1. Implementing Payroll for the United States
  2. Deferred Compensation Plans for the US

Deferred Compensation Plans for the US

Use deferred compensation plans to allow participants to save for their retirement on a pretax or after-tax basis. Employees can choose one or more deductions from their wages.

When preparing to set up deferred compensation plans for your organization, you should consider the following.

  • What plan types you can set up

  • How you configure the base contributions

  • How you configure catch-up contributions

  • What additional elements are created

  • What are the contribution limits and how you can override them

  • What reports are available to help you

Plan Types

You can support a variety of deferred compensation plans for your employees.

Plan type

To define elements for this plan type

401 (k)

Using the Elements task, define an element with the Pretax Deductions primary element classification and Deferred Compensation 401k secondary element classification.

During element definition, you can elect to set up a variety of additional contribution types.

  • After-tax

  • Catch-up and catch-up employer-match

  • Employer-match

  • Roth after-tax and Roth catch-up

You can also define after-tax and Roth contributions manually as described below.

After-Tax 401 (k)

The element template provides the option to define after-tax contributions during the base element definition.

You can also manually define this contribution type. Using the Elements task, select the Voluntary Deductions primary element classification and Pension Plan After Tax secondary element classification. Using this method, you can elect to set up employer-match contributions for this plan.

Roth 401 (k)

The element template provides the option to define Roth contributions during the base element definition.

You can also manually define this contribution type. Using the Elements task, select the Voluntary Deductions primary element classification and Deferred Compensation 401k Roth secondary element classification.

During element definition, you can elect to set up a variety of additional contribution types.

  • Catch-up and catch-up employer-match

  • Employer-match

403 (b)

For the base contribution, define an element with the Pretax Deductions primary classification and Deferred Compensation 403b secondary classification.

To define employer-match and catch-up contributions, use the person's Benefits and Pensions card.

After-Tax 403 (b)

Define an element with the Voluntary Deductions primary classification and Pension Plan After Tax 403b secondary classification.

To define employer-match contributions, use the person's Benefits and Pensions card.

Roth 403 (b)

Define an element with the Voluntary Deductions primary classification and Pension Plan After Tax 403b secondary classification.

To define catch-up and employer-match up contributions, use the person's Benefits and Pensions card.

457 (b)

For the base contribution, define an element with the Pretax Deductions primary classification and Deferred Compensation 457 secondary classification.

To define employer-match and catch-up contributions, use the person's Benefits and Pensions card.

After-Tax 457 (b)

Define an element with the Voluntary Deductions primary classification and Pension Plan After Tax 457 secondary classification.

To define employer-match contributions, use the person's Benefits and Pensions card.

Roth 457 (b)

Define an element with the Voluntary Deductions primary classification and Pension Plan After Tax 457 secondary classification.

To define catch-up and employer-match up contributions, use the person's Benefits and Pensions card.

Base Contributions

You can define base contributions for the following deferred compensation plans through the Elements task.

Note: The element template provides options for defining after-tax and Roth contributions automatically when you define the base contribution. The template creates the relevant elements. Alternately, you can define them manually using the classifications below.

Plan Type

Primary Classification

Secondary Classification

401(k)

Pretax Deductions

Deferred Compensation 401k

403 (b)

Pretax Deductions

Deferred Compensation 403b

457 (b)

Pretax Deductions

Deferred Compensation 457

After-Tax 401 (k)

Voluntary Deductions

Pension Plan After Tax

After-Tax 403 (b)

Voluntary Deductions

Pension Plan After Tax 403b

After-Tax 457 (b)

Voluntary Deductions

Pension Plan After Tax 457

Roth 401 (k)

Voluntary Deductions

Deferred Compensation 401k Roth

Roth 403 (b)

Voluntary Deductions

Deferred Compensation 403b Roth

Roth 457 (b)

Voluntary Deductions

Deferred Compensation 457 Roth
Note: Although Roth 401 (k), Roth 403 (b), and Roth 457 (b) are after-tax contributions, you must send Roth employer-matching contributions to a third-party pretax account. For further info, see your third-party supplier's documentation.

Catch-Up Contributions

Most deferred compensation plans offer catch-up contributions. These contributions help employees maximize their deferred compensation balances as they near their retirement age.

If you include them, you choose if the payroll process deducts them concurrently or sequentially with the base deductions. For further info, see the following in the Help Center.

  • How Concurrent Catch-Up Deductions Are Calculated

  • How Sequential Catch-Up Deductions Are Calculated

Additional Elements

Depending on how you configure the base element, the element template may create additional elements to support it, including indirect elements.

For example, when you create a 401 (k) element, your answers to these questions can result in the template creating indirect elements.

  • Should the element have an associated catch-up element?

  • Should the element have an associated Roth element?

  • Should the element have an associated after-tax element?

  • Should the deferred compensation element have an associated employer-match element?

Contribution Limits

The predefined contribution limits help ensure the employee is in compliance with statutory limits. However, there are some cases where you need to adjust the limits for individual employees.

For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.

Note: If your employee contributes to both a 401 (k) and 403 (b) plan, the payroll process enforces the deferred compensation annual limit across both plans.

Reports

You can view or print these reports about deferred compensation deductions.

Report

How you can use it

For further info, check here

Deduction Report

Provides details of the payroll deductions processed for the specified period.

Deduction Report in the Help Center

Element Results Register

Provides a listing of the elements and pay values processed for each payroll relationship action.

Element Results Register for the US in the Help Center

Statement of Earnings

Consolidates all relevant info from a payroll run or a prepayment into a single report, so the results can be easily viewed and verified. Includes personal info, payroll info, and tax and employment info, run results, messages, and balances.

How to View the Statement of Earnings for the US in the Help Center

Deferred Compensation Over the Limit Balance Exception Report

Useful for 401 (k) plans, but not 403 (b) or 457 (b) plans.

Oracle Cloud Human Capital Management for the US: Balance Exception Report (2325520.1) on My Oracle Support

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