Enhanced Deferred Compensation Employer Matching for SUI Taxable Wages

We have enhanced our deferred-compensation contributions processing with the addition of elements that support state unemployment insurance (SUI) wage treatment for states where employer-matching contributions must be included in SUI taxable wages. We have updated the deferred compensation plan element templates to include this option. All employer-match indirect elements created by the templates will use the new Employer Contributions classification and Deferred Compensation Employer Match secondary classification.

Primary classification Employer Contributions
Secondary classification Deferred Compensation Employer Match
Plan types 401 (k), 403 (b), 457 (b)
SUI states Arizona, California, Illinois, Massachusetts

Employee contribution elements aren’t impacted.

  • Only elements defined through the updated template will have their employer-match amounts evaluated for SUI wages.
  • Employer-match amounts from multiple deferred compensation sources, such as pretax and Roth contributions, are evaluated together for SUI wage purposes.
  • Supports state SUI compliance for employer-matching contributions in Arizona, California, Illinois, and Massachusetts.
  • Reduces manual configuration and workarounds for SUI wage reporting.
  • Preserves federal wage treatment for employer matching contributions.
  • Keeps employer match reporting aligned with existing Employer Charges reporting.
  • Supports consistent SUI wage evaluation when employer match is calculated from multiple contribution sources.

Steps to enable and configure

You don't need to do anything to enable this feature.

Tips and considerations

  • This feature applies to these states.
    • Arizona
    • California
    • Illinois
    • Massachusetts

Employer-matching contributions remain excluded from SUI wages by default for all other states.

  • Only elements defined through the updated template will have their employer-match amounts evaluated for SUI wages.
  • Employer-match amounts from multiple deferred compensation sources, such as pretax and Roth contributions, are evaluated together for SUI wage purposes.
  • To use this feature, you must deprecate your older elements and redefine them. It’s strongly recommended that you transition all employer-match elements for a plan to the new model at the start of a new plan year or calendar year.
  • Don’t use legacy employer-match elements and new employer-match elements together for the same payroll processing model. Payroll processing is blocked when mixed employer match configurations are detected.
  • Employer-matching contributions remain excluded from federal income tax (FIT), Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) wages.
  • Employer matching contributions continue to appear in employer-side reporting under Employer Charges.