Introducing 2% Shareholder Validation

We’ve added a new set of validations to help ensure accurate payroll calculation and processing for all 2% shareholders in our system. Individuals who hold more than 2% of outstanding stock of a corporation are not permitted to receive pre-tax benefits such as Section 125 medical benefits (see here), and need to be designated as such via a company-defined attribute. The new set of validations reduce the need for corrections and will include:

• Employees can only be marked as 2% shareholders with an effective start date at the beginning of a calendar year
• Employees that have an active pre-tax health benefit associated with them cannot be marked as a 2% shareholder unless their pre-tax health benefits are either deleted or ended before their effective start date as a 2% shareholder
• When uploading historical payrolls, 2% shareholder earnings cannot be created for employees that are not 2% shareholders