3079.1 Processing a Relocation Stipend Procedure

Procedure #3079.1; Rev.: 1 (Effective Jan. 1, 2023)
Related Policy: UW-3079 Relocation Policy
Functional Owner: Accounting Services, Business Services
Contact: Expense Reimbursement Program Manager – Allie Watters, expensereimbursement@bussvc.wisc.edu, (608) 263-3525; OHR Payroll – payroll@wisc.edu

Procedure statement
Who is affected by this procedure
Procedure
Contact roles and responsibilities
Definitions
Related references
Revisions

I. Procedure statement

The University of Wisconsin–Madison allows units to pay relocation stipends for new and presently employed personnel assigned to new locations by transfer or promotion, in accordance with IRS regulations. Relocation stipends may be processed via the Human Resource System (HRS/Payroll) or the Shared Financial System (SFS / E-Reimbursement). This procedure documents steps to complete either payment option.

II. Who is affected by this procedure

Employees who are awarded a relocation stipend; administrative staff who process payroll or financial transactions; Divisional Business Officers and others who have approval authority.

III. Procedure

1. Processing a Relocation Stipend via Payroll
  Relocation stipends may be processed via payroll after an employee’s start date using the workflow for additional pay. Appropriate documentation should be provided for the payment. Documentation is not stored in the Human Resource System (HRS), so all supporting documentation must be retained outside of HRS by the unit for audit purposes. To get started, sign into HRS.
  1. Navigate to Payroll for North America > Employee Pay Data USA > Workflow Addl Pay Create.
  2. Click the Add a New Value tab.
    1. Empl ID – You can enter an additional pay record for both active and inactive employees.
    2. Empl Record – The empl record needs to be entered. If employees have/had more than one position at a time this number will tie the payment to the correct record.
    3. Earnings Code – Use earnings code RRE – Relocation Reimbursement
    4. Effective Date – This date defaults to today’s date. Update it to correspond to the “Begin Date” of the pay period in which the payment was earned. This can be in a prior, current, or future pay period. Refer to the UW Payroll Calendar for pay period begin dates.
      Note: If the Empl Rcd is a new appointment and the employee was hired in the middle of that pay period, enter the effective date equal to their start date and click Enter.
  3. Click the Add button.
  4. You will be taken to the Additional Pay entry page, and the Empl ID, Empl Record, Earnings Code, and Effective Date information you entered on the previous page will be brought in. Enter the appropriate information for the lump sum payment in the fields below:
    1. Addl Seq Nbr: Enter a 1 in this field.
    2. End Date (Optional): Enter an end date for the payment. The best practice is to use an end date equivalent to the last day of the pay period in which the last payment should occur.
    3. Earnings: Enter the dollar amount to be paid to the employee each pay period.
    4. Goal Amount: Enter the total dollar amount you want to pay the employee.
      1. For example, a one-time payment of $100 is accomplished using a matching Earnings and Goal Amount. If five equal payments of $100 were the result being sought, the Earnings should be entered as $100 and the Goal Amount should be entered as $500.
      2. Relocation stipends are taxable and may be split between multiple pay periods to reduce the tax impact from one large payment.
      3. It is best practice to enter a goal amount for both one-time and multi-period payments alike. If no goal amount is entered, the nightly load job will consider the payment to be multi-period, even if it is not, and will load the payment to the Create Additional Pay page. If this occurs after pay sheets are created, it is possible that the payment will not pay on the intended paycheck.
      4. If content is entered in both the Goal Amount and the End Date fields, the payments will stop at whichever occurs first.
    5. OK to Pay: This field will default to checked, indicating the payment should be paid on the employee’s on-cycle check. If you are entering a record that will stop a payment, you will need to uncheck this box.
    6. Applies to Pay Periods: Validate the applicable check boxes are checked. “First”, “Second”, and “Third” boxes correspond to the A, B, and C payroll designations, respectively.
    7. Description: Enter comments regarding this payment. Approvers will be able to view these comments when approving the payment. This is a free form field and is required to submit the additional pay record.
  5. Click the Submit button.
  6. The submitted record will now update to a Workflow Status of Submitted and a Workflow Approval ID will be assigned to the record. Each additional pay entry will have a unique Workflow Approval ID. Additionally, the approver workflow will now appear at the bottom of the page showing the assigned approvers at each level and the status of each approval.
2. Processing a Relocation Stipend via e-Reimbursement
  Relocation stipends may be processed prior to an employee’s start date using a non-employee profile or after their start date utilizing their employee profile.
  To get started, employees/alternates must sign into the Shared Financial System (SFS), click the Expenses tile, then click Create Expense Report. If acting as an alternate for another traveler, click the drop-down arrow next to the employee’s name in the upper left corner of the screen, then select Change Employee. Select the appropriate employee from the resulting list and proceed to the next step.
  1. General Information: The first page is the General Information page, also commonly referred to as the header information. Information entered here applies to the entire expense report.
    1. Business Purpose – Choose Relocation
    2. Default Location – Choose the employee’s headquarter city (typically Madison, WI)
    3. Reference – Choose Not a Travel Related report.
    4. Attachments
      1. Attach relocation stipend authorization letter or equivalent form. This letter or form must include the following information: name of relocating employee, reason for the move, position, specific amount of the standard relocation stipend, and if the employee/ new hire is eligible for a supplemental stipend.
    5. Justification
      1. Example: Relocation stipend for [employee name] to relocate from [origin] to [destination] on [date of relocation – MM/DD/YY] to assume the role of [position].
        
        The relocation date should be included to ensure the relocation stipend is made no more than 30 days in advance of the employee’s actual relocation date, per UW-Madison relocation policy.
  2. Expense details: This section is where users enter the details of their expenses.
    1. Choose Add expense lines from the Expense Report Action drop-down menu.
      1. Choose the Expense Type Relocation-Stipend for the expense.
        
        Description: Enter “Relocation” or preferred information
        
        Reimbursement Method: Select “Personal Funds”
        
        Amount: Enter the stipend amount on the authorization letter or equivalent form. Note: In accordance with IRS regulations, this stipend payment is considered taxable income and subject to applicable income and employment taxes. The amount entered will be offset by required withholding (typically 30%), and the relocating employee will receive the resulting net payment.
        
        Enter Originating Location [ORIGIN]
        
        Enter Expense Location [DESTINATION]
    2. Click the (+) Add button to add an expense line.
      1. Choose the Expense Type E-Re Estimated Withholding
        
        Description: Enter “Required withholding” or preferred information
        
        Reimbursement Method: Select “Personal Funds”
        
        Amount: Manually calculate the withholding amount by multiplying the “Relocation-Stipend” amount by 0.30. (i.e. $10,000 x 0.30 = $3,000). The amount should be entered as a negative amount (i.e. -3,000.00). Click “Save” in the upper right-hand corner of the screen.
        
        Note: a red-flag warning will appear indicating “Negative expense amount – Credit reference information required.” Click the box Credit Reference Required in the Section “Exception Comments” at the bottom of the page. Enter the following text: Required e-Reimbursement withholding.
  3. Click Review and Submit – Alternates and travelers must ensure the accuracy of the expense report prior to submission.
    1. Expense Report Summary – Note the amount due to the Employee is the relocation stipend amount less the withholding.
    2. Click Submit.
      1. Current UW employees must submit their own expense reports.
      2. Alternates can submit expense reports on behalf of non-employees and recently-terminated employees.
  4. Payment
    1. Employee Profile
      1. Payment will be made via the payroll method of payment on file. If direct deposit information has been entered, payment will be made via direct deposit. If no direct deposit information is on file, a system check will be issued to the address on file, usually the office address. System checks are mailed within 2-5 business days of payment, and ACH deposits take up to 3-5 business days to post. E-Reimbursement payment is separate from payroll processes and will not occur on a paycheck direct deposit payment.
    2. Non-employee Profile
      1. The default payment method for non-employees with addresses within the U.S. and Canada is a mailed check. Check pickup at 21 N. Park Street is also an option; email expensereimbursement@bussvc.wisc.edu to arrange for the relocating employee to pick up their check at the Division of Business Services. Wire payment is required for non-employees with addresses outside the U.S. and Canada.

IV. Contact roles and responsibilities

Relocating employee: Responsible for understanding and complying with relocation policy and procedure.
Employing Department: Responsible for communicating relocation policy and procedures to employees; relaying tax withholding information; providing information about household moves and directing employees to Purchasing Services and Property Control for business and laboratory equipment moves; and setting up the new employee profile as soon as the offer is accepted and finalized
Approving Authority: e-Reimbursement approvers, auditors and Additional Pay Approvers – Responsible for reviewing relocation expenses and withholding entries and ensuring funding, supporting documentation, and justification are sufficient to pass audit
Tax Compliance: Responsible for monthly tax compliance reporting for relocation expenses
Additional Pay Enterer: Responsible for entering the Relocation Stipend in HRS and tracking the stipend through the approval process and payment

V. Definitions

Approving authority – Chancellor, Vice Chancellor, or delegated division dean or director who approves expenses for relocation or temporary work assignments.
Authorization letter – A letter specifically outlining and approving university funding and amounts for relocation stipends.
Employee – Any individual who holds a faculty, academic staff, university staff, or limited appointment at UW–Madison.
Relocation Stipend – Lump-sum, tax-reportable payment to employee for relocation costs.

VI. Related references

VII. Revisions

Procedure Number	3079.1
Date Approved	Jan. 1, 2023
Revision Dates	N/A

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