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Date: August 4, 2016

Bulletin Number: 1497

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Subject Retroactive Dependent Care Advantage Account (DCAA) New York Dependent Care Employer Contribution Benefit for Employees Represented by the Public Employees Federation (PEF)

Purpose To notify agencies of the reinstatement of the non-taxable benefit and of adjustments that may be made to DCAA payroll deductions for eligible PEF employees.

Affected Employees

Any employee represented by Bargaining Unit 05 (PEF) who enrolled in the Dependent Care Advantage Account during or after the Open Enrollment period with a current job status of Active or Paid Leave, regardless of current bargaining unit. 

Background

Due to no contract in place as of January 1, 2016, employees represented by PEF were not eligible for deduction code 420, NY Dependent Care Contribution, which is the Non-Taxable Employer Contribution Benefit.  As a result of the recent ratification of the one (1) year PEF contract, certain PEF represented employees are now eligible for this benefit.

Effective Date(s) Administration Paychecks dated August 24, 2016
Institution Paychecks dated September 1, 2016

Eligibility Criteria At the time of enrollment in the DCAA, employees must have been represented by BU 05, must be currently enrolled in the DCAA and have a current Job Status of Active or Paid Leave to receive the retroactive Non-taxable Employer Contribution.

PEF represented employees who enroll in the Dependent Care Advantage Account with an eligible Change In Status (CIS) event for the remainder of the 2016 plan year will also be eligible for the non-taxable benefit.

Agency Actions The DCAA vendor, Fringe Benefits Wage Works (FBWW), will be sending a notification letter to all affected employees.  Agencies should direct affected employees to review notices available at the GOER website (http://www.goer.ny.gov/) and to visit the Flex Spending Account Website (http://www.flexspend.ny.gov/) for further information.

OSC Actions

As a result of the recent ratification of the one (1) year PEF contract, employees who are currently enrolled in the Dependent Care Advantage Account will have the Non-taxable Employer Contribution benefit automatically applied to their account for the 2016 plan year.

PEF represented employees who enroll in the Dependent Care Advantage Account with an eligible Change In Status (CIS) event will now be eligible for the Employer Contribution for the remainder of the 2016 plan year.

Current DCAA business rules state that the Employer Contribution is based on the participants’ salary that was in force at the time of Open Enrollment.  This is without the 2% raise that was negotiated as part of the PEF settlement.

The Non-Taxable Employer Contribution counts towards the $5,000 annual IRS pre-tax limit. The employee’s annual election is not affected by the addition of the Employer Contribution. However, the employee’s own bi-weekly deductions will be adjusted accordingly. The employee’s annual elected deduction amount (Goal Amount) will be reduced by the amount of their Employer Contribution and the remainder of their bi-weekly deductions will be adjusted accordingly so as not to exceed their annual election (Goal Amount). In certain situations, this may involve a refund of employee deductions. 

OSC will automatically update employee deductions, provide Employer Contributions and refund eligible employees as determined by the Governor’s Office of Employee Relations (GOER) and FBWW.  These updates and refunds will be provided to OSC by FBWW using an electronic input file. It is the goal of FBWW to perform all updates and refunds in the same paycheck wherever possible. 

Tax Implications The total Dependent Care amount (Dependent Care deduction plus Employer Contribution) will be reported in Box 10 Dependent Care Benefits on the employee Form W-2.  Amounts in excess of the $5,000.00 IRS pre-tax limit is taxable and will be included in Boxes 1, 3 and 5 of the Form W-2.

Questions Questions regarding the retroactive agreement may be directed to the GOER website at http://www.goer.ny.gov. Employee questions regarding their specific deduction, Employer Contribution or refund should be directed to the Flex Spending.