1. Benefits Questions and Answers
  2. Create pretax deduction elements as part of setting up 401(k) plans in benefits

Create pretax deduction elements as part of setting up 401(k) plans in benefits

In the scenario, you need to create payroll elements so you can send the employee and employer contributions for payroll processing.

  1. Depending on your access privileges, start the Elements task from the My Client Groups quick actions or from the Setup and Maintenance work area.

  2. Complete these fields:

    Field Value
    Legislative Data Group Select your legislative data group
    Primary Classification

    Pretax Deductions

    You use this classification to define elements for 401(k) deductions.
    Secondary Classification

    Deferred Compensation 401(k)

    This classification enables you to create elements specific to a 401(k) implementation.

  3. Click Continue. In the Basic Information page, complete these fields, leaving other fields as is.

    Field Value
    At which employment level should this element be attached? Payroll relationship level
    Should every person eligible for the element automatically receive it?

    No

    You want Benefits to make the element entry, not any other application.
    Can a person have more than one entry of this element in a payroll period? No
    Earliest entry date First standard earning date
    Latest entry date Last standard earning date

  4. Click Next.

  5. In the Additional Details page, complete this questionnaire. Accept the default values for other questions.

    Field Value
    Enforce 401(k) Eligible Compensation Limit Check

    Yes

    This addresses these scenario requirements:
    • Employee contribution shouldn’t exceed USD 23000 a year.
    • Employer contribution in a year shouldn’t exceed 6% of the employee’s salary.
    Should the deferred compensation 401(k) elements have an associated employer-match element?

    Yes

    This addresses the scenario requirement where we need to include the employer contribution in addition to the employee’s contribution. A relevant employer element will be created automatically.

    Later, you link this element to an employer contribution rate that you’ll create in a subsequent task.

  6. Click Next.

  7. Review the details and click Submit.

  8. Open the element you created and create element eligibility. You don’t need to enter any criteria, but make sure that the Automatic Entry check box is deselected.

  9. Click Submit.