3.0 - Payroll Procedures for Payments after Death

Subject:Payroll Procedures for Payments after Death
Source: Office of the University Controller (UCO)
Original Date of Issue: October 1990
Date of Last Revision: December 2021
Rationale: To outline the procedures for departments to follow concerning the death of an employee.
Procedure Upon learning of an employee’s death, the department (or campus) that formerly employed the decedent must immediately notify UCO Payroll of the employee’s death, and the following procedures should be used to process their final payment. No further payments should be processed in HRMS payable to the deceased employee. Final payments are processed by UCO using a Check Request in BUY.IU, made payable to the estate, following the appropriate approval process.
  1. The department (or campus) should remove all current pay period wages from the payroll voucher to avoid payment. 
  2. The department (or campus) will prepare and submit the normal termination documents (eDoc and (pdf)) to Indiana University Human Resources (IUHR) for final payout, including all terminal pay earn codes.
  3. To obtain the final payment, the family of the decedent should review How to Claim a Final Paycheck (pdf) procedures for making the final payment. The family must then complete and submit the following documents to UCO Payroll:
    1. Paycheck Claim (pdf)
    2. Affidavit of No Administration (pdf)
    3. W-9 Request for Taxpayer Identification Number and Certification (pdf)
  4. UCO Payroll receives the adjustment voucher for the final payment from the department (or campus), as well as the Paycheck Claim, Affidavit of No Administration, and W-9 tax form from the decedent’s family.
  5. If the decedent’s estate has not been opened, UCO Payroll will issue the payment following the completion of a 45-day waiting period. The 45-day waiting period will be calculated from the date of death. In accordance with Indiana law, if an estate is opened, and UCO Payroll receives the letters of administration or letters testamentary and the W-9 tax form, the 45-day waiting period will not apply.
  6. The termination payout will be approved by IUHR following normal procedures. The UCO Payroll Termination Coordinator will monitor and maintain all paperwork in UCO Payroll.
  7. UCO Tax will process the final payment on a Check Request including all wages, refunds, etc. due. Retirement contributions will be calculated and wages will be adjusted as needed. If an estate was opened, the check will be issued “to the estate of” the deceased. If an estate is not opened, the check will be issued to the claimant signing the Paycheck Claim (pdf) form. 
  8. Social Security and Medicare taxes will be withheld if the final payment is made in the same tax year in which the death occurred and will appear in boxes 3 and 5 of the employee’s Form W-2. If the final payment is made in the year following the date of death, social security and Medicare taxes will not be withheld and will not be reported in boxes 3 and 5 of the employee’s Form W-2. UCO Tax will update the decedent’s wages (DCD) accordingly in HRMS. 
  9. The check will be disbursed according to instructions indicated on the Paycheck Claim (pdf) form. At tax year-end, the university will issue a Form 1099 to the estate or person claiming the final paycheck.
Cross Reference:
Responsible Organization: Office of the University Controller (UCO)