Central Payroll Service Agreement
The Diocesan Central Payroll Program was created to serve our congregations by providing an economical payroll service process. For the fee of $104 annually per employee, we prepare all direct deposits, file quarterly 941 reports, deposit payroll taxes and prepare W-2s at year-end. Basically, if all of your employees are on this program, you simply send money to the diocese twice a month and you have no other payroll responsibilities.
In addition, employees participating in Central Payroll have the ability to take advantage of the Diocese of Maine’s Flexible Benefit Plan (Download the Group Dynamic Enrollment Form here) which includes – pre-tax medical/dental insurance premium deductions and medical/dependent care pre-tax deductions (Section 125 Cafeteria Plan.) There are additional costs to participate in the cafeteria plan. (See below.)
The Central Payroll Program is operated by the diocese as a payroll service to the congregations with the understanding that:
- Each participating church reimburses the diocesan office for all clergy and lay salaries and the employer’s share of lay FICA (Social Security and Medicare) tax (7.65%) disbursed on its behalf, such reimbursement being received before any payroll will be issued.
- Each participating church will pay the Diocesan office $4.00 per payroll direct deposit.
- The cost of participating in our cafeteria plan is an additional $2.77 per pay period per employee per account. In other words, if your employee wants a medical reimbursement account, the annual cost to the congregation is $66.56. This fee is not kept at the diocesan office, but paid directly to Group Dynamic, the third party administrator of the reimbursement accounts.
Notice of Change
Written notice of all changes is required. [Email is fine.] It is necessary that the payroll department be informed of all payroll changes: salary increases, new employees, terminations, changes in status, etc. All such notices should be received at the diocesan office not sooner than 30 days or later than 7 days before the effective date. The diocesan office assumes no responsibility for overpayment to any person unless written notice has been received 7 days in advance of the day the pay period ends. A notice of change received after a payroll is issued will not be processed until the next payroll is issued. Payroll adjustments can be retroactive. View and download the Central Payroll Enrollment/Change Form here (pdf).
I-9 and W-4 Withholding Forms and Instructions
Federal and state withholding forms FED W4 and ME W4 are required for all new employees or employees wishing to change their withholding status. All new employees, including clergy, must complete the W-4 forms. If a clergyperson does not want federal taxes withheld, he/she should write “no withholding requested” on Line 7 of the FED W-4, sign and date the form. Please make a similar notation on the state ME W-4 form.
Federal and state withholdings will be calculated on the basis of an individual’s withholding status (single, married), the number of exemptions listed on the Form W-4, and the salary paid by the church without regard to other income. Persons requiring additional withholding are advised to include the additional amount on the W-4.
As clergy will be issued W-2s at year-end, they are considered employees of their congregations for Federal Tax purposes. As employees, they may elect to have federal and state income taxes withheld by filing a W-4 form – this is considered as voluntary withholding but can eliminate the need for quarterly filing if the correct amount of withholding is requested.
Employment Eligibility Verification (Form I9) must be completed for each employee.
We require direct debit – a program where congregations can authorize the diocesan office to debit their checking account for the exact amount of their payroll on the same day that payroll is processed. This avoids the worry of making sure the check is mailed in enough time to arrive here before the deadline. We have many satisfied congregations using this service and strongly suggest enrolling to use this process.
Employee Direct Deposit
We strongly suggest that all employees to be enrolled in direct deposit. Complete request an Employee Direct Deposit Enrollment Form and send to the diocesan office.
FICA Taxes (Social Security and Medicare)
a. LAY FICA
It is the responsibility of every employer to withhold social security taxes from the wages paid to each (lay) employee in excess of $100.00 per calendar year. The rate for social security tax will be 7.65% for lay employees. This tax consists of 6.2% for Social Security and 1.45% for Medicare coverage.
b. CLERGY FICA – FICA is part of the minimum total compensation amount set by resolution at Convention.
For purposes of FICA taxes, clergy are considered to be self-employed and, therefore, subject to a 15.30% rate. According to Canon, clergy must be reimbursed for 1/2 of the self employment tax (7.65% – which is comparable to the employer’s portion of lay FICA tax). Calculate the FICA reimbursement as follows:
- WITH Rectory:
(Salary + fair rental value* of Rectory + utilities) X .0765 = FICA reimbursement
* = Fair Rental Value = what it would cost someone in your area to rent the Rectory. The IRS may check this rental value, so be sure to estimate the fair rental value. It is recommended that you obtain a professional opinion of this value from a realtor or other qualified individual.
- WITHOUT Rectory:
(Salary + Housing) X .0765 = FICA reimbursement
This amount should be recorded on Line B of the Payroll Enrollment/Change Form.
- WITH Rectory:
We will be remitting payroll bi-weekly. Find the payroll schedule and associated deadlines here. In order for pay to be remitted promptly to the employee, funds MUST be received in the diocesan office by noon of the deadline listed.
Pay Statements and W-2s
Go to https://login.adp.com/welcome to sign-in to your ADP account to view pay stubs. If you have forgotten your login information, select “Forgot User ID”. If you’re a new user, click on “Get Started” at the bottom of the screen.
Employee Contribution of Insurance Premiums
If your employee has medical/dental insurance premiums withheld from their paycheck, a check in the amount of the total withheld will be sent from the diocesan office to the church on a monthly basis. Insurance premiums will continue to be paid by the congregation.
Employee Contribution to Pension Funds
Employees may contribute to many qualified 403(b) pension programs provided the plan has a provision to accept contributions from the Diocese of Maine. These contributions will be deposited into the employee’s account bi-monthly.
Dependent Care and Medical Reimbursement Account Withholding
These amounts will be sent to Group Dynamic, Inc. by the diocesan office after each payroll for credit to the employee’s account. These amounts may not be changed during the plan year unless you have a qualified family status change. It is also important to note that monies set aside in Section 125 Cafeteria plans must be used for qualified expenses or the money is non-refundable.
Hourly employee payroll information is due to the diocesan office no later than noon on the Monday of a payroll week. Earlier submission is always appreciated. Please email.
Payment for payroll including hourly employees is a little more complicated. The most convenient and accurate way for it to be handled is using the direct debit program where the Diocese of Maine debits your checking account for the exact amount of your payroll at the same time that we process direct deposits.
If you have any questions, please don’t hesitate to be in touch with us via email.