Example of Defining Elements for 401 (k) and Roth 401 (k) Deferred Compensation Plans

In this example, you're defining pretax deductions elements for a 401 (k) deferred contribution plan.

This involves multiple stages.

1. Use the Elements task to define at least two pretax deductions elements.

2. Set the element entries.

3. Feed the predefined balance.

How You Define the Element

This involves several steps.

1. Start the element template.

2. Define the base element amount rules.

3. Define the catch-up rules.

4. Define the Roth deductions.

5. Define the after-tax deductions.

6. Finish up with the template.

   For further info, see the following sections.

Get Started with the Element Template

Start the element template.

1. Start the Elements task.

2. Define an element using the Pretax Deductions primary classification and Deferred Compensation 401k secondary classification.

3. Define the necessary values in Entry Rules, Availability Rules, and Duration and Termination Rules.

4. Click Next.

Define the Base Element Amount Rules

On Additional Details:

1. Specify any associated elements in Deferred Compensation Rules along with how they should be processed (concurrent or sequential).

   • Catch-up element

   • Roth element or Roth catch-up element

   • After-tax element

2. Choose Yes or No for the following options in Amount Rules.

   • If earnings are insufficient to take the full deduction, do you want to take a partial deduction?

   • Enforce 401K Eligible Compensation Limit Check

   Note: After the template creates this element, set the actual amounts to be withdrawn through element entry. For further info, see Element Entry Methods in the Help Center.

3. Indicate how the element should be processed in Processing Rules.

   • Specify whether the element is nonrecurring or recurring during each payroll period or does it require explicit entry.

   • Choose whether to process the element only once in each payroll period.

   • Choose whether the element is subject to iterative processing.

4. Indicate if a corresponding employer-match element should be created and, if so, with or without employee contributions.

   Note: After the template creates this element, you must set the matching amounts through element entry.

5. Define the necessary values in a person's element entry.

How You Define Catch-Up Rules

In Catch-up Rules:

1. Indicate if your base element should have a corresponding catch-up element.

   If you select No, skip to the next section.

   By selecting Yes, the template creates a corresponding pretax element titled "<base element name> Catch Up".

2. Select the catch-up processing method.

   Processing method	What it does
   Concurrent	Deductions are taken at the same time as the base contributions.
   Sequential	Deductions are taken only after the statutory maximum for the base contributions has been met. The catch-up deductions begin in the current pay period.

3. Specify the amount rule for the catch-up element.

How You Define Roth Rules

In Roth Rules:

1. Indicate if your base element should have a corresponding after-tax Roth element.

   If you select No, skip to the next section.

   By selecting Yes, the template creates a corresponding Roth after-tax element titled "<base element name> Roth".

   Note: After the template creates this element, you must set the actual amounts to be withdrawn through element entry.

2. Specify the amount rule for the Roth element in an element entry.

   Note: After the template creates this element, you must set the actual amounts to be withdrawn through element entry.

3. Indicate if a corresponding employer-match element should be created and, if so, with or without employee contributions.

   Selecting one of the Yes options creates a corresponding after-tax employer match element, titled "<base element name> Roth Employer Match".

   Note: After the template creates this element, you must set the matching amounts through element entry.

4. Indicate if your Roth element should have a corresponding catch-up element.

   If so, specify its amount rule and processing method.

   By selecting Yes, the template creates a corresponding after-tax catch-up element titled "<base element name> Roth Catch Up".

   Note: After the template creates this element, you must set the actual amounts to be withdrawn through element entry.

How You Define After-Tax Rules

In After-Tax Rules:

1. Indicate if your base element should have a corresponding after-tax element.

   If you select No, click Next.

   By selecting Yes, the template creates a corresponding after-tax element titled "<base element name> Aftertax".

   Note: After the template creates this element, you must set the actual amounts to be withdrawn through element entry.

2. Specify the amount rule for the after-tax element.

   Note: After the template creates this element, you must set the actual amounts to be withdrawn through element entry.

3. Specify the after-tax processing method for this element.

4. Indicate if a corresponding after-tax employer-match element should be created and, if so, with or without employee contributions.

Finish Up

Once you have set the necessary values:

1. Click Next.

2. Review your settings, and click Submit.

3. Depending on what options you selected in the template, and what associated elements were created, you must feed the appropriate balances.

   Balance feeds depend on the type of contribution and element:

   • For base contributions, feed the Deferred Compensation 401K Eligible Earnings and Total Deferred Compensation 401k Eligible Earnings predefined balances.

   • For catch-up contributions, feed the Other Pretax balance.

How You Feed the Predefined Balance

You use the Balance Definitions task to configure the feeds because the Elements task doesn't automatically feed a balance for tracking eligible earnings. You can configure deferred compensation calculations requiring eligible earnings, such as 401 (k), catch-up 401 (k), Roth 401 (k), catch-up Roth 401 (k), and after-tax 401 (k).

1. Start the Balance Definitions task.

2. Search for and select the predefined Deferred Compensation 401k Eligible Earnings balance.

3. Click Edit.

4. Click Balance Feeds.

5. Configure the feeds and save your work.

6. Repeat these steps for the predefined Total Deferred Compensation 401k Eligible Earnings balance.