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There are several upcoming changes that may impact employee leave and earnings for pay periods (PPs) at the end of 2022 and beginning of 2023, and/or may be of interest to them. The Interior Business Center (IBC) is requesting Servicing Personnel Offices, and Payroll Coordinators/Liaisons please share this updated information with all employees.
Section Categories:
(Some items may require employees to take action)
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Calendar Details and Information: Leave Year, Number of Pay Periods, Payroll Schedule Calendar, and Taxable Earnings Year
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Deductions: Benefits and Donations
- Payroll Changes and Pay Limitations
- Tax Related Deductions and Implications
- 2022 Tax Forms
Calendar Details and Information:
Leave Year
- The 2022 leave year ends PP 2023-01, December 31, 2022
- Employees in the six hour leave category will get their extra four hours in PP 2023-01, the last full PP of the calendar year.
- The 2023 leave year is from PP 2023-02, January 1, 2023, through PP 2024-02, January 13, 2024 (27 PPs)
- Employees in the six hour leave category will get their extra four hours for 2023 in PP 2024-01, the last full PP of the calendar year.
Number of Pay Periods
- There are 26 PPs in calendar year 2022.
- The final official pay date will be December 27, 2022.
- Calendar year 2023 will also have 26 PPs.
Payroll Schedule Calendar
Taxable Earnings Year
- The 2022 taxable earnings year is from PP 2022-01, beginning December 19, 2021, through PP 2022-26, ending December 17, 2022.
- The 2023 taxable earnings year is from PP 2023-01, beginning December 18, 2022, through PP 2023-26, ending December 16, 2023.
Deductions (Benefits and Donations):
Combined Federal Campaign (CFC)
- All Federal employees participating in the CFC are directed to one giving system.
- The Office of Personnel Management has contracted with the Give Back Foundation for employees to make CFC pledges.
- To sign up, select charities and set up new donor contributions for 2023, visit https://cfcgiving.opm.gov/welcome no later than January 14, 2023.
- According to 5 C.F.R. 950.701, payroll deductions will begin with the first PP after January 15, 2023, (PP 2023-04), for 26 PPs, and will end PP 2024-03.
Dental and Vision Benefits
- Dental and vision coverage authorized in 2022 automatically continues in 2023, though some premiums may change for 2023.
- For additional information, visit benefeds.com to view new rates, make open season changes, etc.
Federal Employee Health Benefits (FEHB)
- FEHB coverage authorized in 2022 automatically continues in 2023, though some plans and premiums may change for 2023.
- Coverage under a newly elected health plan is effective the first day of the PP beginning on or after January 1, 2023; this will be PP 2023-02.
- Enrollees will remain covered and receive the 2022 benefits of the previously elected plan until coverage under the 2023 new plan becomes effective.
- Employees in terminating or reduced coverage plans should make a new election during open season. Please refer to our October 28, 2022, User Group memo “Action Required: 2022 Federal Employee Health Benefits (FEHB) Open Season and Terminating Plans” for more information.
Federal Employees' Group Life Insurance (FEGLI)
Flexible Spending Accounts (FSA)
- Unless re-authorized by the employee, pre-tax deductions for the FSA Program automatically stop after PP 2022-26.
- For pre-tax FSA deductions to occur in 2023, new elections must be made during the Open Season from Monday, November 14 through Monday, December 12, 2022.
- For additional information and/or make open season changes, employees can go to FSAFEDS
Thrift Savings Plan (TSP) – Traditional and Roth Contributions
- In 2023, the maximum elective deferral limit for TSP contributions will be $22,500, up from $20,500 in 2022.
- Deduction changes for PP 2023-01 can be made now through EEX by entering “12/18/22” in the Future Effective Date field.
- EEX allows changes to the Effective Date up to 90 days in advance. Employees can change TSP deductions at any time in EEX at https://www.employeeexpress.gov
- The combined total of tax-deferred traditional and Roth after-tax contributions cannot exceed the elective deferral limit in any year.
- Unless changed or canceled by the employee, 2022 bi-weekly contribution amounts or percentages automatically carryover into 2023.
- Employees who reach the Internal Revenue Service (IRS) maximum contribution limit before the end of the year will not be able to have further employee contributions and may lose any government matching contributions for the rest of the year, if applicable.
Spillover Method for TSP Catch-Up Contributions (Formerly Thrift Catch-up Contributions (TCC) and Roth Savings Catch-up (RSC))
- Beginning January 1, 2021, the Federal Retirement Thrift Investment Board implemented a new method for catch-up contributions called the “spillover”.
- Spillover will apply to all active employees who are at least 50 years of age, or older, and exceed the IRS annual deferral limit.
- Employees will receive government matching contributions in the spillover method.
- Eligible employees will have contributions automatically count toward the IRS catch-up limit.
- Catch-up contributions can be made up to an extra $7,500 annually in 2023.
- Once the $22,500 elective deferral limit for TSP is reached, any additional contributions “spillover” into the extra $7,500 catch-up limit.
- Like in 2022, no elections will need to be entered into EEX.
- However, spillover contributions should be included with regular traditional and/or Roth contributions when making elections in EEX.
- Please refer to the ‘Thrift Savings Plan (TSP) – Traditional and Roth Contributions’ section above, regarding government matching contributions and when updates should be entered into EEX.
- The chart below provides two examples (dollar amount contributions) for calculating PP election amounts in EEX. In each scenario, the TSP Traditional Maximum contribution must be met before any catch-up contributions can “spillover”:
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Example 1: 2023 Maximum TSP Traditional Contributions and Maximum Spillover Contributions
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Contributions
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PP Dollar Amount Contribution
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Maximum TSP Traditional (Pre-Tax) contributions met:
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$ 22,500
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Maximum spillover catch-up contributions (Must meet TSP Traditional maximum prior to contributing to spillover):
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$ 7,500
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Total Maximum contributions allowed:
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$ 30,000
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26 PPs in 2023, in pp2023-26 this will be reduced to $1,150
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$1,154
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Effective date
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12/18/2022
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Example 2: 2023 Maximum TSP Traditional Contributions without Maximum Spillover Contributions
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Contributions
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PP Dollar Amount Contribution
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Maximum TSP Traditional (Pre-Tax) contributions met:
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$22,500
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Spillover catch-up contributions (Must meet TSP Traditional maximum prior to contributing to spillover – example shown is less than allowable maximum spillover contribution amount of $7,500):
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$ 3,500
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Total contributions:
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$26,000
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26 PPs in 2023
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$ 1,000
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Effective date
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12/18/2022
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Payroll Changes and Pay Limitations:
Aggregate Pay Limitation
- Office of Personnel Management’s (OPM) Fact Sheet can be viewed at Aggregate Limitation on Pay (opm.gov)
- As a reminder for 2023, the statutory limit on pay applies to most employees exempt from the Fair Labor Standards Act (FLSA) (see 5 U.S. Code 5307).
- Even though basic pay is never cutback, some allowances, differentials, bonuses, or awards may even cutback and be deferred to the following year.
- Retention, recruitment or relocation incentives authorized under 5 U.S. Code 5753 and 5754, which may cause employees to exceed the aggregate limitations on pay may also be reduced or suspended.
- The aggregate pay limitation is generally Level 1 of the Executive Schedule.
Annual Premium Pay Limitation
- OPM’s Fact Sheet can be viewed at Maximum GS Pay Limitations (opm.gov)
- As a reminder for 2023 the annual premium pay limits defined in 5 U.S. Code 5547(b) apply.
- For employees exempt from the FLSA, if regular pay projected for the year plus Title 5 overtime, night differential, standby pay, availability pay, administratively uncontrollable overtime, Sunday Premium, or Holiday worked reach the limits, no additional premium pay may be paid.
- Compensatory time may not be substituted for overtime that is not payable.
- The annual pay limitation is the greater of the annual rate of GS-15, step 10 for each locality, or the Level V of the Executive Schedule.
Leave and Earnings Statement (LES)
- Employees should carefully review their LES for any changes that would affect their pay.
- If there are any questions, please have them contact the IBC Customer Support Center (CSC), using the information provided in the “Contact Information” section at the end of this memorandum.
Payroll Changes
- New payroll changes will be implemented in PP 2023-02, including any authorized 2023 pay raise, if applicable.
Tax Related Deductions and Implications:
Form W-4 Claiming Exempt Withholding
- To continue an employee’s exemption from withholding in 2023, the IRS requires those claiming exemption to fill out a new Form W-4, Employee's Withholding Allowance Certificate, no later than February 10, 2023.
- If a new Form W-4 has not been entered into EEX or the FPPS between January 1 and February 10, 2023, the employee’s Federal withholdings status will be changed to the highest possible withholding. If action is entered after February 10, 2023, it may not update in time to avoid tax withholding for PP 2023-04.
- The IRS has not yet updated the 2023 Form W-4 but once available, it may be viewed at http://www.irs.gov/pub/irs-pdf/fw4.pdf.
- The IBC will soon update the Federal Income Tax Withholding Formula for wages paid in 2023; which may be viewed on our website at https://ibc.doi.gov/HRD/FedStateTerritorial. Before utilizing the formula, employees contributing pre-tax deductions should first subtract those amounts from their biweekly gross pay.
Occupational Privilege Tax
- Certain localities require an Occupational Privilege Tax be taken from employees in their jurisdiction.
- When working within a specific district, the Occupational Privilege Tax is levied.
- While some localities withhold the tax in the first full PP of the year, the actual deduction will depend on the locality’s withholding requirements.
State and Local Taxes
- To ensure taxes are being withheld from the correct state and/or locality, we encourage every employee to review their LES.
- If an employee notices taxes are being withheld for the incorrect state or locality, or if they are still being withheld for a city the employee no longer lives or works, they should contact their payroll liaison, personnel office, or the IBC CSC, using the information provided in the “Contact Information” section at the end of this memorandum, as soon as possible.
- For additional information related to tax withholding please refer to our September 22, 2022, User Group memo “Updated State, City and County Income Tax Withholding related to Official Duty Station.”
- The Payroll Office has limited capability to correct prior year tax errors, and 2022 errors not identified until 2023 may require the employee to file a tax return to recover taxes withheld for the wrong tax entity. Wages for non-taxing states are not reported on Form W-2s.
Social Security (OASDI) and Medicare Taxes
- The Social Security Administration increased the 2023 maximum earnings to $160,200; there is no wage base limit for Medicare tax.
- For 2023, the Social Security and Medicare tax rates remain the same for all wages, at 6.2% and 1.45%, respectively.
- Individuals with earned income of more than $200,000 pay an additional 0.9 % in Medicare taxes.
- The tax rates shown above do not include this additional 0.9 %.
- More information about these taxes can be found within the following document:2023 Social Security Changes - COLA Fact Sheet (ssa.gov)
Transportation (Commuting) Benefits
- The IRS has not yet announced the 2023 rates as they are contingent on legislation that has not been finalized. Once rates are available, they will be listed in the Publication 15- B (2023), Employer’s Tax Guide to Fringe Benefits
Voluntary Tax Allotments
- Since these allotments are remitted to the locality on the employee’s behalf, the amount of ‘estimated’ tax deductions withheld through a Voluntary Tax Allotment will be reflected on Form W-2 in Box 14 as item 8 - Estimated Local Tax.
- These amounts are only estimated.
- Reconciliation occurs when the employee files an applicable tax return with the locality.
2022 Tax Forms:
Form W-2
- The target date for access to view and print Form W-2, Wage and Tax Statement, in Employee Express (EEX) is January 14, 2023.
- Currently, only approximately 53% of active employees have elected electronic Form W-2s via EEX.
- To ensure the protection of Personal Identifiable Information (PII), please encourage employees to elect electronic W-2s in EEX prior to December 27, 2022.
- For all employees who did not elect to turn off the hard copy, a printed Form W-2 will be mailed to the employee’s address of record no later than January 31, 2023.
- Please have employees that are expecting a mailed Form W-2 verify the address listed on their latest electronic LES in EEX.
- To ensure receipt of the mailed Form W-2, any change of address requests submitted to the U.S. Postal Service must be processed no later than December 16, 2022.
Form 1095-C
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, will be available for viewing and printing in EEX no later than January 13, 2023.
- Currently, only approximately 38% of active employees have elected electronic Form 1095-C via EEX.
- To ensure protection of PII, please encourage employees to elect electronic 1095-Cs in EEX prior to December 23, 2022.
- For all employees who did not elect to turn off the hard copy, a printed Form 1095-Cs will be mailed to the employee’s address of record no later than March 2, 2023.
- For any questions about Form 1095-C, please visit: https://www.irs.gov/forms-pubs/about-form-1095-c
- Please have employees that are expecting a mailed Form 1095-C verify the address listed on their latest electronic LES in EEX.
- To ensure receipt of the mailed Form 1095-C, any change of address requests submitted to the U.S. Postal Service must be processed no later than December 16, 2022.
Contact Information:
If there are any questions, employees can contact the IBC Customer Support Center at 720-673-9958 (interim contact number) or by email at Payroll_Helpdesk@ios.doi.gov
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