E-7-8 Relocation/Moving Allowance for Employees

I. Purpose

To govern payments made to a new employee when a relocation/moving allowance would serve as a significant recruiting tool to help offset the new employee’s personal costs of relocation to work at the University  and to ensure departments communicate tax implications to employees and comply with state and federal tax laws.

II. Definitions

• Domicile – A person’s fixed, permanent, and principal home for legal purposes.
• Relocation – A change in residence of 50 or more miles from most current permanent domicile that involves moving household goods and personal effects from one location to another primary work location required for their UK work assignment. 
• Relocation/moving allowance – An allowance for relocation/moving, including house hunting. It should not exceed 10% of the employee’s annual base salary or $17,500, whichever is greater. May be remitted as a one-time payment or multiple payments.
• Temporary housing allowance – An allowance for temporary housing that must not exceed $1,500 per month for a maximum of three months.
• Offer Letter – The signed and executed document specifying the amounts for relocation/moving allowance and temporary housing allowance. This executed letter is provided to Human Resources Compensation before any payment is processed. 

• Payment – The payment is treated as wages and paid through the payroll process. The amount the employee will receive will be net of applicable taxes (e.g., income taxes, Social Security, Medicare and other applicable taxes) which are deducted from the total amount stated in the offer letter.  

  Wage Types – The relocation/moving allowance must use wage type 2600 and GL 511316. The temporary housing allowance must use wage type 2090 and GL 511315. Both must be paid through the University’s payroll system.

III. Responsibilities

1. Department
   1. Determine proposed maximum amount of relocation/moving allowance and/or temporary housing allowance and state amounts in the offer letter.  
   2. Obtain appropriate level of approvals based upon position type in writing and prior to including in the offer letter. The President, Provost, Executive Vice President, Vice President, Dean or authorized delegate must approve the relocation/moving allowance and/or temporary housing allowance prior to giving the new employee a signed offer letter. Written approval must be provided to Human Resources Compensation before any payment is processed.

1. Enter employee in SAP with the appropriate hire date. 
   1. Initiate payment(s) through the payroll system by payroll calendar deadlines using the appropriate wage type.
2. Human Resources
   1. Review processed PAR for relocation/moving allowance and/or temporary housing allowance and confirm the amount(s) agree with the offer letter and appropriate wage type used. 
3. University Financial Services (UFS)
   1. Process relocation/moving allowance and/or temporary housing allowance payment(s) entered by department and confirmed by Human Resources, on the next scheduled payroll date, withholding applicable income and employment taxes.

IV. Policy

Relocation/moving allowances are not an entitlement and will not be authorized in all circumstances. When it is in the best interest of the University, within the funds available, the University may provide a relocation/moving allowance payment for an employee to move from one location to another. This policy applies to all moves regardless of the dollar amount. 

The relocation/moving allowance payment may be offered to assist with relocating 50 or more miles from the employee’s most current permanent domicile to the primary work location required for their UK work assignment. 

Departments may also limit moving allowances to less than the maximum amount allowed by policy. UKHC has a central approval process, which will remain in place.

The relocation/moving allowance must be stated in the offer letter and is intended to be used for and should encompass house hunting, packing and transporting goods, storage all travel associated with the employee’s relocation. Additionally, a college or department may provide a temporary housing allowance. The amount of the temporary housing allowance must be stated in the offer letter and must not exceed $1,500 per month for a maximum of three months. 

With the enactment of the Tax Cuts and Jobs Act of 2017, relocation/moving allowances to employees during calendar years 2018 through 2025 will be treated as wages and paid through the payroll process. Income taxes, Social Security, Medicare and other applicable taxes are deducted from the total amount stated in the offer letter and provided to the employee. The payment the employee will receive will be net of applicable taxes. These payments are not subject to retirement contribution.

Since the University offers a relocation/moving allowance rather than reimbursing actual expenses, payments under this policy cannot be charged to sponsored projects unless the funding agency outlines specific requirements to be met for the charges to be allocable.  

V. Procedures

1. The employee’s hiring information must be entered in SAP.
2. The relocation/moving allowance amount and/or temporary housing allowance must be included in the employee’s offer letter and a copy of the offer letter along with written approval must accompany the appropriate University forms when payment is processed. Departments have the flexibility to submit payroll authorizations on one or more pay periods. 
3. A relocation/moving allowance must not exceed 10% of the employee’s annual base salary or $17,500, whichever is greater.
4.  A temporary housing allowance must not exceed $1,500 per month for a maximum of three months. 
5. The department must create an additional payment for the relocation/moving allowance using wage type 2600 and GL 511316 and/or payment(s) for the temporary housing allowance using wage type 2090 and GL 511315. These payments will be made through the University’s payroll system and are subject to withholding of applicable income taxes and employee taxes. Payments will be reported as taxable wages on the employee’s W-2 form.
6. If the employee does not move in accordance with terms in the offer letter, then any payment made will be subject to employee repayment to the University. 
7. Expenses for moving laboratory or research equipment directly to the University must be included in the offer letter and will be paid or reimbursed separately from the employee’s relocation/moving allowance.