Set Up 401 (k) and Roth 401 (k) Deferred Compensation Plans

401 (k) deferred compensation plans allow participants to save for retirement.

Employees can choose one or more deductions from wages on a pretax, Roth, or after-tax basis. Catch-up options are available for participants that meet the age requirements, and employer matching is available if your organization supports it.

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

You use the Elements task to define 401 (k) pretax and voluntary deductions elements.

You can define elements for these kinds 401 (k) and Roth 401 (k) plans.

Plan type	Description	To define this element
401 (k)	In this plan, an employee can elect to have a portion of their cash wages contribute to the plan on a pretax basis.	Define an element with the Pretax Deductions primary element classification and Deferred Compensation 401 (k) secondary element classification. During the base plan configuration, you can define associated contribution types. Employer-matching Catch-up Roth After-tax See below for info about stand-alone catch-up, after-tax, and Roth elements.
401 (k) Catch-Up	These contributions help employees maximize their deferred compensation balances as they near their retirement age.	You can define catch-up contributions during the base plan configuration. To define stand-alone catch-up elements, use the Deferred Compensation 401k Catch-Up secondary element classification.
After-Tax 401 (k)	These contributions are considered voluntary and contribute to the 401 (k) plan with after-tax dollars.	You can define after-tax contributions during the base plan configuration. To define stand-alone elements, use the Voluntary Deductions primary element classification and Pension Plan After Tax secondary element classification.
Roth 401 (k)	This plan is similar to the 401 (k) plan but is funded with after-tax contributions from the participant.	You can define Roth and Roth catch-up contributions during the base plan configuration. To define stand-alone elements, use these dedicated secondary classifications. Deferred Compensation 401k Roth Deferred Compensation 401k Roth Catch Up

401 (k) Base Contributions

Setting up the base employee contributions for a 401 (k) plan can involve multiple operations.

What you want to do	How you do it
Define the base deduction element	Use the Elements task.
Define catch-up contributions	The element template prompts you to include catch-up contributions with the base contributions. If you choose to include them, it prompts you choose if the payroll process deducts them concurrently or sequentially with the base deductions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met.
Define Roth contributions	The element template prompts you to include Roth contributions with the base contributions. This can include Roth catch-up contributions. If you choose to include catch-up contributions, it prompts you choose if the payroll process deducts them concurrently or sequentially with the base deductions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met.
Define after-tax contributions	The element template prompts you to include after-tax contributions with the base contributions. If you choose to include them, it prompts you choose if the payroll process deducts them concurrently or sequentially with the base deductions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met.
Define the contribution amount rules	Use the Amount Rules section of the template to define how the payroll process handles insufficient funds and eligible compensation limit checks. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.
Define the element processing rules	Use the Processing Rules section of the template to define how the payroll process handles this element during payroll calculation, including iterative processing. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Set up employer matching	The element template gives you the option to include employer-matching contributions.
Choose the employee contribution method	Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period. You set the contribution method through input values on the element.
Set the other input values	Use the input values to configure the element behavior, including overrides and limits.
Change the element processing priorities	The element template automatically sets the appropriate processing priorities for the elements you define. If you need to change the processing priority for an element, use the Elements task to set a new value in Priority.

For further info, see the following sections.

Define the Base Deduction Element

You can define base contributions for 401 (k) plans through the Elements task.

Deduction type	Primary classification	Secondary classification
Base 401 (k)	Pretax Deductions	Deferred Compensation 401k Catch-Up

Note: When you create these elements, the element template creates multiple indirect elements, such as Calculator elements. Some are based on selections you made during element definition, such as catch-up and employer-matching results elements.

For further info, see Example of Defining Elements for 401 (k) and Roth 401 (k) Deferred Compensation Plans in the Help Center.

Choose the Employee Contribution Method

Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period.

If you enter values in the Deduction Amount, Amount, and Percentage input values for an employee, the payroll process applies them according to the following priority.

1. Deduction Amount

2. Amount

3. Percentage

When you assign the element entry to an employee, you define the flat amount or percentage for that employee. If you choose percentage, the payroll process draws the contributions from eligible earnings only.

Set Up Employer-Match Contributions

An employer match is the amount the employer chooses to pay into an employee's retirement account. Employer base contribution matching is optional, configurable, and applies to these deduction types.

• 401 (k)

• 401 (k) Catch-Up

• 401 (k) After-Tax

• 401 (k) Roth

• 401 (k) Roth Catch-Up

The Employer Match Rules section of the element template has a single prompt. The selection you make here applies to all employer-match types.

Template prompt	What it does
No	No employer matching for your compensation plan.
Yes, with employee contributions	Applies employer matching amounts based on employee contributions. By default, this element matches $.50 for every $1 contributed by the employee, up to 6% of their pay per pay period. Note: Employer match deductions continue until the employer-match threshold is met, even if the employee has reached their deferred contribution limit for the year.
Yes, without employee contributions	Applies an employer match even if the employee doesn't contribute. You must use the Employer Match Amount input value to define your contributions. The match calculation remains 50% of the 6% of earnings.

You can change the employer match values through the Employer Liabilities element's input values.

Set the Input Values

You can set input values on the following elements.

• Base element

• Employer match

Base Element Input Values

Input value	What it does
Amount	Represents the dollar amount of the contribution. Entry in this input value takes priority over entry in the Percentage value. Note: For flat amount contribution elements only. For example, to set a contribution of $100, enter 100.00.
Deduction Amount	Overrides the amount of contribution deducted each pay period. Entry in this input value takes priority over entry in the Amount or Percentage values. For example, to set a contribution of $100, enter 100.00.
Distribution Code	Don't use for 401 (k) elements.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met. This applies to these contributions. 401 (k) 401 (k) After-Tax 401 (k) Catch-Up Roth 401 (k) Roth 401 (k) Catch-Up
High Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Iteration Count	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Low Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Method	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Override IRS Limit	Overrides the statutory employee base contribution limit as enforced by the IRS. This assists in preventing overpayment into contributions. Use this value to set a new limit. For example: Assume a statutory limit of $17,500 An employee has already contributed $5,000 with a previous employer Use this input value to account for the $5,000 already contributed Set the limit to $12,500 with a date for the effective change (17500 - 5000 = 12500). For example, to set an override of $12,500, enter 12500.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Partial Flag	Select Yes to allow partial deduction amounts when: Earnings are insufficient to take the full deduction Legislative limits have been met
Percentage	Represents the percentage amount of the contribution. Note: For percentage-amount contribution elements only. Entry in Amount and Deduction Amount takes priority over this input value. For example, enter 3% as 03.
Period Type	Identifies how often the contribution is processed. Note: For flat amount contribution elements only.
Separate Tax Code	Don't use for 401 (k) elements.

Employer-Match Element Input Values

Input value	What it does
Distribution Code	Don't use for 401 (k) elements.
Employer Contribution Percentage	Percentage of employee contributions matched by the employer. The default is to match $.50 for every $1 contributed by the employee.
Employer Contribution Limit Percentage	Maximum amount of employer contribution matching, based on the percentage of employee's pay per pay period. The default is to match 6% of the employee's pay per pay period. For example, enter 6% as 06.
Employer Contribution Without EE	Identifies if the payroll process takes employer-matching contributions with or without employee contributions.
Employer Match Amount	Represents the dollar amount of the contribution.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met. This applies to the following contributions. 401 (k) 401 (k) After-Tax 401 (k) Catch-Up Roth 401 (k) Roth 401 (k) Catch-Up
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change.
Separate Tax Code	Don't use for 401 (k) elements.

401 (k) Catch-Up Contributions

Catch-up contributions help employees maximize their deferred compensation balances as they near their retirement age. These pretax payments are in addition to the base contributions, and they apply to 401 (k) deferred compensation deductions. They're restricted to participants 50 years and older.

When you define the base contribution, you can choose to configure catch-up contributions at that time. However, you can also set up catch-up elements independently.

What you want to do	How you do it
Define the catch-up deduction element	Use the Elements task.
Configure catch-up processing	The element template prompts you choose if the payroll process deducts these catch-up contributions concurrently or sequentially with the base deductions. If you select Concurrent, the process takes the deductions at the same time as the base contributions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met. The catch-up deductions begin in the current pay period.
Set up employer matching	The element template prompts you to include employer-matching contributions.
Define the contribution amount rules	Use the Amount Rules section of the template to define how the payroll process handles insufficient funds and eligible compensation limit checks. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.
Define the element processing rules	Use the Processing Rules section of the template to define how the payroll process handles this element during payroll calculation, including iterative processing. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Choose the employee contribution method	Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period. You set the contribution method through input values on the element.
Set the other input values	Use the input values to configure the element behavior, including overrides and limits.
Set the element processing priorities	The element template automatically sets the appropriate processing priorities for the elements you define. If you need to change the processing priority for an element, use the Elements task to set a new value in Priority.
Configure balance feeds for catch-up contributions	There are no predefined balance feeds for the pretax catch-up indirect elements. For the payroll process to properly calculate taxes for the catch-up contributions: Start the Balance Definitions task. Feed any 401 (k) catch-up results elements to the Other Pretax balance definition.

Define the Catch-Up Deduction Element

You can define catch-up contributions for 401 (k) plans through the Elements task.

Deduction type	Primary classification	Secondary classification
Base 401 (k) catch-up	Pretax Deductions	Deferred Compensation 401k Catch-Up

This creates a Pretax Deductions element named "<base element name> Catchup". Use the Balance Definitions task to feed the 401 (k) catch-up results element to the Other Pretax balance.

Set Up Employer-Match Contributions

For employer-matching contributions, you have the following options.

Template prompt	What it does
No	No employer matching for the catch-up deductions.
Yes, with employee contributions	Applies employer matching amounts based on employee contributions. By default, this element matches $.50 for every $1 contributed by the employee, up to 6% of their pay per pay period. Note: Employer match deductions continue until the employer-match threshold is met, even if the employee has reached their deferred contribution limit for the year.
Yes, without employee contributions	Applies an employer match even if the employee doesn't contribute. You must use the Employer Match Amount input value to define your contributions.

You can change the employer match values through the Employer Liabilities element's input values.

Set the Input Values

You can set input values on the following elements.

• Catch-up base element

• Catch-up employer match

Catch-Up Base Element Input Values

Input value	What it does
Amount	Represents the dollar amount of the contribution. Entry in this input value takes priority over entry in the Percentage value. Note: For flat amount contribution elements only. For example, to set an override of $100, enter 100.00.
Deduction Amount	Overrides the amount of contribution deducted each pay period. Entry in this input value takes priority over entry in the Amount or Percentage values. For example, to set an override of $100, enter 100.00.
Distribution Code	Don't use for 401 (k) catch-up elements.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
High Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Iteration Count	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Low Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Method	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Override IRS Limit	Overrides the statutory employee base contribution limit as enforced by the IRS. This assists in preventing overpayment into contributions. Use this value to set a new limit. For example: Assume a statutory limit of $17,500 An employee has already contributed $5,000 with a previous employer Use this input value to account for the $5,000 already contributed Set the limit to $12,500 with a date for the effective change (17500 - 5000 = 12500). For example, to set an override of $12,500, enter 12500.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Partial Flag	Select Yes to allow partial deduction amounts when: Earnings are insufficient to take the full deduction Legislative limits have been met
Percentage	Represents the percentage amount of the contribution. Note: For percentage-amount contribution elements only. Entries in Amount and Deduction Amount take priority over this input value. For example, enter 3% as 03.
Period Type	Identifies how often the contribution is processed. Note: For flat amount contribution elements only.
Process Type	Identifies whether this deduction is taken sequentially or concurrently with the base contribution. If you select Concurrent, the process takes the deductions at the same time as the base contributions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met. The catch-up deductions begin in the current pay period.
Separate Tax Code	Don't use for 401 (k) catch-up elements.
To Within	Used for net-to-gross processing. For further info, see Net-to-Gross Earnings Elements for the US.

Catch-Up Employer Match Element Input Values

Input value	What it does
Distribution Code	Don't use for 401 (k) catch-up elements.
Employer Contribution Percentage	Percentage of employee contributions matched by the employer. The default is to match $.50 for every $1 contributed by the employee.
Employer Contribution Limit Percentage	Maximum amount of employer contribution matching, based on the percentage of employee's pay per pay period. The default is to match 6% of the employee's pay per pay period. For example, enter 6% as 06.
Employer Contribution Without EE	Identifies if the payroll process takes employer-matching contributions with or without employee contributions.
Employer Match Amount	Represents the dollar amount of the contribution.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change.
Separate Tax Code	Don't use for 401 (k) catch-up elements.

After-Tax Contributions

If your deferred compensation plan supports after-tax contributions to pretax accounts, you can choose to configure them when you define the base contribution.

However, you can also set up after-tax elements independently.

Note: After-tax elements are subject to the Elective Deferral and Annual Compensation limits. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.

What you want to do	How you do it
Define the after-tax deduction element	Use the Elements task.
Configure after-tax processing	The element template prompts you choose if the payroll process deducts these after-tax contributions concurrently or sequentially with the base deductions. If you select Concurrent, the process takes the deductions at the same time as the base contributions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met. The catch-up deductions begin in the current pay period.
Set up employer matching	The element template gives you the option to include employer-matching contributions.
Define the contribution amount rules	Use the Amount Rules section of the template to define how the payroll process handles insufficient funds and eligible compensation limit checks. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.
Define the element processing rules	Use the Processing Rules section of the template to define how the payroll process handles this element during payroll calculation.
Choose the employee contribution method	Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period. You set the contribution method through input values on the element.
Set the other input values	Use the input values to configure the element behavior, including overrides and limits.
Set the element processing priorities	The element template automatically sets the appropriate processing priorities for the elements you define. If you need to change the processing priority for an element, use the Elements task to set a new value in Priority.

For further info, see the following sections.

Define the After-Tax Deduction Element

You can define after-tax contributions for 401 (k) plans through the Elements task.

Deduction type	Primary classification	Secondary classification
After-tax 401 (k)	Voluntary Deductions	Pension Plan After Tax

This creates a Voluntary Deductions element named "<base element name> After tax".

For further info, see Example of Defining Elements for 401 (k) and Roth 401 (k) Deferred Compensation Plans in the Help Center.

Set Up Employer-Match Contributions

Employer after-tax contribution matching is optional and configurable.

Template prompt	What it does
No	No employer matching for your compensation plan.
Yes, with employee contributions	Applies employer matching amounts based on employee contributions. By default, this element matches $.50 for every $1 contributed by the employee, up to 6% of their pay per pay period. Note: Employer match deductions continue until the employer-match threshold is met, even if the employee has reached their deferred contribution limit for the year.
Yes, without employee contributions	Applies an employer match even if the employee doesn't contribute. You must use the Employer Match Amount input value to define your contributions.

You can change the employer match values through the Employer Liabilities element's input values.

Note: Although these are employee after-tax contributions, you must send any employer-matching contributions to a third-party pretax account.

Choose the Employee Contribution Method

Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period.

If you enter values in the Deduction Amount, Amount, and Percentage input values for an employee, the payroll process applies them according to this priority.

1. Deduction Amount

2. Amount

3. Percentage

When you assign the element entry to an employee, you define the flat amount or percentage for that employee. If you choose percentage, the payroll process draws the contributions from eligible earnings only.

Set the Input Values

You can set input values on the following elements.

• After-tax base element

• After-tax employer match

After-Tax Base Element Input Values

Input value	What it does
Amount	Represents the dollar amount of the contribution. Entry in this input value takes priority over entry in the Percentage value. Note: For flat amount contribution elements only. For example, to set an override of $100, enter 100.00.
Deduction Amount	Overrides the amount of after-tax contribution deducted each pay period. Entry in this input value takes priority over entry in the Amount or Percentage values. For example, to set an override of $100, enter 100.00.
Distribution Code	Don't use for after-tax elements.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Partial Flag	Select Yes to allow partial deduction amounts when: Earnings are insufficient to take the full deduction Legislative limits have been met
Percentage	For percentage contributions, represents the percentage amount. Enter a percentage in the following format: 3 for 3%.
Period Type	For flat amount contributions, identifies how often the contribution is processed.
Process Type	Identifies whether this deduction is taken sequentially or concurrently with the base contribution. If you select Concurrent, the process takes the deductions at the same time as the base contributions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met. The catch-up deductions begin in the current pay period.
Separate Tax Code	Don't use for after-tax elements.

After-Tax Employer-Match Element Input Values

Input value	What it does
Distribution Code	Don't use for after-tax elements.
Employer Contribution Percentage	Percentage of employee contributions matched by the employer. The default is to match $.50 for every $1 contributed by the employee.
Employer Contribution Limit Percentage	Maximum amount of employer contribution matching, based on the percentage of employee's pay per pay period. The default is to match 6% of the employee's pay per pay period. For example, enter 6% as 06.
Employer Contribution Without EE	Identifies if the payroll process takes employer-matching contributions with or without employee contributions.
Employer Match Amount	Represents the dollar amount of the contribution.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change.
Separate Tax Code	Don't use for after-tax elements.

Roth 401 (k) Contributions

If your deferred compensation plan supports Roth 401 (k) contributions to after-tax accounts, you can choose to configure them when you define the base contribution.

However, you can also set up Roth elements independently.

Note: Roth 401 (k) elements are subject to the Elective Deferral and Annual Compensation limits. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.

What you want to do	How you do it
Define the base deduction element	Use the Elements task.
Set up employer matching	The element template prompts you to include employer-matching contributions.
Set up catch-up processing	The element template prompts you to include catch-up contributions with the base contributions. If you choose to include them, it prompts you choose if the payroll process deducts them concurrently or sequentially with the base deductions. If you select Concurrent, the process takes the deductions at the same time as the base contributions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met. The catch-up deductions begin in the current pay period.
Set up catch-up employer matching	The element template prompts you to include catch-up employer-matching contributions.
Define the contribution amount rules	Use the Amount Rules section of the template to define how the payroll process handles insufficient funds and eligible compensation limit checks. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.
Define the element processing rules	Use the Processing Rules section of the template to define how the payroll process handles this element during payroll calculation, including iterative processing. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Choose the employee contribution method	Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period. You set the contribution method through input values on the element.
Set the other input values	Use the input values to configure the element behavior, including overrides and limits.
Set the element processing priorities	The element template automatically sets the appropriate processing priorities for the elements you define. If you need to change the processing priority for an element, use the Elements task to set a new value in Priority.

Define the Base Deduction Element

You can define contributions for Roth 401 (k) plans through the Elements task.

Deduction type	Primary classification	Secondary classification
Base Roth 401 (k)	Voluntary Deductions	Deferred Compensation 401k Roth

This creates a Voluntary Deductions element named "<base element name> Roth".

For further info, see Example of Defining Elements for a 401 (k) and Roth 401 (k) Deferred Compensation Plans in the Help Center.

Set Up Employer-Match Contributions

Employer Roth contribution matching is optional and configurable.

Template prompt	What it does
No	No employer matching for your compensation plan.
Yes, with employee contributions	Applies employer matching amounts based on employee contributions. By default, this element matches $.50 for every $1 contributed by the employee, up to 6% of their pay per pay period. Note: Employer match deductions continue until the employer-match threshold is met, even if the employee has reached their deferred contribution limit for the year.
Yes, without employee contributions	Applies an employer match even if the employee doesn't contribute. You must use the Employer Match Amount input value to define your contributions.

You can change the employer match values through the "<element name> Roth Employer Match" element's input values.

Set Up Employer-Match Catch-Up Contributions

You have the same employer-match options for catch-up contribution as for the base contributions.

Choose the Employee Contribution Method

Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period.

If you enter values in the Deduction Amount, Amount, and Percentage input values for an employee, the payroll process applies them according to the following priority.

1. Deduction Amount

2. Amount

3. Percentage

When you assign the element entry to an employee, you define the flat amount or percentage for that employee. If you choose percentage, the payroll process draws the contributions from eligible earnings only.

Set the Input Values

You can set input values on the following elements.

• Roth base element

• Roth employer match

Roth Base Element Input Values

Input Value	What it does
Amount	Represents the dollar amount of the contribution. Entry in this input value takes priority over entry in the Percentage value. Note: For flat amount contribution elements only. For example, to set a contribution of $100, enter 100.00.
Deduction Amount	Overrides the amount of contribution deducted each pay period. Entry in this input value takes priority over entry in the Amount or Percentage values. For example, to set a contribution of $200,000, enter 200000.00.
Distribution Code	Don't use for Roth 401 (k) elements.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
High Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Iteration Count	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Low Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Method	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Override IRS Limit	Overrides the statutory employee base contribution limit as enforced by the IRS. This assists in preventing overpayment into contributions. Use this value to set a new limit. For example: Assume a statutory limit of $17,500 An employee has already contributed $5,000 with a previous employer Use this input value to account for the $5,000 already contributed Set the limit to $12,500 with a date for the effective change (17500 - 5000 = 12500). For example, to set an override of $12,500, enter 12500.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Partial Flag	Select Yes to allow partial deduction amounts when: Earnings are insufficient to take the full deduction Legislative limits have been met
Percentage	Represents the percentage amount of the contribution. Note: For percentage-amount contribution elements only. Entries in Amount and Deduction Amount take priority over this input value. For example, enter 3% as 03.
Period Type	Identifies how often the contribution is processed. Note: For flat amount contribution elements only.
Separate Tax Code	Don't use for Roth 401 (k) elements.

Roth Employer-Match Element Input Values

Input value	What it does
Distribution Code	Don't use for Roth 401 (k) elements.
Employer Contribution Percentage	Percentage of employee contributions matched by the employer. The default is to match $.50 for every $1 contributed by the employee.
Employer Contribution Limit Percentage	Maximum amount of employer contribution matching, based on the percentage of employee's pay per pay period. The default is to match 6% of the employee's pay per pay period. For example, enter 6% as 06.
Employer Contribution Without EE	Identifies if the payroll process takes employer-matching contributions with or without employee contributions.
Employer Match Amount	Represents the dollar amount of the contribution.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change.
Separate Tax Code	Don't use for Roth 401 (k) elements.

Roth Catch-Up Contributions

Your deferred compensation plan can support catch-up contributions for Roth 401 (k) plans. Unlike 401 (k) catch-up contributions, the payroll process calculates these contributions after tax. Use the appropriate catch-up secondary classifications within the Voluntary Deductions primary classification. They're restricted to participants 50 years and older.

When you define the base Roth contribution, you can choose to configure catch-up contributions at that time. However, you can also set up Roth catch-up elements independently.

What you want to do	How you do it
Define the catch-up deduction element	Use the Elements task.
Configure catch-up processing	The element template prompts you choose if the payroll process deducts these catch-up contributions concurrently or sequentially with the base deductions. If you select Concurrent, the process takes the deductions at the same time as the base contributions. If you select Sequential, the process doesn't start taking deductions until the statutory maximum for the base contributions are met. The catch-up deductions begin in the current pay period.
Set up catch-up employer matching	The element template prompts you to include catch-up employer-matching contributions.
Define the contribution amount rules	Use the Amount Rules section of the template to define how the payroll process handles insufficient funds and eligible compensation limit checks. For further info, see Contribution Limits for Deferred Compensation Plans in the Help Center.
Define the element processing rules	Use the Processing Rules section of the template to define how the payroll process handles this element during payroll calculation, including iterative processing. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Choose the employee contribution method	Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period. You set the contribution method through input values on the element.
Set the other input values	Use the input values to configure the element behavior, including overrides and limits.
Set the element processing priorities	The element template automatically sets the appropriate processing priorities for the elements you define. If you need to change the processing priority for an element, use the Elements task to set a new value in Priority.

Define the Catch-Up Deduction Element

You can define catch-up contributions for Roth 401 (k) plans through the Elements task.

Deduction type	Primary classification	Secondary classification
Roth 401 (k) catch-up	Voluntary Deductions	Deferred Compensation 401k Roth Catch Up

This creates a Voluntary Deductions element named "<base element name> Roth Catchup".

For further info, see Example of Defining Elements for 401 (k) and Roth 401 (k) Deferred Compensation Plans in the Help Center.

Set Up Catch-Up Employer-Match Contributions

Roth catch-up employer matching is optional and configurable.

Template prompt	What it does
No	No employer matching for your compensation plan.
Yes, with employee contributions	Applies employer matching amounts based on employee contributions. By default, this element matches $.50 for every $1 contributed by the employee, up to 6% of their pay per pay period. Note: Employer match deductions continue until the employer-match threshold is met, even if the employee has reached their deferred contribution limit for the year.
Yes, without employee contributions	Applies an employer match even if the employee doesn't contribute. You must use the Employer Match Amount input value to define your contributions.

You can change the employer match values through the "<element name> Roth Catchup Employer Match" element's input values.

Choose the Employee Contribution Method

Employees can contribute either a flat dollar amount or a percentage of their earnings per pay period.

If you enter values in the Deduction Amount, Amount, and Percentage input values for an employee, the payroll process applies them according to this priority.

1. Deduction Amount

2. Amount

3. Percentage

When you assign the element entry to an employee, you define the flat amount or percentage for that employee. If you choose percentage, the payroll process draws the contributions from eligible earnings only.

Set the Input Values

You can set input values on the following elements.

• Roth catch-up base element

• Roth catch-up employer match

Roth Catch-Up Base Element Input Values

Input Value	What it does
Amount	Represents the dollar amount of the contribution. Entry in this input value takes priority over entry in the Percentage value. Note: For flat amount contribution elements only. For example, to set a contribution of $100, enter 100.00.
Deduction Amount	Overrides the amount of contribution deducted each pay period. Entry in this input value takes priority over entry in the Amount or Percentage values. For example, to set a contribution of $100, enter 100.00.
Distribution Code	Don't use for Roth 401 (k) elements.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
High Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Iteration Count	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Low Deduction	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Method	Available if you enable iterative processing for this element. For further info, see Iterative Processing for Pretax Deductions in the Help Center.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Override IRS Limit	Overrides the statutory employee base contribution limit as enforced by the IRS. This assists in preventing overpayment into contributions. Use this value to set a new limit. For example: Assume a statutory limit of $17,500 An employee has already contributed $5,000 with a previous employer Use this input value to account for the $5,000 already contributed Set the limit to $12,500 with a date for the effective change (17500 - 5000 = 12500). For example, to set an override of $12,500, enter 12500.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change. Use the Start-of-Year Process to remove the exemption and end-date the override on the appropriate employee records. For further info, see Run Start-of-Year Process in the Help Center.
Partial Flag	Select Yes to allow partial deduction amounts when: Earnings are insufficient to take the full deduction Legislative limits have been met
Percentage	Represents the percentage amount of the contribution. Note: For percentage-amount contribution elements only. Entries in Amount and Deduction Amount take priority over this input value. For example, enter 3% as 03.
Period Type	Identifies how often the contribution is processed. Note: For flat amount contribution elements only.
Separate Tax Code	Don't use for Roth 401 (k) elements.

Roth Catch-Up Employer-Match Element Input Values

Input value	What it does
Distribution Code	Don't use for Roth 401 (k) elements.
Employer Contribution Percentage	Percentage of employee contributions matched by the employer. The default is to match $.50 for every $1 contributed by the employee.
Employer Contribution Limit Percentage	Maximum amount of employer contribution matching, based on the percentage of employee's pay per pay period. The default is to match 6% of the employee's pay per pay period. For example, enter 6% as 06.
Employer Contribution Without EE	Identifies if the payroll process takes employer-matching contributions with or without employee contributions.
Employer Match Amount	Represents the dollar amount of the contribution.
Enforce Compensation Limit	If you select Yes, deductions stop when the annual compensation limit is reached. If you select No, deductions stop when the elective deferral limit is met.
Override IRS Annual Compensation Limit	Overrides the eligible compensation annual limit. For example, to set an override of $200,000, enter 200000.00. Note: If you use this override, you must clear this value at the beginning of each year with date effective change.
Separate Tax Code	Don't use for Roth 401 (k) elements.

Other Considerations

When defining elements for 401 (k) or Roth 401 (k) deferred compensation plans, you have the following additional considerations.

For info about compensation limits, see Compensation Limits for Deferred Compensation Plans in the Help Center.

Contribution Limits

The payroll process automatically enforces statutory limits on the deferred compensation contributions.

If your employee contributes to both 401 (k) and 403 (b) standard or Roth plans, the payroll process enforces the deferred compensation annual limit across the plans.

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

Tax Exemptions

In most cases, pretax deferred wages aren't subject to federal (FIT) or state income tax (SIT) withholding at the time of deferral. However, they're included as wages subject to Social Security, Medicare, and federal unemployment tax (FUTA). The payroll process takes this into account and automatically deducts the appropriate taxes during payroll calculation.

For further info, see the following in the Help Center.

• Involuntary Deduction Wage Basis Rules for the US

• Tax Wage Basis Rules for the US

Balances for Eligible Earnings

When you create an element that takes a percentage deduction, the payroll process doesn't take the deduction until you feed the eligible balance. The Elements task doesn't automatically establish this feed for tracking eligible earnings.

To identify the earnings to be used in these calculations:

1. Start the Balance Definitions task.

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

3. Click Edit.

4. Click Balance Feeds.

5. Configure the feeds for your eligible earnings results elements, and save your work.

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

Note: If you're running multiple 401 (k) plans, they must use separate balances for each. You can use the predefined Deferred Compensation 401K Eligible Earnings and Total Deferred Compensation 401k Eligible Earnings balances for only one. For any additional plans, you must define and feed a new balance, copying the predefined one, and modify the appropriate fast formulas.

Reports

The following reports collect and display info about deferred compensation deductions.

Report	How you use it
Deduction Report	View details of payroll deductions processed for the specified period. For further info, see Deduction Report in the Help Center.
Element Results Register	View a listing of the elements and pay values processed for each payroll relationship action. For further info, see 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 info about personal info, payroll info, and tax and employment info, run results, messages, and balances. For further info, see How to View the Statement of Earnings for the US in the Help Center.
Deferred Compensation Over the Limit Balance Exception Report	For further info, see Oracle Cloud Human Capital Management for the US: Balance Exception Report (2325520.1) on My Oracle Support.