Iterative Processing for Pretax Deductions

Sometimes a pretax deduction is equal to or higher than the person's gross pay. When this happens, the payroll process can withhold it iteratively. This makes sure it properly withholds higher priority deductions, like taxes and involuntary deductions.

How You Enable Iterative Processing for New Pretax Elements

When you use the Elements task, select Yes for the Is this element subject to iterative processing template prompt.

If you're enabling iterative processing, you must enable them for all pretax deduction elements.

How You Can Enable It for Your Existing Elements

To turn this on for existing elements, use the Element Upgrade Process.

For further info, see Oracle Cloud Human Capital Management for the US: Element Upgrade (2458385.1) on My Oracle Support.

Here's an Example

Your employee has elected for 100% of their salary be deferred for pretax 401 (k). Although they're deferring their entire salary, that deferral is still subject to Social Security and Medicare taxes and certain state and local taxes. In this case, you would enable iteration for your 401 (k) element. When you run your payroll, the process withholds the required taxes before taking the 401 (k) deduction, up to the maximum limit.

What Input Values Affect Iterative Processing

These input values define how the payroll process performs the iterations.

Input value	What it does
High Deduction	Identifies the highest threshold for the iterations. It would display an amount of $1,000 as `1000.00`. You can't change this value.
Iteration Count	Identifies the maximum number of iterations the payroll process can perform. You can't change this value.
Low Deduction	Identifies the lowest threshold for the iterations. It would display an amount of $900.99 as `900.99`. You can't change this value.
To Within	Informs the payroll process how close to the contribution amount it must get during its calculations. To determine the amount, it uses the value you set in the following input values: Percentage Amount Deduction Amount

When the payroll process completes, it updates these values with its final amounts in the run results.

How the Payroll Process Calculates the Earnings

For those pretax elements where iteration has been enabled, the payroll process reduces the amount to withhold in the following order to ensure proper tax withholding, according to their secondary classification.

Nonqualified Deferred Compensation
Deferred Compensation 401k Catch-Up
Deferred Compensation 401k
Deferred Compensation 403b
Deferred Compensation 457
Health Savings Account Catch-Up
Flexible Spending Account
Dependent Care 125
Vision Care 125
Dental Care 125
Health Savings Account
Health Care 125