[SchoolFinance] PFML question

Wed Jan 8 08:15:45 EST 2025

We had our first payroll last week.
I am still running ProFund. The calculation was pre-tax for Section 125 as
it should be, (so health insurance), but post-tax for 403(b)s, which it
should not be.
SUTA and FUTA are not an employee tax.

The PFML tax does not further reduce taxable wages, nor should it.

Stacie Field
Business Manager
RSU 16 - Poland, Mechanic Falls, Minot
207.998.2727 ext 102

On Wed, Jan 8, 2025 at 7:55 AM Lisa Harkin <lharkin at kitteryschools.com>
wrote:

> our auditors say post tax
>
> On Wed, Jan 8, 2025 at 7:32 AM Adam Hanson <
> ahanson at lewistonpublicschools.org> wrote:
>
>> Hi everyone,
>> After learning that ADS Profund's research led them to set up their new
>> deduction code for PML as pre-tax, I reached out to the director of the
>> PFML program for clarification. Based on the email he sent me below, we
>> will be changing our setup and withholding the deduction pre-tax. The
>> example that he gave is clear enough that I feel we can move ahead
>> with this as a pre-tax deduction and fall back on his answer if the IRS
>> ever questions it. Below is his response to me:
>>
>> "When calculating PFML wages – it is not “gross wages” but calculated
>> similar to State Unemployment Wages (also FUTA wages).  This means that
>> certain payment types are not included in subject payments.  The best
>> example is health insurance premiums to an employer sponsored plan are not
>> included in subject wages.  Employers should use IRS Publication 15 2025
>> Publication 15 <https://www.irs.gov/pub/irs-pdf/p15.pdf> with focus on
>> calculating FUTA wages when calculating what subject wages are (section 125
>> plans are mentioned).
>>
>>
>>
>> PFML premiums are then calculated on subject wages before taxes come out.
>>
>>
>>
>> The question of whether PFML premiums are themselves taxable – that is,
>> whether they are a pre-tax or a post-tax deduction, is not a question PFML
>> can legally answer – as it depends on the guidance and processed of the
>> IRS.   This is the amount of imputed taxable wages that an employer would
>> enter for other federal and state tax programs.
>>
>>
>>
>> An example.
>>
>>
>>
>> Someone makes $1000 a week and pays $100 health premiums towards an
>> employer sponsored plan.  Subject wages are $900 for PFML (ignoring that
>> there may be other subject wages to consider).  PFML premium is $4.50 (for
>> employee).   Then the question if taxable wages for other state and federal
>> tax programs becomes $900 or $896.50 is the question on taxability of
>> premiums (question #6 in our FAQ).
>>
>>
>>
>> We also have a new customer service line at 621-5024 if needed."
>>
>> On Fri, Dec 6, 2024 at 3:19 PM Adam Hanson <
>> ahanson at lewistonpublicschools.org> wrote:
>>
>>> After attending webinars, reading the latest rules and updated FAQ, this
>>> is how we are planning to proceed until we hear otherwise from the state or
>>> the IRS:
>>> 1. We will be treating the employee share of PFML deductions as
>>> "post-tax", so withheld on full gross pay, not reduced by any other
>>> deductions, even if they fall under a Section 125 agreement.
>>> 2. We will be including anything we otherwise treat as "taxable" wages
>>> in the 1% calculation. So that will include cash in lieu, travel stipends
>>> and cell phone stipends.
>>>
>>> FYI, I fully agree with everyone who has expressed their opinions about
>>> the insanity of this law, particularly the fact that it includes public
>>> school departments.
>>> We have Enterprise ERP (AKA Munis) software, and they have provided no
>>> guidance as to how we will produce our quarterly files for upload, or how
>>> we will exclude from the reports the employee groups to whom the law does
>>> not yet apply because of the October 2023 "temporary grandfathering" rule.
>>> They are "looking into it".
>>>
>>> Good luck to everyone.
>>>
>>> On Thu, Dec 5, 2024 at 10:27 AM Field, Stacie <sfield at rsu16.org> wrote:
>>>
>>>> Yes, that is what they are all saying.
>>>> But, it is not right to disregard IRS reduction agreements for the
>>>> employee portion.
>>>> That is my argument.
>>>>
>>>> Stacie Field
>>>> Business Manager
>>>> RSU 16 - Poland, Mechanic Falls, Minot
>>>> 207.998.2727 ext 102
>>>>
>>>>
>>>> On Thu, Dec 5, 2024 at 10:02 AM Deb Roberts <DRoberts at msmaweb.com>
>>>> wrote:
>>>>
>>>>> I was on a zoom meeting with Reggie presenting to our local Chamber
>>>>> this morning. I asked about deducting section 125 amounts before
>>>>> calculating the tax – his answer was to calculate the tax on gross wages
>>>>> before any taxes.
>>>>>
>>>>>
>>>>>
>>>>> Deb
>>>>>
>>>>>
>>>>>
>>>>> *From:* SchoolFinance <schoolfinance-bounces at maillist.informe.org> *On
>>>>> Behalf Of *Lisa Harkin
>>>>> *Sent:* Thursday, December 5, 2024 8:46 AM
>>>>> *To:* Moderated information sharing for school business managers <
>>>>> schoolfinance at maillist.informe.org>
>>>>> *Subject:* Re: [SchoolFinance] PFML question
>>>>>
>>>>>
>>>>>
>>>>> Thanks Stacie for the clarification about SUTA and FUTA being employer
>>>>> taxes.  Although a portion of FICA is employer, but we won't go there!
>>>>>
>>>>> This really is a bad situation.
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 3:41 PM Field, Stacie <sfield at rsu16.org> wrote:
>>>>>
>>>>> Yes, I looked at the Circular E, and pub 15-A and 15-B. Also spoke
>>>>> directly with Tim Applegate, and the IRS last week.
>>>>>
>>>>> I keep arguing you cannot tax an employee on Section 125 or 403(b)
>>>>> reduction agreements. Not getting anywhere.
>>>>>
>>>>> SUTA and FUTA are employER taxes, not employEE, so none of this
>>>>> matters.
>>>>>
>>>>>
>>>>>
>>>>> We have to honor reduction agreements, which are under IRS
>>>>> regulations.
>>>>>
>>>>> I do not believe the State of Maine can override the IRS.  I don't
>>>>> feel I have gotten anywhere. I am just hoping for a lawsuit down the road.
>>>>> If I can find an attorney willing to take it on, I'll start one.   My two
>>>>> cents, less .5% of course.
>>>>>
>>>>>
>>>>>
>>>>> Stacie Field
>>>>>
>>>>> Business Manager
>>>>>
>>>>> RSU 16 - Poland, Mechanic Falls, Minot
>>>>>
>>>>> 207.998.2727 ext 102
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 3:02 PM Lisa Harkin <lharkin at kitteryschools.com>
>>>>> wrote:
>>>>>
>>>>> OK, me again, last post I promise.
>>>>>
>>>>> Has anyone looked at the Circular E?
>>>>>
>>>>> Exempt from FUTA (ie PFML?)
>>>>>
>>>>> Government employment:
>>>>>
>>>>> 1. State/local governments and political subdivisions, employees of:
>>>>>
>>>>> a. Salaries and wages (includes
>>>>>
>>>>> payments to most elected and appointed officials). See
>>>>>
>>>>> chapter 3 of Pub. 963.
>>>>>
>>>>>
>>>>>
>>>>> AND
>>>>>
>>>>>
>>>>>
>>>>> Insurance for employees:
>>>>>
>>>>> 1. Accident and health insurance
>>>>>
>>>>> premiums under a plan or system for
>>>>>
>>>>> employees and their dependents generally or for a class or classes of
>>>>>
>>>>> employees and their dependents
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 2:34 PM Andrea Disch <adisch at msad11.org> wrote:
>>>>>
>>>>> Yes, Lisa, my apologies for not being clearer.
>>>>>
>>>>> It was clarified during yesterday's PFML portal webinar that PFML
>>>>> does not allow for the carve-out earnings exemptions that are available
>>>>> under unemployment.
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> Andrea Disch
>>>>> Business Manager
>>>>>
>>>>>
>>>>>
>>>>> Maine School Administrative District No. 11
>>>>> 150 Highland Avenue • Gardiner, Maine 04330
>>>>>
>>>>>
>>>>>
>>>>> 207-582-5346
>>>>>
>>>>> *aDisch at msad11.org <aDisch at msad11.org>*
>>>>>
>>>>> *www.msad11.org <http://www.msad11.org>*
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 1:12 PM Lisa Harkin <lharkin at kitteryschools.com>
>>>>> wrote:
>>>>>
>>>>> I heard that PFML has the same exemptions as SUTA and FUTA, so I am
>>>>> deducting Health and Dental from gross wages.
>>>>>
>>>>> Reading your reply again, you are talking about earnings, not
>>>>> exemptions to gross earnings, so Health exemptions are a completely
>>>>> different subject.  Apologies.
>>>>>
>>>>>
>>>>>
>>>>> Some volunteers get paid, oxymoron, I know.
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 10:59 AM Andrea Disch <adisch at msad11.org>
>>>>> wrote:
>>>>>
>>>>> MSAD 11 will be deducting PFML from all school board
>>>>> member compensation, as well.
>>>>> It was stated again at yesterday's meeting that PFML does not have the
>>>>> earnings exemptions that SUTA has, including school board members.
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> Andrea Disch
>>>>> Business Manager
>>>>>
>>>>>
>>>>>
>>>>> Maine School Administrative District No. 11
>>>>> 150 Highland Avenue • Gardiner, Maine 04330
>>>>>
>>>>>
>>>>>
>>>>> 207-582-5346
>>>>>
>>>>> *aDisch at msad11.org <aDisch at msad11.org>*
>>>>>
>>>>> *www.msad11.org <http://www.msad11.org>*
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 9:12 AM Coulombe, Jessica <
>>>>> jessica.coulombe at rsu4.org> wrote:
>>>>>
>>>>> Hello!
>>>>>
>>>>>
>>>>>
>>>>> A question I have is for School Board members. I am thinking that PFML
>>>>> wages would be subject to the PFML deduction., as we consider them
>>>>> volunteers that receive an honorarium stipend.  Your thoughts?
>>>>>
>>>>>
>>>>>
>>>>> Thanks
>>>>>
>>>>> Jessica
>>>>>
>>>>>
>>>>>
>>>>> On Wed, Dec 4, 2024 at 9:01 AM Andrea Disch <adisch at msad11.org> wrote:
>>>>>
>>>>> I have not received any specific guidance regarding but we are being
>>>>> told that there are few exceptions to PFML, fewer exceptions than for SUTA.
>>>>> My guess would be that if the wage flows through payroll, and you
>>>>> would withholdSUTA, you will also need to withhold PFML taxes.
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> Andrea Disch
>>>>> Business Manager
>>>>>
>>>>>
>>>>>
>>>>> Maine School Administrative District No. 11
>>>>> 150 Highland Avenue • Gardiner, Maine 04330
>>>>>
>>>>>
>>>>>
>>>>> 207-582-5346
>>>>>
>>>>> *aDisch at msad11.org <aDisch at msad11.org>*
>>>>>
>>>>> *www.msad11.org <http://www.msad11.org>*
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> On Mon, Dec 2, 2024 at 2:44 PM Krol, Gabrielle <
>>>>> gabrielle.krol at msad52.org> wrote:
>>>>>
>>>>> Good Afternoon,
>>>>>
>>>>>
>>>>>
>>>>> I am wondering if anyone has seen or heard any guidance on if we are
>>>>> imposing this tax to Cash in Lieu, or Travel stipends.  I may have missed
>>>>> this guidance.
>>>>>
>>>>>
>>>>>
>>>>> Thank you!
>>>>>
>>>>>
>>>>>
>>>>> --
>>>>>
>>>>> Gabrielle Krol
>>>>>
>>>>> Business Manager
>>>>>
>>>>> MSAD 52
>>>>>
>>>>> 486 Turner Center Road
>>>>>
>>>>> Turner, ME 04282
>>>>>
>>>>> 207-225-1006
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> --
>>>>>
>>>>> *Jessica Coulombe*
>>>>>
>>>>> Payroll Specialist
>>>>>
>>>>> Wellness Coordinator
>>>>> RSU 4
>>>>> 971 Gardiner Rd
>>>>> Wales, Me 04280
>>>>> 207-375-4273 ext 175  or Option 2
>>>>>
>>>>> fax:207-375-2522
>>>>> jessica.coulombe at rsu4.org
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> Confidentiality Statement
>>>>>
>>>>> This email and any files transmitted with it are confidential and
>>>>> intended solely for the use of the individual or entity to whom they are
>>>>> addressed.  This message contains confidential information and is intended
>>>>> only for the individual named. If you are not the named addressee you
>>>>> should not disseminate, distribute or copy this e-mail. Please notify the
>>>>> sender immediately by email if you have received this email by mistake and
>>>>> delete this email from your system. If you are not the intended recipient
>>>>> you are notified that disclosing, copying, distributing or taking any
>>>>> action in reliance on the contents of this information is strictly
>>>>> prohibited.
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> --
>>>>>
>>>>> Lisa Harkin
>>>>>
>>>>> Finance Manager
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> --
>>>>>
>>>>> Lisa Harkin
>>>>>
>>>>> Finance Manager
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> --
>>>>>
>>>>> Lisa Harkin
>>>>>
>>>>> Finance Manager
>>>>> _______________________________________________
>>>>> SchoolFinance mailing list
>>>>> SchoolFinance at maillist.informe.org
>>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>>>
>>>> _______________________________________________
>>>> SchoolFinance mailing list
>>>> SchoolFinance at maillist.informe.org
>>>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>>>
>>>
>>>
>>> --
>>> Adam Hanson
>>> Controller
>>> Lewiston Public Schools
>>> 36 Oak Street
>>> Lewiston, ME 04240
>>> Phone: (207) 795-4100, ext. 4051
>>> Fax: (207) 795-4177
>>>
>>> LEGAL CONFIDENTIAL: The information in this email, and any attachment,
>>> may contain legally privileged information. It is intended only for the
>>> attention and use of the named recipient. If you are not the intended
>>> recipient, you are not authorized to retain, disclose, copy or distribute
>>> the message and/or any of its attachments. If you received this email in
>>> error, please notify me and delete this message. Thank you.
>>>
>>> 1-855-938-0657 لترجمة هذه الوثيقة، يرجى الاتصال
>>>
>>> Haddii aad rabto in lagu turjumo warqadani, fadlan soo wac 1-855-938-0657
>>>
>>> Pour vous faire interpréter cet email, prière d'appeler
>>> le 1-855-938-0657
>>>
>>> Para receber uma interpretação deste email, faz favor de ligar
>>> para 1-855-938-0657
>>>
>>> For interpretation in Kiswahili (Swahili), Shqip (Albanian), Farsi,
>>> Kreyòl Ayisyen (Haitian Creole), 普通话 (Mandarin), ਪੰਜਾਬੀ(Punjabi), and
>>> Русский (Russian), please call 1-855-938-0656
>>>
>>> For interpretation in Español (Spanish), Tiếng Việt (Vietnamese), and
>>> Ikinyarwanda (Kinyarwanda), please call 1-855-938-0657
>>>
>>> For interpretation of this document in other languages, please call
>>> (207) 795-4103
>>>
>>>
>>
>> --
>> Adam Hanson
>> Controller
>> Lewiston Public Schools
>> 36 Oak Street
>> Lewiston, ME 04240
>> Phone: (207) 795-4100, ext. 4051
>> Fax: (207) 795-4177
>>
>> LEGAL CONFIDENTIAL: The information in this email, and any attachment,
>> may contain legally privileged information. It is intended only for the
>> attention and use of the named recipient. If you are not the intended
>> recipient, you are not authorized to retain, disclose, copy or distribute
>> the message and/or any of its attachments. If you received this email in
>> error, please notify me and delete this message. Thank you.
>>
>> 1-855-938-0657 لترجمة هذه الوثيقة، يرجى الاتصال
>>
>> Haddii aad rabto in lagu turjumo warqadani, fadlan soo wac 1-855-938-0657
>>
>> Pour vous faire interpréter cet email, prière d'appeler
>> le 1-855-938-0657
>>
>> Para receber uma interpretação deste email, faz favor de ligar
>> para 1-855-938-0657
>>
>> For interpretation in Kiswahili (Swahili), Shqip (Albanian), Farsi,
>> Kreyòl Ayisyen (Haitian Creole), 普通话 (Mandarin), ਪੰਜਾਬੀ(Punjabi), and
>> Русский (Russian), please call 1-855-938-0656
>>
>> For interpretation in Español (Spanish), Tiếng Việt (Vietnamese), and
>> Ikinyarwanda (Kinyarwanda), please call 1-855-938-0657
>>
>> For interpretation of this document in other languages, please call (207)
>> 795-4103
>>
>> _______________________________________________
>> SchoolFinance mailing list
>> SchoolFinance at maillist.informe.org
>> http://maillist.informe.org/mailman/listinfo/schoolfinance
>
>
>
> --
> Lisa Harkin
> Finance Manager
> _______________________________________________
> SchoolFinance mailing list
> SchoolFinance at maillist.informe.org
> http://maillist.informe.org/mailman/listinfo/schoolfinance
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://maillist.informe.org/pipermail/schoolfinance/attachments/20250108/dcdb6c61/attachment-0001.htm>