Spring Cleaning Your HR Records

Whether it looks like it outside or not, spring officially arrived on March 20. While we normally associate this change in season to spring cleaning our homes, it is also a good time to spring clean the company’s records.

How long should your company keep certain records?

• ERISA 107 requires anyone who files certain information (e.g., Form 5500) should keep records (COBRA, as well) for six years from the filing date, which means the records need to be kept for eight years.
• Internal Revenue Code states that employers who maintain a fringe benefit plan should retain records for four years from the tax filing date, for a total of five years.
• Tax records should be kept for three years from the tax filing date, four years in total.
• FMLA paperwork should be kept for three years.
• HIPAA records should be kept for six years.
• Medicare Part D and RDS records should be kept for six years.

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Important Dates to Remember

The following checklist provides insurance agents/brokers, employers and benefits and payroll professionals key upcoming dates and deadlines related to health benefits. This reminder list does not constitute all of the deadlines applicable to employers and some deadlines may be different based on variations in plan year or plan design.

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State FUTA Credit Reductions and Minimum Wage Increases

The last 60 days of each year present two predictable payroll changes: FUTA credit reductions and minimum wage increases. Recent announcements have clarified what those changes will be.

FUTA Credit Reduction States

Here is a summary of the 18 states (plus the U.S. Virgin Islands) with a credit reduction because they failed to repay outstanding federal loans by the November 10, 2012, deadline: 

• First year, employers in these three states will pay an increase of .3% in FUTA tax (maximum $21 per employee):  Arizona, Delaware and Vermont.
• Second year, employers in these 14 states will pay an increase of .6% in FUTA tax (maximum $42 per employee):

Arkansas	California	Connecticut	Florida
Georgia	Kentucky	Missouri	Nevada
New Jersey	New York	North Carolina	Ohio
Rhode Island	Wisconsin

• Third year, employers in Indiana will pay an increase of .9% in FUTA tax (maximum $63 per employee)
• The Virgin Islands extra credit reduction is 1.5%.
• These states dropped off the list for 2012 after being on the list for 2011:       

Illinois	Michigan	Minnesota	Pennsylvania
South Carolina	Virginia

Employers pay FUTA taxes at 6% on the first $7,000 of covered wages for each employee in a calendar year. This tax may be offset by credits of up to 5.4% (i.e., the “normal credit”) against FUTA tax liability for amounts paid to a state unemployment fund. A .3% credit would reduce that credit to 5.1%, thus making the net FUTA rate .9% (i.e., 6.0% – 5.1%). Affected employers must pay the additional taxes by January 31, 2013.

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