Offering New Employees a Relocation Stipend in Lieu of Reimbursements or Direct Support for Moving & Relocation Expenses
These procedures apply to all employees of William & Mary, including the Virginia Institute of Marine Science (hereafter referred to as “the university”).
The purpose of these procedures is to ensure compliance with new federal tax regulations and reduce the university’s administrative cost associated with the handling of expenses related to moving and relocation since they are now considered taxable income for the employee. Further, these procedures are intended to simplify the administrative burden to new employees who are relocating as a result of accepting employment with the university.
On December 22, 2017, the President of the United States signed into law The Tax Cuts and Jobs Act of 2017 (the Act). The Act requires all moving and relocation expenses incurred on or after January 1, 2018, for which an employer either pays directly or reimburses an employee, to be considered taxable income to the employee. The university immediately made changes to comply with the Act for calendar year 2018; however, the implementation of the required changes has led to a review of current university procedures and the impact on its employees.
Hiring departments may offer a new employee up to 15% of his or her annual salary, not to exceed $30,000, as a relocation stipend if the supervisor has sufficient funds within his or her unit’s budget to cover the cost of the stipend plus related fringe benefits. Note: No additional budget will be provided from the university to cover the cost of a relocation stipend and related fringe benefits.
As of January 1, 2019, no hiring department may make an offer of employment to a new employee that commits the university to paying directly for the employee’s moving and relocation costs or reimbursing the employee for his or her related out-of-pocket expenses.
Effective with the date identified above, the university will no longer cover the direct costs or reimburse employees for costs associated with the moving and relocation of their personal household goods as a result of accepting a position with the university unless those costs are related to an offer of employment made prior to January 1, 2019.
In cases where moving and relocation costs are being paid by a grant or contract and the provisions of the grant or contract place greater restrictions on the allowances for moving expenses than the university policy as defined herein, such restrictions shall prevail.
V. Employee Eligibility Requirements and Timing of Payment
To be eligible for a relocation stipend, a new employee must live at least 50 miles from the employee’s new work location as assigned by the university and his or her commuting distance must have increased by at least 50 miles in one direction. In addition, the employee must satisfactorily maintain employment on a regular, full-time basis for at least one year (i.e., twelve consecutive months) beginning on the employee’s first day of employment. If an employee separates from the university prior to one year, he or she must repay the relocation stipend in full (i.e., stipend amount, including the taxes paid on behalf of the employee) within 30 days of his or her last day of employment with the university. The Senior Vice President for Finance and Administration (SVPFA) or his/her designee may authorize exceptions to these requirements if warranted.
The relocation stipend will be included in the new employee’s initial personnel action request initiated by the hiring department and will be paid in one lump sum within 60 days of the employee’s first day of employment. The relocation stipend will be reported as taxable income to the employee with appropriate federal and state taxes withheld. The relocation stipend is intended to assist an employee with related moving and relocation costs, but the employee is free to use the funds at their discretion; however, no other funds will be provided by the university for such purposes.
VI. Hiring Department Responsibilities
A university hiring department may offer a relocation stipend as part of its efforts to recruit a new employee with the department’s existing budget. The hiring department is responsible for:
- Documenting the relocation stipend as part of the offer letter,
- Ensuring the employee reviews, accepts and signs a repayment agreement in the event the employee leaves the university within twelve months of being hired, and
- Initiating a personnel action form to ensure that the relocation stipend is paid not later than 60 days from the first date of employment.
In the event that the employee transitions from the original hiring department to another hiring department within the university in his/her first 12 months of employment, the new hiring department will be expected to reimburse the original hiring department on a pro-rata basis for the relocation stipend provided as part of the initial term of employment.
VII. Approval and Amendment
This administrative policy was created by the Office of the SVPFA and may be amended or terminated by the SVPFA. Questions about the implementation of this policy or its interpretation should be directed to askHR@wm.edu.University Relocation Stipend Agreement (pdf)