How does the Start-of-Year Process flow determine Section 603 high earners?

The Start-of-Year Process flow can automatically identify Section 603 high-earners based on their aggregated Social Security taxable wages. It processes them according to your employer identification numbers (EINs). Because Oracle Cloud Payroll doesn't perform aggregation at the EIN level, the Start-of-Year Process flow groups employees by the organizational structure that best matches your EIN configuration.

• Payroll statutory unit (PSU)

  Aggregates Social Security taxable wages across all tax reporting units (TRUs) within the PSU.

• TRU

  Evaluates the wages separately by TRU. Wages aren't aggregated across TRUs.

• Tax group

  Aggregates the wages within each tax group.

If an employee exceeds the threshold in any TRU or tax group, the process classifies them as a SECURE 603 high earner for the entire payroll relationship.

For further info, see How do I set the SECURE 603 evaluation level?

How do I configure the Start-of-Year Process flow?

When running the flow, select the SECURE 603 Catch-Up Eligibility Update data type.

The flow generates an output file you can use to review the evaluation results, proposed updates, applied updates, skipped records, and warnings.

For further info, see How to Perform Begin-of-Year Processing for the US.

When would I need to perform this evaluation manually?

Don't use the Start-of-Year Process flow for this if the evaluation levels don't accurately represent your EIN structure. For example:

• A PSU includes multiple employer EINs.

• One EIN is split across multiple TRUs that aren't represented by a single tax group.

• You use tax groups for payroll reporting, but they don't match the EIN structure for the retirement plan.

• You have employees that have payroll relationships across multiple PSUs.