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Set up employees and payroll items

401(k) payroll item limits

The application handles cafeteria plan deductions, retirement plan deductions, and company matching amounts and automatically adjusts the annual limits for the various retirement plans.
When employees reach age 50, they're eligible to make increased (catch-up) contributions. You'll need to enter a birth date for each employee on the Personal tab of the Employees screen for the application to automatically increase their annual contribution limit.
tip
You can make the employee birth date a required field by following these steps:
  1. Select
    Setup
    ,
    Firm Information
    , and then
    Firm
    .
  2. Go to the Preferences tab.
  3. Mark the
    Require Birth date if active retirement plan deduction
     option.
The maximum annual compensation limit (for example, $330,000 for 2023) is not considered in the application. For more information, refer to IRS guidance.

Adjust limit calculations

Use the following steps to turn off the catch-up limit and/or calculate the deduction without the cafeteria 125 deduction amount included.
  1. Select
    Setup
    ,
    Employees
     and then go to the
    Payroll Items
     tab.
  2. Select the ellipsis button in the row for the 401(k) deduction item.
  3. On the
    Main
     tab, mark the
    Do not apply catch-up limit
     checkbox and/or the
    Subtract cafeteria 125 deduction before calculating
     checkbox.
  4. Select
    OK
    , and then
    Enter
     to save your changes to the employee.
Marking the
Do not apply catch-up limit
 checkbox will prevent the application from applying the retirement plan catch-up contribution limit increase regardless of the employee's age.

Contributions to both traditional and Roth 401(k)

If an employee makes contributions to both a traditional and Roth 401(k), you'll need to keep both deduction items active on the employee for the application to make sure that the shared annual contribution limit isn't exceeded.

This article applies to:

  • Product: Accounting CS Client Access
  • Subject: Payroll checks

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