Set Up 403 (b) and Roth 403 (b) Deferred Compensation Plans

403 (b) deferred compensation plans help participants 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 in the Help Center.

You use the Elements task to define 403 (b) pretax and voluntary deductions elements. Then you can capture the deduction info on the person's Benefits and Pensions calculation card. For further info, see Benefits and Pensions Card for the US in the Help Center.

Note: Contribution limits for 403 (b) plans are the same as for 401 (k) plans, unless the 15 Years-of-Service rule applies. For further info, see 403 (b) Plan 15 Years-of-Service Rule in the Help Center.

You can define elements for these kinds of 403 (b) plans.

Plan type	How you use it	To define this element
403 (b)	This is retirement savings plan available for the employees of public schools, 501(c)(3) tax-exempt organizations, and eligible clergy. It is also known as a tax-sheltered annuity plan.	Define an element with the Pretax Deductions primary classification and Deferred Compensation 403b secondary classification. Select this component name when you configure the person's Benefits and Pensions card. For further info, see Select the Base Contribution Method below. To define employee match and catch-up contributions, use the person's Benefits and Pensions card.
After-Tax 403 (b)	These contributions are considered voluntary and contribute to the 403 (b) plan with after-tax dollars.	Define an element with the Voluntary Deductions primary classification and Pension Plan After Tax 403b secondary classification. For further info, see Define After-Tax Contributions below.
Roth 403 (b)	This plan is similar to the 403 (b) plan but is funded with after-tax contributions from the participant.	Use the Elements task to create after-tax Roth elements using the Voluntary Deductions primary element classification and the Deferred Compensation 403b Roth secondary classification. For further info, see Define Roth Contributions below.

Define the Base Contributions

Setting up the base employee contributions for a 403 (b) plan involves multiple operations.

What you want to do	How you do it
Define the base deduction element	Use the Elements task.
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.
Configure the Benefits and Pensions card	Use the Calculation Cards task to configure the card and the card components.
Set component subprocessing priorities	In the rare cases where you're defining multiple components of the same type, use Subprocessing Order to determine which is processed first. The lower the number, the higher the priority. Enter a lower or higher number to alter the default processing, depending on whether you want it processed before or after the existing card components.
Set up employer-match contributions	Use the Calculation Cards task to add the appropriate calculation values to the selected component.
Set up catch-up contributions	Use the Calculation Cards task to add the appropriate calculation values to the selected component.
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 403 (b) catch-up results elements to the Other Pretax balance definition.

For further info, see the following sections.

Define the Base Deduction Element

You can define base contributions for 403 (b) plans through the Elements task.

Deduction type	Primary classification	Secondary classification
Base 403 (b)	Pretax Deductions	Deferred Compensation 403b

These elements don't have input values. You perform any additional settings for these contributions through the person's Benefits and Pensions card.

Note: When you create these elements, the element template creates multiple indirect elements, such as catch-up and employer-matching results elements.

For further info, see Example of Defining Elements for 403 (b) and After-Tax 403 (b) Deferred Compensation Plans in the Help Center.

Configure the Benefits and Pensions Card

The element template provides minimum configuration for your plan. To fully set up your plan, add it to your employees' Benefits and Pensions cards and complete its configuration.

You can use a data loader to create the card for multiple employees. However, bear in mind that most of these cards would require individual configuration to meet each person's requirements.

To configure the card for an individual employee:

1. In My Client Groups, click Payroll.

2. Click Calculation Cards.

3. Search for and select the person.

4. Open their Benefits and Pensions card for editing.

   Create it if it doesn't already exist.

5. For employees with multiple assignments, use the Associations node to select the assignment for this card.

   1. In Calculation Card Overview, select the Associations node.

   2. In Association Details, click Add.

   3. Select the assignment number, and choose the calculation component you want to associate with it.

   4. Click OK.

   If you don't select an assignment association, the payroll process distributes the deduction across all of them.

6. Add your 403 (b) plan element to the card.

   1. In Calculation Card Overview, select Benefits.

   2. In Calculation Components, click Create and select your base 403 (b) element name.

      Enter a new subprocessing order if needed.

   3. Click OK.

7. Define whether the employee contributes a flat dollar amount or a percentage of their earnings per pay period.

   Employees choose whether to contribute a flat dollar amount or a percentage of their earnings per pay period.

   1. In Calculation Components, select the base element's row.

   2. Select Enterable Calculation Values on Calculation Cards.

   3. Click Create.

   4. For Display Value, select one of the following.

      Display value	What it does
      Flat Amount for Employee Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employee Contribution	Sets the contribution as a percentage of earnings. Enter the value in Rate as a percentage. For example, enter 5% as 05. If the employee chooses this, the payroll process draws the deductions from eligible earnings only.

8. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

9. Save your work, and continue with employer-matching and catch-up contributions if required.

Set Up Employer-Match Contributions

An employer match is the amount the employer chooses to pay into a retirement account.

To set up employer matching for your compensation plan:

1. Start the Calculation Cards task.

2. Open the person's Benefits and Pensions card for editing.

   Calculation Components lists all plans you have added to the card.

3. Select the calculation component for the 403 (b) plan you want to manage.

4. Select Enterable Calculation Value on Calculation Cards.

5. Click Create, and select Employer Contribution.

6. For DisplayValue, select one of the following.

   Display value	What it does
   No	No employer matching for your compensation plan.
   Yes, with employee contributions	Applies employer-matching amounts based on employee contributions. 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. The match calculation remains 50% of the 6% of eligible earnings.

7. Click OK.

8. Set the employer-match amount.

   By default, this component matches $.50 for every $1 contributed by the employee. The employee is limited to 6% of their eligible earnings per pay period, so the maximum employer match would be 3%.

   To change these settings:

   1. In Enterable Calculation Value on Calculation Cards, click Create.

   2. Select whether the employer match is a flat amount or a percentage of employee earnings per pay period.

      Display value	What it does
      Flat Amount for Employer Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employer Contribution	Sets the employer-match contribution as a percentage of earnings. The default is 50%. Enter the value in Rate as a percentage. For example, enter 25% as 25.
      Employer Contribution Limit Percentage	Add this calculation value to change the maximum amount of employer-match contributions. The default is 6% of the person's eligible earnings per pay period. Enter the value in Rate as a percentage. For example, enter 7% as 07. This calculation value applies to employer-match and catch-up employer-match contributions.

   3. Click OK.

9. If you're providing employer-match catch-up amounts, do the following.

   1. Click Create, and select Employer Catch-Up Contribution.

   2. For Display Value, select one of the following.

      Display value	What it does
      No	No employer matching for your compensation plan.
      Yes, with employee contributions	Applies employer-matching amounts based on employee contributions. 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. The match calculation uses the same settings as for the base employer match.

   3. Add the following values as appropriate.

      Display value	What it does
      Flat Amount for Employer Catch-Up Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00. If you add this, don't add Percentage for Employer Catch-Up Contribution.
      Percentage for Employer Catch-Up Contribution	Sets the contribution as a percentage of earnings. Enter the value in Rate as a percentage. For example, enter 25% as 25. If you add this, don't add Flat Amount for Employer Catch-Up Contribution.
      Employer Contribution Limit Percentage	Changes the maximum amount of employer-match contributions. Enter the value in Rate as a percentage. For example, enter 7% as 07. The default is 6% of the person's pay per pay period. This calculation value applies to employer-match and catch-up employer-match contributions.

   4. Click OK.

10. Add other calculation values as needed, such as limit overrides.

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

    • Contribution Limits for Deferred Compensation Plans

    • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

11. Save your work, and continue with catch-up contributions if required.

Set Up Catch-Up Contributions

To define catch-up contributions for 403 (b) plans, use the person's Benefits and Pensions calculation card.

Note: Don't define elements with the Catch-Up secondary element classifications. The element template uses these secondary classifications to create results elements based on the deferred compensation elements you define.

To enable catch-up contributions:

1. Add the Employee Catch-Up Contribution calculation value to the 403 (b) component on the person's Benefits and Pensions card, and select Yes.

2. Define whether the employee contributes a flat dollar amount or a percentage of their earnings per pay period.

   1. In Enterable Calculation Values on Calculation Cards, click Create.

   2. Select one of the following.

      Display value	What it does
      Flat Amount for Employee Catch-Up Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employee Catch-up Contribution	Sets the contribution as a percentage of earnings. Enter the value in Rate as a percentage. For example, enter 5% as 05. If the employee chooses this, the payroll process draws the deductions from eligible earnings only.

   3. Click OK.

3. Define how the payroll process calculates the catch-up contributions in relation to the base contributions.

   In Enterable Calculation Values on Calculation Cards, add Catch-Up Processing Rule and choose a value.

   Processing rule	What it does
   Concurrent	The payroll process takes the deductions at the same time as the base contributions.
   Sequential	The process doesn't take the catch-up deductions until the statutory maximum for the base contributions has been met. The catch-up deductions begin in the current pay period.

4. Use the Adjusted Deferred Compensation Limit and Enforce the 15 year rule calculation values to enforce the 15 Years-of-Service rule for eligible employees.

   For further info, see 403 (b) Plan 15 Years-of-Service Rule in the Help Center.

5. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

6. Click Save and Close.

You can change the default settings using the Value Definitions task and use two overrides to manage the compensation limit. If you set Adjusted Deferred Compensation Limit to Yes, then the rule applies and checks for the 15 years-of-service. If you use the setting Enforce the 15 year rule, the rule applies without checking seniority.

Note: The Enforce 15 years of service rule value overrides Adjusted Deferred Comp Limit. If you set Enforce 15 years of service rule to Yes, the payroll process applies the rule even if Adjusted Deferred Comp Limit is disabled.

Define After-Tax Contributions

If your deferred compensation plan supports after-tax contributions to pretax accounts, you can implement them through a combination of element definition and calculation card configuration.

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.

Define the Base Deduction Element

You can create the base contribution elements through the Elements task.

Plan type	Primary classification	Secondary classification
After-tax 403 (b)	Voluntary Deductions	Pension Plan After Tax 403b

These elements don't have input values. You perform any additional settings for these contributions through the person's Benefits and Pensions card.

Note: When you create these elements, the element template creates multiple indirect elements, such as Employee and Employer results elements.

Configure the Benefits and Pensions Card

To configure the person's card for after-tax contributions:

1. Use the Calculation Cards task to open their Benefits and Pensions card for editing.

2. Add your after-tax 403 (b) plan element to the card.

   1. In Calculation Card Overview, select the Benefits node.

   2. In Calculation Components, click Create and select your after-tax 403 (b) element name.

      Enter a new subprocessing order if needed.

   3. Click OK.

3. Define whether the employee contributes a flat dollar amount or a percentage of their earnings per pay period.

   1. In Calculation Components, select the base element's row.

   2. Select Enterable Calculation Values on Calculation Cards.

   3. Click Create.

   4. For Display Value, select one of the following.

      Display value	What it does
      Flat Amount for Employee Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employee Contribution	Sets the contribution as a percentage of earnings. Enter the value in Rate as a percentage. For example, enter 5% as 05. If the employee chooses this, the payroll process draws the deductions from eligible earnings only.

   5. Click OK.

4. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

5. Save your work, and continue with employer-matching contributions if required.

Set Up Employer-Match Contributions

To set up employer matching for your after-tax contributions:

1. Start the Calculation Cards task.

2. Open the person's Benefits and Pensions card for editing.

   Calculation Components lists all of the plans you have added to the card.

3. Select the calculation component for the after-tax 403 (b) plan you want to manage.

4. Select Enterable Calculation Value on Calculation Cards.

5. Click Create, and select Employer Contribution.

6. For Display Value, select one of the following.

   Display value	What it does
   No	No employer matching for your compensation plan.
   Yes, with employee contributions	Applies employer-matching amounts based on employee contributions. 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. The match calculation remains 50% of the 6% of eligible earnings.

7. Click OK.

8. Set the employer-match amount.

   By default, this component matches $.50 for every $1 contributed by the employee. The employee is limited to 6% of their eligible earnings per pay period, so the maximum employer match would be 3%.

   To change these settings:

   1. In Enterable Calculation Value on Calculation Cards, click Create.

   2. Select whether the employer match is a flat amount or a percentage of employee earnings per pay period.

      Display value	What it does
      Flat Amount for Employer Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employer Contribution	Sets the employer-match contribution as a percentage of eligible earnings. The default is 50%. Enter the value in Rate as a percentage. For example, enter 25% as 25. If you choose this, the payroll process draws the deductions from eligible earnings only.
      Employer Contribution Limit Percentage	Changes the maximum amount of employer-match contributions. The default is 6% of the person's eligible earnings per pay period. Enter the value in Rate as a percentage. For example, enter 7% as 07. This calculation value applies to employer-match and catch-up employer-match contributions.

   3. Click OK.

9. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

10. Click Save and Close.

Define Roth Contributions

Your deferred compensation plans can support Roth 403 (b) voluntary deductions, employer matching, and catch-up contributions.

Define the Base Deduction Element

You can create the base contribution elements through the Elements task.

Plan type	Primary classification	Secondary classification
Roth 403 (b)	Voluntary Deductions	Deferred Compensation 403b Roth

These elements don't have input values. You perform any additional settings for these contributions through the person's Benefits and Pensions card.

Note: When you create these elements, the element template creates multiple indirect elements, such as Employee and Employer results elements.

Configure the Benefits and Pensions Card

To configure the person's card for after-tax contributions:

1. Use the Calculation Cards task to open their Benefits and Pensions card for editing.

2. Add your Roth 403 (b) plan element to the card.

   1. In Calculation Card Overview, select the Benefits node.

   2. In Calculation Components, click Create and select your Roth 403 (b) element name.

      Enter a new subprocessing order if needed.

   3. Click OK.

3. Define whether the employee contributes a flat dollar amount or a percentage of their earnings per pay period.

   1. In Calculation Components, select the base element's row.

   2. Select Enterable Calculation Values on Calculation Cards.

   3. Click Create.

   4. For Display Value, select one of the following.

      Display value	What it does
      Flat Amount for Employee Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employee Contribution	Sets the contribution as a percentage of earnings. Enter the value in Rate as a percentage. For example, enter 25% as 25. If the employee chooses this, the payroll process draws the deductions from eligible earnings only.

   5. Click OK.

4. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

5. Save your work, and continue with employer-matching and catch-up contributions if required.

Set Up Employer-Match Contributions

To set up employer matching for your Roth contributions:

1. Start the Calculation Cards task.

2. Open the person's Benefits and Pensions card for editing.

   Calculation Components lists all of the plans you have added to the card.

3. Select the calculation component for the Roth 403 (b) plan you want to manage.

4. Select Enterable Calculation Value on Calculation Cards.

5. Click Create, and select Employer contribution.

6. For Display Value, select one of the following.

   Display value	What it does
   No	No employer matching for your compensation plan.
   Yes, with employee contributions	Applies employer-matching amounts based on employee contributions. 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. The match calculation uses the same settings as for the base employer match.

7. Click OK.

8. Set the employer-match amount.

   By default, this component matches $.50 for every $1 contributed by the employee. The employee is limited to 6% of their eligible earnings per pay period, so the maximum employer match would be 3%.

   To change these settings:

   1. In Enterable Calculation Value on Calculation Cards, click Create.

   2. Select whether the employer match is a flat amount or a percentage of employee earnings per pay period.

      Display value	What it does
      Flat Amount for Employer Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employer Contribution	Sets the contribution as a percentage of eligible earnings. The default is 50%. Enter the value in Rate as a percentage. For example, enter 25% as 25.
      Employer Contribution Limit Percentage	Add this calculation value to change the maximum amount of employer-match contributions. The default is 6% of the person's eligible earnings per pay period. Enter the value in Rate as a percentage. For example, enter 7% as 07. This calculation value applies to employer-match and catch-up employer-match contributions.

   3. Click OK.

   4. To change the maximum amount of employer-match contributions, add the Employer Contribution Limit Percentage calculation value. Enter the value in Rate as a percentage.

      For example, enter 7% as 07.

      The default is 6% of the person's pay per pay period.

      This calculation value applies to employer-match and catch-up employer-match contributions.

   5. Click OK.

9. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

10. Save your work, and continue with catch-up contributions if required.

Set Up Catch-Up Contributions

Your deferred compensation plan can support catch-up contributions for Roth 403 (b) plans. Unlike 403 (b) catch-up contributions, these Roth contributions are calculated after tax. They're restricted to participants 50 years and older.

To set up Roth catch-up contributions for your eligible employees:

1. Add the Employee Catch-Up Contribution calculation value to the Roth 403 (b) component on the person's Benefits and Pensions card, and select Yes.

2. Define whether the employee contributes a flat dollar amount or a percentage of their earnings per pay period.

   1. In Enterable Calculation Values on Calculation Cards, click Create.

   2. Select one of the following.

      Display value	What it does
      Flat Amount for Employee Catch-Up Contribution	Represents the amount of the contribution in USD. Enter the value in Amount. For example, enter $1000 as 1000.00.
      Percentage for Employee Catch-Up Contribution	Sets the contribution as a percentage of earnings. Enter the value in Rate as a percentage. For example, enter 5% as 05. If the employee chooses this, the payroll process draws the deductions from eligible earnings only.

   3. Click OK.

3. Define how the payroll process calculates the catch-up contributions in relation to the base contributions.

   In Enterable Calculation Values on Calculation Cards, add Processing Rule and choose a value.

   Display value	What it does
   Concurrent	The payroll process takes the deductions at the same time as the base contributions.
   Sequential	The process doesn't take the catch-up deductions until the statutory maximum for the base contributions has been met. The catch-up deductions begin in the current pay period.

4. Add other calculation values as needed, such as limit overrides.

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

   • Contribution Limits for Deferred Compensation Plans

   • Limits and Overrides for 403 (b) and 457 (b) Deferred Compensation Plans

5. Click Save and Close.

Other Considerations

When defining elements for 403 (b) or Roth 403 (b) deferred compensation plans, you have the following additional considerations.

For further info, 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 403b 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 403b Eligible Earnings predefined balance.

Note: If you're running multiple 403 (b) plans, they must use separate balances for each. You can use the predefined Deferred Compensation 403b Eligible Earnings and Total Deferred Compensation 403b 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.