Navigation

IS-2096 Deductions and Direct Deposit (Policy)

Human Resources

Release Date: 8/16/01

Policy

CNM Board Policy

Administrative Directive

Introduction

On each payday, employees receive an earnings and withholding statement that reflects the employees earnings and deductions.  Pay is distributed to employees either by paycheck or by direct deposit to a bank account.  Employees can elect to have their pay deposited directly into their personal checking or savings accounts instead of receiving printed paychecks.

1. Deductions

1.1 Earnings and withholding statements appear on each employees paycheck or direct deposit slip. Within these statements are the employees deductions for the current paycheck and year to date.  Deductions are categorized as either mandatory (deductions that must be taken out of the employees paycheck) or optional (deductions that the employee elects to have taken from the paycheck).

2. Mandatory Deductions for Employees

2.1 If the employee is a non income tax exempt employee (an employee who must pay Federal and State taxes), the following mandatory deductions are taken out of the employees paycheck: Federal taxes, Medicare,  OASDI (also known as Social Security), State taxes, and Workers Compensation.  See the Mandatory Deductions for Non Income Tax Exempt Employees chart.

Mandatory Deductions for Non Income Tax Exempt Employees

Deduction as it appears on paycheck

Deduction full name

FED TX

Federal Income Taxes

MEDICARE

Medicare

OASDI

Social Security

STATE TX

State Income taxes

W COMP

Workers Compensation


3. Mandatory Deductions for Income Tax Exempt Employees

3.1 For the purposes of this Administrative Directive, income tax exempt employees are those employees who do not have Federal taxes and State taxes deducted from their paychecks. Income tax exempt status is determined when the employee submits a W 4 form to payroll showing a reason for income tax exempt status.   Medicare, Social Security, and Workers Compensation are still mandatory deductions for income tax exempt employees.  See the Mandatory Deductions for Income Tax Exempt Employees chart.

Mandatory Deductions for Income Tax Exempt Employees

Deduction as it appears on paycheck

Deduction full name

MEDICARE

Medicare

OASDI

Social Security

W COMP

Workers Compensation


4. Mandatory Retirement Deductions

4.1 As a condition of employment at Central New Mexico Community College (CNM), all employees (except the ones listed in 4.1.1 and 4.1.2) are required to join the Educational Retirement Act (ERA) benefit plan and retiree healthcare systems.

4.1.1 The following employees are not required to pay into the Educational Retirement Act and retiree healthcare systems: student employees (also known as work study employees), substitute instructors, New Mexico educational system retirees, and employees working with a full time equivalency (FTE) of .25 or less per year.

4.2  If the employee is required to join the Educational Retirement Act benefit plan, the following mandatory deductions are taken out of the employees paycheck:

Mandatory Retirement Deductions

Deduction as it appears on paycheck

Deduction full name

ERA

Employee Retirement Plan

RET HEAL

Retiree Health


5. Optional Deductions

5.1 Optional deductions are deductions that the employee chooses to have withdrawn from the employees paycheck.  Examples of optional deductions include, but are not limited to:  life insurance, medical insurance, union dues, and automatic withdrawal donations to charity, if any. For more information on optional deductions, see IS- 2002 Faculty and Staff Insurance Benefits,  IS-2036 Flexible Spending Accounts,  IS-2048 Tax Deferred Annuities, and IS-2080 Collective Bargaining Agreement.

6. Options for Receiving Pay

6.1 Employees can elect to be paid with a printed paycheck or to have their pay deposited directly into their personal checking or savings accounts.

Printed Paycheck

6.1.1 Employees who elect to be paid with a printed paycheck receive their checks on designated paydays from the department timekeeper.

Direct Deposit

6.1.2 Employees who elect to have their pay deposited directly into their personal checking or savings accounts automatically have the pay deposited as directed on designated paydays.

6.1.2.1 Employees may elect to initiate the direct deposit method at any time and may discontinue at any time, either during employee orientation or at any time afterward. Initiating, changing or discontinuing direct deposit of pay may require a number of days to accomplish.  Employees should initiate, change or discontinue direct deposit as far in advance as possible.

6.1.2.2 Employees may allocate their paychecks for direct deposit into more than one account. For example, the employee may elect to have part of the paycheck deposited into checking and part into savings.

6.1.2.3 The employee is responsible for informing the Payroll department if any changes occur within the bank account receiving direct deposits.  These changes include closing the account or bank merger/acquisition.

7. Definitions

Income Tax Exempt

Employees who are excused from paying Federal and State taxes.  Income Tax Exempt status is determined when the employee submits a W-4 form to payroll showing a reason for exempt status.

Mandatory Deductions

Required deductions from an employees pay.  The employee cannot choose whether or not they are deducted.

Medicare

The Medicare program funds health care for people over the age of 65. Under certain circumstances, some disabled people under the age of 65 also qualify for Medicare.  For more information, visit the Medicare website.

Optional Deductions

Deductions the employee chooses to have taken from the pay.  Examples include, but are not limited to:  life insurance, medical insurance, and automatic withdrawal donations to charity.

Social Security

Federal taxes that supply the following benefits:  retirement, disability, family benefits, and survivors benefits.  For more information, visit the Social Security website.

Workers Compensation

Insurance protection for employees injured on the job.

 



Forms

Support Materials:

IS-2002, Faculty and Staff Insurance Benefits
IS-2050, Employee Retirement Plan (ERA)
IS-2036, Flexible Spending Accounts
IS-2048, Tax-Deferred Annuities
IS-2014, Employee Orientation
IS-2080, Collective Bargaining Agreement

Reference Materials: