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Combined Deduction Limit

Created on  | Last modified on  Highlight Matches

Summary

Multiple Deductions that use the same limit can be processed using the limit once.

Description

Deductions like 401k and 401k Roth use the same limit per year.  This new feature in Sage 100 Payroll 2.26 combines the deductions to use one limit per-user selections.

The Combined Deduction Limit can be setup for Standard, Employer Contribution, Pension Plan or Cafeteria Plan Deduction Types.

 

Cause

When setup properly, this limits all deductions using the same limit from using the limit multiple times, overstating the contribution.

Resolution

  1. Go to Payroll, Setup, Combined Deduction Limit Maintenance.
    1. Create a Combined Deduction Limit Code, 'PENSION' description, Deduction Type and Combined Limit.  
    2. Deductions setup with Same Deduction Type and Reset Balance at Year End will display in the grid. (Must have Reset Balance at Year End selected).
  2. Setup 2 deductions 401k & Roth 401k for 1 employee.
    1. Pension Plan Type.
    2. Limit $23,500.
    3. Combined Deduction Code PENSION.
    4. Box 12, Box 12 Code 'D'.
    5. Deduction Accrual Account.
    6. Tax Rule 805002 for 401k Deduction Code and Tax Rule 805118 for Roth 401k Deduction. 
  3. Return to Combined Deduction Limit Maintenance and select the Deductions to use the Combined Deduction Limit PENSION.
  4. Apply to Applicable Employees.

  5. NOTE:

    If the deductions code's combined deduction limit changes, the employee deduction balances are recalculated to reflect the other deductions included in the limit. 

     

401k DeductionRoth 401k DeductionCombined Deduction Limit Maintenance

Example:

Deduction codes 401K and 401KRO from above will be reference combined limit code = PENSION where the combined limit =$23,500.

If employee A has:

YTD for deduction 401K = $15,000

YTD for deduction 401KRO = $8,010

Combined YTD = $23,010

Combined Limit = $23,500

Employee A has deduction codes set up for automatic deductions for 401K = $1000 and 401KRO = $534 for each check. The payroll data entry deduction calculation for the check is:

401K = $490 (Since total 401K on check + combined ytd > combined limit then amount = combined limit – combined YTD $23,500-$23,010)

401KRE = 0 (limit exceeded on prior deduction line)