump’s $900 billion COVID-19 relief bill affect the unemployment assistance currently awarded to me by the state?
On December 27, 2020, former President Donald Trump signed a $900 billion federal COVID-19 relief bill which provided American’s earning under $75,000 a year with a $600 stimulus check. It also added an additional $300 per week of unemployment money for up to 11 weeks that is automatically added into state benefit checks or deposits. Unemployment coverage for contract and gig workers was also extended for up to 11 weeks.
Stay Supplied at the Paychex Store
The Paychex Store offers labor law posters, awards and recognition, payroll supplies, and resources for HR management, time and attendance, training, and workforce safety, such as:
- COVID-19 safety posters
- Social distancing signage
- Window clings
Look for Updates
Paychex is here, ready, and able to support you through the COVID-19 pandemic. Look for updates from us as new information becomes available.
For more about how you can respond to COVID-19 and other disruptive scenarios, please contact your Paychex representative, visit our Coronavirus Help Center, or reach out to us through one of the following support options.