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  • Adoption Assistance Program
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An adoption assistance program is a separate written plan of an employer under which the employer provides employees with adoption assistance.

Adoption assistance plan benefits can also be provided under a cafeteria plan (section 125 plan). Thus, employees may elect to make contributions for this on a pre-tax basis.

The type of adoption assistance provided by the employer is treated differently than Adoption Assistance Benefit Plans set up as Section 125. The type provided by the employer involves a cash payment made to the employee to cover the expenses of an adoption. If this type of adoption assistance is in place, the district must pay the employee the money through payroll so the payment is reported correctly. These payments should be made to the employee through UPDCAL using a pay type of NC2. These payments are reported in the following manner:

  • Exempt from Federal taxation
  • Exempt from Ohio taxation
  • Not exempt from Medicare taxation
  • Not exempt from ODJFS wages
  • Exempt from SERS/STRS

The type of cafeteria plan for adoption assistance is slightly different than other types of cafeteria plans supported by the software. The type for adoption assistance has a cash value and is treated as wages for medicare taxation purposes, where other cafeteria plans are not.

The USPSDAT/DEDNAM program allows you to determine whether or not the Section 125 plans in place at your district are treated as wages or not. By default, all existing Section 125 plans will be treated as the non-wage type. When running DEDNAM, you will note two options for the Section 125's. If necessary, districts should contact their legal advisors for clarification as to whether or not their plan is to be treated as wages.

The USPSDAT/DEDNAM program also allows you to enter in a deduction type of "ADOP" for those Section 125 plans set up for adoption assistance. This change will cause CALCPAY to treat section 125 plans correctly. The "ADOP" plan types will be handled in the following manner:

  • Exempt from Federal taxation
  • Exempt from Ohio taxation
  • Not exempt from Medicare taxation
  • Not exempt from ODJFS wages
  • Not exempt from SERS/STRS

Under both plans, the amount of the adoption assistance will be placed on the adoption assistance field on the 001 record. That total amount is then placed in Box 13 of the W2 form, with a code of "T" by W2PROC.

The QRTRPT program will clear the adoption assistance field when clearing for the calendar year-end.

To properly set up section 125 adoption assistance plans, a district must add the DEDNAM record as an ADOPT Deduction Type and flag it as a section 125 treated as wages Annuity Type.

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