Item 877 - Lump Sum Pay Deferral

(PPT Line G Item)

This code is entered only when a separating employee has requested to defer payment for lump sum separation pay (vacation, holiday, CTO or sick leave, if entitled) to the following calendar (tax) year.

 

This item was not in use from 10/23/2001 through 10/15/2002. It was reinstated per HR/EHDB 2002-03. For additional information, refer to the technical letter on the Systemwide Human Resources web site.

 

The procedure for deferring pay is campus controlled. Exercise particular care when the employee has mandatory and voluntary payroll deductions.

 

Coding:

On line G enter: 877 / Y

Example:

877 Y

Audits:

  1. Only the portion of leave that extends beyond the November pay period (in the same year as the separation) can be deferred and issued in the following calendar year.

  2. Final Settlement payments cannot be deferred.

  3. If lump sum pay is to be issued next year, and

  1. Separation date is prior to December:

  • Process separation, but do not enter Item 877. Enter only the lump sum to be paid through November pay period in Item 621 - Lump Sum To Be Paid. Keep a pending file.

  • In January, process a SxxC and enter total lump sum in Item 621 Enter Item 877 = Y.

  1. Separation date is in December, but prior to the end of the pay period:

    • Process separation, but do not enter Item 621 or Item 877.

    • In January, process a SxxC and enter total lump sum in Item 621. Enter Item 877 = Y.

More Info:

  1. Employees must submit a written election to defer lump sum separation pay a minimum of 5 days prior to the effective date of their separation.

  2. The following deductions can be withheld from deferred lump sum payments:

  • Deferred Compensation (DC)

  • Tax sheltered Annuity (TSA)

  • Part-time, Seasonal, Temporary (PST) retirement deductions

  1. Employees may elect to contribute some or all of the deferred payment to their 401(k), 403(b) or 457 plan account. Refer to technical letter HR/EHDB 2002-03 on the Systemwide Human Resources web site for additional information.