Relocation Assistance Payments
Welcome to the Office of Business and Financial Services Open Comment Blog!
The Office of Business and Financial Services is hosting an open comment period, beginning July 29 and closing August 9 at 5 p.m. CT. In this open comment period we present updates to the existing relocation assistance policies. The proposed updates are being presented as, 8.11 Relocation Payments.
Highlights from the proposed updates to the University of Illinois System policy include:
- Switch assistance from a reimbursement-based process to a one-time moving stipend processed through University Payroll and Benefits (UPB). The total amount being offered must be documented in a signed offer letter, paid in full, is taxable, and may not be grossed up
- Raise the relocation assistance cap above the current limit of $7,500 to allow for payments up to $15,000. Exception requests to provide reimbursement assistance above the $15,000 limit must be approved by the chancellor or equivalent, or delegate
- Eliminate the list of ‘preapproved’ expense types, as the assistance will be paid in the form of a stipend and not a reimbursement
- End the ability to make direct payments to moving companies or other vendors
- Allow universities to create additional policies to further restrict relocation assistance payments
- Clarify that civil service employees may be eligible to receive relocation assistance
The new policy will be found in Section 8 Payments and Reimbursements of Business and Financial Policies and Procedures Manual.
Please review the policy and provide feedback.
Relocation Policy Proposal FAQs
Q. How and when will the stipend be processed?
A. The one-time relocation stipend will be processed by University Payroll and Benefits (UPB) via PARIS. A new or transferred employee must be active in Banner with an active job to process the relocation adjustment before the stipend payment can be processed. This means that an employee will receive the stipend after their start date. The offer letter, which must disclose the amount of the relocation stipend, and any additional documented approvals from the Chancellor or equivalent if the stipend amount exceeds $15,000 must be scanned into the employee’s BDMS record by HR and/or the unit for UPB to process the payment. The unit must then initiate the stipend request as a Prior Underpayment Adjustment (PUA) in Payroll Adjustment Request Interface System (PARIS).
Q. What documentation is required to process a stipend?
A. The offer letter and any additional documented approvals from the Chancellor or equivalent if the stipend amount exceeds $15,000 must be scanned into the employee’s BDMS record by HR and/or the unit for UPB to process the payment.
Q. Are relocation stipends taxable?
A. All payments related to personal moving expenses are considered taxable income to the employee and will be reported on Form W-2, Wage and Tax Statement and subject to income tax and Medicare withholdings. The stipend payment may not be grossed-up.
Q. Are relocation stipend payments subject to withholding for the State University Retirement System (SURS)?
A. Relocation stipend payments are not subject to SURS withholding.
Q. Are there special considerations when processing a relocation stipend for a foreign national?
A. Hiring departments should encourage their Foreign National employee to meet with University Payroll & Benefits prior to receiving a relocation stipend payment from the University of Illinois. It is the employee’s responsibility to schedule and attend a Foreign National Tax Status Review Appointment. Attending this appointment will assist the employee in confirming any tax treaties that may exist which may reduce federal taxes. Keep in mind tax treaties are only in effect after the employee signs the appropriate documentation with University Payroll & Benefits and before the stipend is processed/paid.
Q. Is it required that $15,000 be paid, or are there other amounts that may be provided?
A. The relocation stipend may not exceed $15,000, without prior approval from the chancellor or equivalent, or delegate. At the discretion of the universities, colleges, or departments additional approvals, or restrictions may be applied. Units can offer a relocation assistance stipend for any amount that falls within established guidelines.
Q. How was the $15,000 limit identified?
A. The new limit was identified by surveying the amount of financial assistance offered for relocations at comparable peer institutions.
Q. Why choose a stipend-only model?
A. A stipend-only model for moving payments represents the most administratively streamlined approach to providing relocation assistance. The System Offices will no longer require units to track the expenses incurred by new or transferred employees and file reimbursement requests. Units will be able to process the relocation assistance stipend . The only substantiation required to process this request will be an offer letter and any additional documented approvals from the Chancellor or equivalent if the stipend amount exceeds $15,000. The stipend will be paid in-full and directly to the employee.
Q. Can we still make direct payments to relocation vendors?
A. Under the proposed policy units will no longer be able to make direct payments to relocation vendors. The administrative difficulty of tracking both a payroll-processed stipend payment and a direct vendor payment for proper tax reporting and withholding make this option impractical. There are additional concerns regarding the possibility of providing relocation assistance beyond the commitment identified in an offer letter, if the direct vendor payment exceeds initial estimates and the total cost along with a stipend is greater than the amount offered to that employee.
Q. Why eliminate the pre-approved expense list?
A. Due to Tax Cuts and Jobs Act (TCJA) of 2017, effective January 1, 2018, payments related to personal moving expenses are considered taxable income to the employee and will be reported on Form W-2, Wage and Tax Statement and subject to income tax and Medicare withholdings. The list of pre-approved expenses was based on a list of previously ‘qualified’ or non-taxable expense types. Now that all relocation payments and expense types are considered taxable income there is no longer a basis in tax law to maintain this list.
Q. Is this relocation assistance for personal items, professional equipment, or both?
A. The relocation assistance stipend permitted under this proposed policy is for personal moving expenses. Units will still be permitted to assist with moving professional equipment under established processes.
8.11 Relocation Payments
The University of Illinois System may provide a one-time moving stipend to eligible employees for the purpose of supporting the relocation process. The stipend may not exceed $15,000, without prior approval from the chancellor or equivalent, or delegate. The amount of the stipend must be documented in a signed employment offer letter. The stipend will be paid in full, is considered taxable income, and may not be grossed-up. At the discretion of the universities, additional university-level approvals, or restrictions may be applied.
Reason for the Policy
The University of Illinois System allows one-time moving stipend payments to assist with the recruitment of new or transferred employees.
Applicability of the Policy
Units may, when funds are available, provide a one-time moving stipend to new or transferred permanent, full-time members of the faculty, administrative, academic professional staff, and when appropriate, civil service staff. Contact the appropriate university or system human resources office for relocation stipend options for civil service staff.
The amount of a one-time moving stipend must be documented in a signed offer letter. Stipend payments must be submitted to University Payroll and Benefits for processing. Units are responsible for initiating the one-time moving stipend payment request and for following additional university-specific requirements. Units should process the stipend via PARIS using earn code REL under the payment type agreement/settlement. The offer letter and any additional documented approvals from the Chancellor or equivalent if the stipend amount exceeds $15,000 must be scanned into the employee’s BDMS record by HR and/or the unit in order for UPB to process the payment. Refer to University Payroll and Benefits guidance at (URL) for additional information regarding how to process these stipend payments.
Related Policies and Procedures
18.5 Fringe Benefits
PARIS Resource Page
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