UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 11-K
 
(Mark One):
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number 0-11330
 
Paychex, Inc. 401(k)
Incentive Retirement Plan
(Full title of the Plan)
Paychex, Inc.
911 Panorama Trail South
Rochester, NY 14625
(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)



1


Index to Financial Statements, Schedule and Exhibits
 
 
 
 
Page No.

 
 
Signatures

 
 
Financial Statements
 
 
 
Report of Independent Registered Public Accounting Firm

 
 
Statements of Net Assets Available for Benefits as of December 31, 2014 and 2013

 
 
Statements of Changes in Net Assets Available for Benefits For the Years Ended December  31, 2014 and 2013

 
 
Notes to Financial Statements

 
 
Supplemental Schedule
 
 
 
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

 
 
Exhibit
 
 
 
23.1 – Consent of Independent Registered Public Accounting Firm for report dated June 10, 2015
14




2


SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
June 10, 2015:
 
 
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
(Name of Plan)
 
/s/ Jacob W. Flaitz, Jr.
Jacob W. Flaitz, Jr.
401(k) Committee Member



3


Report of Independent Registered Public Accounting Firm

Paychex, Inc. 401(k) Incentive Retirement Plan Committee
Paychex, Inc. 401(k)
Incentive Retirement Plan

We have audited the accompanying statements of net assets available for benefits of Paychex, Inc. 401(k) Incentive Retirement Plan (the Plan) as of December 31, 2014 and 2013 and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan has determined it is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Paychex, Inc. 401(k) Incentive Retirement Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2014 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated in all material respects in relation to the financial statements as a whole.

Respectfully Submitted,



/s/ Insero & Company CPAs, P.C.
Insero & Company CPAs, P.C.
Certified Public Accountants

Rochester, New York
June 10, 2015


4



PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
 
 
 
December 31,
 
 
2014
 
2013
Assets
 
 
 
 
Cash
 
$
2,312

 
$
3,627

Investments:
 
 
 
 
Paychex ESOP Stock Fund
 
139,804

 
147,040

American Funds EuroPacific Growth Fund
 
49,286

 
44,921

ClearCourse Group Variable Annuity
 
9,105

 
9,534

Columbia Short Term Bond Fund
 
11,066

 
10,921

Fidelity Balanced Fund K
 
49,073

 
42,873

Fidelity Freedom K Funds 2005—2055
 
124,747

 
104,513

Fidelity Freedom K Income Fund
 
1,848

 
2,657

Fidelity U.S. Government Reserves Fund
 
37,658

 
37,454

Harbor Capital Appreciation Fund
 
68,527

 
61,550

Invesco Growth and Income Fund
 
46,971

 
42,151

Spartan International Index Fund
 
19,268

 
21,375

Spartan Total Market Index Fund
 
23,721

 
18,556

Spartan U.S. Bond Index Fund
 
49,195

 
42,996

Spartan 500 Index Fund
 
62,880

 
49,090

T. Rowe Price Small-Cap Value Fund
 
33,590

 
37,416

Vanguard S&P Mid-Cap 400 Index Fund
 
30,670

 
23,554

Vanguard S&P Small-Cap 600 Index Fund
 
23,412

 
22,267

Wells Fargo Advantage Common Stock Fund
 
36,711

 
37,043

Total investments
 
817,532

 
755,911

 
 
 
 
 
Notes receivable from participants
 
18,969

 
17,481

Net assets available for benefits
 
$
838,813

 
$
777,019

See accompanying notes to financial statements.


5



PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(In Thousands)
 
 
 
Year Ended December 31,
 
 
2014
 
2013
Contributions:
 
 
 
 
Participant
 
$
58,187

 
$
50,932

Employer, net of forfeitures
 
18,687

 
14,200

Transfers from other qualified plans
 
1

 
6

Total contributions
 
76,875

 
65,138

 
 
 
 
 
Investment income:
 
 
 
 
Dividend and interest income
 
40,477

 
17,736

Net realized and unrealized appreciation in fair value of investments
 
3,245

 
138,948

Total investment income
 
43,722

 
156,684

 
 
 
 
 
Interest income on notes receivable from participants
 
748

 
731

 
 
 
 
 
Benefits paid to participants
 
(59,551
)
 
(54,056
)
Change in net assets available for benefits
 
61,794

 
168,497

 
 
 
 
 
Net assets available for benefits at beginning of year
 
777,019

 
608,522

Net assets available for benefits at end of year
 
$
838,813

 
$
777,019

See accompanying notes to financial statements.



6



PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2014 and 2013
NOTE A. PLAN DESCRIPTION
The following brief description of the Paychex, Inc. (the “Company” or “Paychex”) 401(k) Incentive Retirement Plan (the “Plan”) is provided for general information purposes only. More complete information regarding the Plan’s provisions may be found in the Plan Document and Summary Plan Description.
General: The Plan is a defined contribution plan qualified under Sections 401(a) of the Internal Revenue Code (the “Code”), which includes provisions under Section 401(k) allowing an eligible participant to direct the employer to contribute a portion of the participant’s compensation to the Plan on a pre-tax and/or after-tax basis through payroll deductions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan was established on July 1, 1984 and restated in April 2002, January 2007, and October 2011 to include legislative and other applicable regulatory developments through October 1, 2011, as well as make other changes and enhancements to the Plan.
The Plan operates in part as an employee stock ownership plan (“ESOP”), which is designed to comply with Section 4975(e) and the regulations under the Code. It is not currently intended that the Plan be a leveraged ESOP, although the Plan permits the ESOP to borrow money to purchase ESOP stock if the employer should so elect at some future date. As of December 31, 2014 and 2013, all shares of ESOP stock are allocated to participant accounts. Under this ESOP feature, participants are able to receive dividends on their shares of Paychex common stock in the form of cash or have them reinvested into the Paychex ESOP Stock Fund (“ESOP Fund”).
Plan Administration: The Plan is administered by the Paychex, Inc. 401(k) Incentive Retirement Plan Committee (the "Plan Committee"), which is appointed by the Board of Directors of the Company. The Plan’s trustee and record keeper is Fidelity Management Trust Company (“Fidelity”), who is also the trustee for the ESOP Fund. Fidelity was responsible for the custody and management of the Plan’s assets for the periods noted.
Plan Amendments: During 2014, there was one amendment to the Plan to update the Plan's definition of spouse in accordance with changes in federal law. During 2013, there were no amendments to the Plan.
Eligible Employees: All new employees of the Company and its participating subsidiaries are eligible to participate in the salary deferral portion of the Plan immediately. Employees must be employed for one year in which a minimum of 1,000 hours have been worked to be eligible to receive a Company matching contribution, when such matching contribution is in effect.
Contributions: Employees may contribute, on a pre-tax basis and/or on an after-tax basis, from 1% up to 50% of their compensation through payroll deductions in increments of 1%, subject to the limitations established by the Code. For the Roth 401(k), employees may only contribute on an after-tax basis, subject to these same limitations. The maximum allowable annual employee contribution to the Plan was $17,500 in both 2014 and 2013. The Plan Committee may establish for any Plan year a contribution percentage limit for highly compensated employees that is less than 50%. Employees may also contribute amounts representing rollover distributions from other qualified defined benefit or defined contribution plans or individual retirement accounts.
The Company provided a matching contribution in the amount of 50% of up to 8% of eligible pay that an employee contributed to the Plan, effective for pay dates on or after November 15, 2013. Between February 10, 2012 and November 15, 2013, the Company provided a matching contribution in the amount of 50% of up to 6% of eligible pay that an employee contributed to the Plan. The Company may also elect to make an additional discretionary contribution to the Plan, but has not done so for the years ended December 31, 2014 and 2013.
Additionally, participants who are age 50 or older by the end of the calendar year are also allowed to make an additional “catch-up” contribution on a pre-tax basis and/or on an after-tax basis. For the Roth 401(k), participants “catch-up” contributions can only be made on an after-tax basis. This contribution was limited to $5,500 in both 2014 and 2013. The “catch-up” contributions are included in the match calculation, when such matching contribution is in effect, if the employee’s regular contribution is less than allowable percentage of eligible pay.
Vesting: Participants are fully vested as to their elective contributions, rollover contributions, and company matching contributions, as well as any earnings or losses on them. Within the ESOP, dividends received are fully vested, regardless of years of service.
Participant Accounts: The trustee maintains an account for each participant, including participant directed allocations to each investment fund. Each participant’s account is credited with the participant’s contribution and allocations of any employer

7


contribution and Plan earnings, less loans and withdrawals. The investments under the Plan are 100% participant-directed. Plan participants can fully diversify their portfolios by choosing from any or all investment fund choices in the Plan. Transfers in and out of investment funds, including the ESOP Fund, are not restricted, with the exception of certain restricted trading periods for individuals designated as insiders as specified in the Paychex Insider Trading Policy. The Company matching contributions follow the same fund elections as the employee compensation deferrals.
Investment Options: As of December 31, 2014, participants may direct contributions in the following investment options:
•
Paychex ESOP Stock Fund
•
American Funds EuroPacific Growth Fund
•
Columbia Short Term Bond Fund
•
Fidelity Balanced Fund K
•
Fidelity Freedom K Funds 2005—2055
•
Fidelity Freedom K Income Fund
•
Fidelity U.S. Government Reserves Fund
•
Harbor Capital Appreciation Fund
•
Invesco Growth and Income Fund
•
Spartan International Index Fund
•
Spartan Total Market Index Fund
•
Spartan U.S. Bond Index Fund
•
Spartan 500 Index Fund
•
T. Rowe Price Small-Cap Value Fund
•
Vanguard S&P Mid-Cap 400 Index Fund
•
Vanguard S&P Small-Cap 600 Index Fund
•
Wells Fargo Advantage Common Stock Fund
Participants may choose to change their investment option choices and how their contributions are allocated to each fund chosen at any time. The Plan Committee regularly reviews performance, fees, and other key indicators of all investment options and may enter or exit funds at its discretion with the exception of the Paychex ESOP Stock Fund.
ClearCourse Group Variable Annuity is an investment option that provides both guaranteed income at retirement with additional market growth opportunity based on the market performance of its underlying portfolio and it has no redemption restrictions. Effective February 27, 2012, ClearCourse Group Variable Annuity was frozen to new contributions and transfers into the fund.
Forfeited Accounts: Forfeited non-vested assets are used to reduce future employer contributions. Total forfeitures used to reduce employer contributions were approximately $15,600 for 2014 and approximately $50,000 for 2013. Forfeited balances not yet applied to reduce employer contributions as of December 31, 2014 and 2013, respectively, were not material to the financial statements.
Participant Loans: The Plan allows participants to borrow from a minimum of $1,000 up to a maximum equal to the lesser of 50% of their vested account balance or $50,000, reduced by the highest outstanding loan balance in the previous twelve months. Only one loan may be outstanding at any time. The rate of interest is the United States (“U.S.”) prime lending rate plus 1% at the time the loan is disbursed. Payroll deductions are required to repay the principal and interest on the loan within four and one-half years, except for loans used for the purchase of a principal residence, which are required to be repaid within nine and one-half years. Participant loans are subject to a one-time, non-refundable loan origination fee of $75, which is deducted from the participant’s account.
Withdrawals: Withdrawals for financial hardship are permitted provided they are for a significant and immediate financial need, meet the applicable hardship criteria as outlined in the Code, and the distribution is necessary to satisfy that need. Participants are required to fully use the Plan loan program, described above, before requesting a hardship withdrawal and must exhaust all other eligible withdrawals available in the Plan. One hardship withdrawal may be taken each calendar year. For actively employed Plan participants, the Plan also allows for: partial withdrawals of vested balances at age 591/2; withdrawals of rollover contributions made prior to April 15, 2002; and withdrawals of dividends on the participant’s shares of Paychex common stock in the ESOP Fund in the form of cash, if desired.
Payment of Benefits: Upon separation from employment, at retirement, or reaching the age of 591/2, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in their account, or annual installments over a fixed period of time.
Participants in the ClearCourse Group Variable Annuity may elect to receive their vested interest as follows: full lifetime retirement income guarantee at the age of 65 or older; reduced lifetime retirement income guarantee between the ages of 55 and 64; and forfeiture of the lifetime retirement income guarantee prior to age 55.

8


Voting and Tender Offer Rights on ESOP Stock: Each participant in the ESOP Fund is entitled to exercise voting rights on shares held in their account and also direct the ESOP trustee to tender their shares of ESOP Stock if an offer is made to purchase such shares. If the participant does not vote or indicate their preference with respect to a tender offer, the trustee will vote the participant’s shares and unallocated shares in the same proportion as the shares for which the trustee has received instructions.
Plan Termination: Although it has not expressed any intent to do so, the Company has the right under the Plan to permanently discontinue contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become fully vested in their account balances.

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: The financial statements of the Plan have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”).
Use of Estimates: The preparation of financial statements in conformity with GAAP requires the Plan Committee to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Investment Valuation and Income Recognition: Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note D for discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Net realized gains or losses upon the sale of investments are based on their average cost. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis.
Contributions: Contributions from the Company are accrued in accordance with the terms of the Plan. Participant contributions are recorded in the period the Company makes corresponding payroll deductions.
Notes Receivable from Participants: The principal amount of loans plus any unpaid accrued interest is reported as notes receivable from participants on the Statements of Net Assets Available for Benefits. Loans to participants have various maturity dates and interest rates range from 3.25% to 9.25%. Interest earned is recorded on an accrual basis as interest income on notes receivable from participants in the Statements of Changes in Net Assets Available for Benefits.
Payment of Benefits: Benefits are recorded when paid.
Recently Issued Accounting Pronouncements: Other recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) (including technical corrections to the FASB’s Accounting Standards Codification), and the American Institute of Certified Public Accountants did not, or are not, expected to have a material effect on the Plan’s net assets available for benefits or changes in net assets available for benefits.
Subsequent Events: The Plan has evaluated subsequent events for potential recognition and/or disclosure through the date of issuance of these financial statements.

9



NOTE C. INVESTMENTS
The following presents investments that represent 5% or more of the Plan’s net assets as of:
 
 
 
December 31,
In thousands
 
2014
 
2013
Paychex ESOP Stock Fund
 
$
139,804

 
$
147,040

Harbor Capital Appreciation Fund
 
68,527

 
61,550

Spartan 500 Index Fund
 
62,880

 
49,090

American Funds EuroPacific Growth Fund
 
49,286

 
44,921

Spartan U.S. Bond Index Fund
 
49,195

 
42,996

Fidelity Balanced Fund K
 
49,073

 
42,873

Invesco Growth and Income Fund
 
46,971

 
42,151


The change in fair value of the Plan’s investments, including net realized and unrealized gains/(losses), is as follows:
 
 
 
Year Ended December 31,
In thousands
 
2014
 
2013
Paychex ESOP Stock Fund
 
$
1,659

 
$
47,945

American Funds EuroPacific Growth Fund
 
(2,056
)
 
6,952

ClearCourse Group Variable Annuity
 
663

 
1,582

Columbia Short Term Bond Fund
 
(45
)
 
(46
)
Dreyfus Mid Cap Index Fund
 
—

 
1,487

Dreyfus Small Cap Stock Index Fund
 
—

 
699

Fidelity Balanced Fund K
 
138

 
4,674

Fidelity Freedom K Funds 2005—2055
 
(4,861
)
 
13,424

Fidelity Freedom K Income Fund
 
(18
)
 
53

Harbor Capital Appreciation Fund
 
1,864

 
14,574

Invesco Growth & Income Fund
 
(704
)
 
8,458

Spartan International Index Fund
 
(1,683
)
 
3,091

Spartan Total Market Index Fund
 
2,148

 
4,125

Spartan U.S. Bond Index Fund
 
1,465

 
(2,080
)
Spartan 500 Index Fund
 
5,764

 
11,140

T. Rowe Price Small-Cap Value Fund
 
(2,335
)
 
8,122

Vanguard S&P Mid-Cap 400 Index Fund
 
2,010

 
4,234

Vanguard S&P Small-Cap 600 Index Fund
 
991

 
4,015

Wells Fargo Advantage Common Stock Fund
 
(1,755
)
 
6,499

Net realized and unrealized appreciation in fair value of investments
 
$
3,245

 
$
138,948



10



NOTE D. FAIR VALUE MEASUREMENTS
The carrying value of cash approximates fair value due to the short maturities of these instruments. Notes receivable from participants are valued at the principal amount plus accrued interest, which approximates fair value. Mutual funds and Paychex common stock, which is the sole investment in the ESOP Fund, are stated at their approximate fair value based on quoted market prices. The Annuity Fund, ClearCourse Group Variable Annuity, is valued by Genworth Life and Annuity Insurance Company using the quoted market price of the underlying investments less applicable ClearCourse asset charges. The underlying investments are in Janus Balanced T Share Class Fund.
The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into three levels based on reliability, as follows:
•
Level 1 valuations are based on quoted prices in active markets for identical instruments that the Plan has the ability to access.
•
Level 2 valuations are based on quoted prices for similar, but not identical, instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or other significant observable inputs besides quoted prices.
•
Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement.
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table presents information on the Plan’s financial assets measured at fair value on a recurring basis as of:
 
 
 
December 31, 2014
 
 
Carrying
value
(Fair
value)
 
Quoted
prices in
active
markets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
In thousands
 
 
 
 
 
 
 
 
Mutual Funds
 
$
668,623

 
$
668,623

 
$
—

 
$
—

Paychex Common Stock
 
139,804

 
139,804

 
—

 
—

Annuity Fund
 
9,105

 
—

 
9,105

 
—


 
 
 
December 31, 2013
 
 
Carrying
value (Fair
value)
 
Quoted
prices in
active
markets
(Level 1)
 
Significant
other
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
In thousands
 
 
 
 
 
 
 
 
Mutual Funds
 
$
599,337

 
$
599,337

 
$
—

 
$
—

Paychex Common Stock
 
147,040

 
147,040

 
—

 
—

Annuity Fund
 
9,534

 
—

 
9,534

 
—



NOTE E. RISKS AND UNCERTAINTIES
The Plan provides certain investments that are exposed to various risks, such as interest rate risk, credit risk, and market volatility risk. The Plan attempts to limit these risks by authorizing and offering participants a broad range of investment options that are invested in high quality securities or are offered and administered by reputable and known investment and insurance companies. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in values of investment securities will occur in the near term, and such changes could materially affect the amounts reported in the Statements of Net Assets Available for Benefits and of Changes in Net Assets Available for Benefits.

11


The Plan’s exposure to a concentration of risk is limited by the diversification of investments across 27 participant-directed fund elections. Additionally, the investments within each participant-directed fund election are further diversified into varied financial instruments, with the exception of the ESOP Fund, which invests in a single security and cash.

NOTE F. RELATED PARTY TRANSACTIONS
The Plan’s holdings of Paychex common stock qualify as a party-in-interest transaction. As of December 31, 2014, the Plan held 3,028,028 shares of Paychex common stock at a fair market value of $139,804,053. As of December 31, 2013, the Plan held 3,229,531 shares of Paychex common stock at a fair market value of $147,040,546.
Fidelity serves as trustee, recordkeeper, and custodian of the Plan and, therefore, is a party-in-interest. Costs related to administering the Plan are paid by the Company. The Company paid approximately $273,000 and $329,000 in 2014 and 2013, respectively, in administrative expenses.

NOTE G. TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service (“IRS”) dated January 12, 2015, stating that the Plan and amendments through October 12, 2011, is qualified under Section 401(a) and Section 4975(e) of the Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt.
The preparation of financial statements in conformity with U.S. GAAP requires the Plan Committee to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Committee has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. Therefore, the Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Committee believes it is no longer subject to income tax examinations for the years prior to 2011.

NOTE H. RECONCILIATION OF FINANCIAL STATEMENTS TO IRS FORM 5500
As allowed by ERISA, the Plan has elected to prepare its IRS Form 5500 on the cash basis of accounting. The financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The following is a reconciliation between the net assets available for benefits as reported in the financial statements to the net assets available for benefits as reported in IRS Form 5500 as of: 

 
December 31,
In thousands
2014
 
2013
Net assets available for benefits – financial statements
$
838,813

 
$
777,019

Less: deemed distributions —defaulted loans
99

 
77

Net assets available for benefits – IRS Form 5500
$
838,714

 
$
776,942



12



SCHEDULE OF ASSETS (HELD AT END OF YEAR)
(SCHEDULE H, LINE 4i- FORM 5500)
PAYCHEX, INC. 401(k) INCENTIVE RETIREMENT PLAN
EIN-16-1124166
PLAN-0-40436
December 31, 2014
(Dollars, Units, and Shares in Thousands) 
Identity of
Party
Involved
 
Description of Investment Including Maturity
Date, Rate of Interest, Collateral, Par or
Maturity Value
 
Units/
Shares
 
Current Value
Fidelity*
 
Cash
 
—

 
$
2,312

Fidelity*
 
Paychex, Inc. Common Stock
 
3,028

 
139,804

Fidelity*
 
American Funds EuroPacific Growth Fund
 
1,048

 
49,286

Fidelity*
 
ClearCourse Group Variable Annuity
 
648

 
9,105

Fidelity*
 
Columbia Short Term Bond Fund
 
1,115

 
11,066

Fidelity*
 
Fidelity Balanced Fund K
 
2,155

 
49,073

Fidelity*
 
Fidelity Freedom K Funds 2005
 
73

 
946

Fidelity*
 
Fidelity Freedom K Funds 2010
 
123

 
1,626

Fidelity*
 
Fidelity Freedom K Funds 2015
 
371

 
5,042

Fidelity*
 
Fidelity Freedom K Funds 2020
 
837

 
11,917

Fidelity*
 
Fidelity Freedom K Funds 2025
 
988

 
14,683

Fidelity*
 
Fidelity Freedom K Funds 2030
 
1,295

 
19,652

Fidelity*
 
Fidelity Freedom K Funds 2035
 
1,087

 
16,975

Fidelity*
 
Fidelity Freedom K Funds 2040
 
1,270

 
19,868

Fidelity*
 
Fidelity Freedom K Funds 2045
 
1,054

 
16,922

Fidelity*
 
Fidelity Freedom K Funds 2050
 
911

 
14,724

Fidelity*
 
Fidelity Freedom K Funds 2055
 
201

 
2,392

Fidelity*
 
Fidelity Freedom K Income Fund
 
156

 
1,848

Fidelity*
 
Fidelity U.S. Government Reserves Fund
 
37,658

 
37,658

Fidelity*
 
Harbor Capital Appreciation Fund
 
1,171

 
68,527

Fidelity*
 
Invesco Growth and Income Fund
 
1,768

 
46,971

Fidelity*
 
Spartan International Index Fund
 
518

 
19,268

Fidelity*
 
Spartan Total Market Index Fund
 
396

 
23,721

Fidelity*
 
Spartan U.S. Bond Index Fund
 
4,190

 
49,195

Fidelity*
 
Spartan 500 Index Fund
 
863

 
62,880

Fidelity*
 
T. Rowe Price Small-Cap Value Fund
 
718

 
33,590

Fidelity*
 
Vanguard S&P Mid-Cap 400 Index Fund
 
158

 
30,670

Fidelity*
 
Vanguard S&P Small-Cap 600 Index Fund
 
114

 
23,412

Fidelity*
 
Wells Fargo Advantage Common Stock Fund
 
1,572

 
36,711

Participants *
 
Participant loans **
 
—

 
18,969

 
 
 
 
 
 
$
838,813


* Represents party-in-interest
** Loans to participants have various maturity dates (interest at 3.25% to 9.25%).


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