To create 401(k), 403(b) or 457 elements:Create 401(k), 403(b), and 457 elements in the Deduction window.
To create 401(k), 403(b) or 457 elements:Set the effective date early enough to handle any historical entries. You cannot enter a deduction for employees before the deduction's effective start date.
Type a unique name for the element in the Name field. Type a short name in the Reporting Name field, if desired.
The Name applies to both the deduction element and its formula. It must start with a letter of the alphabet, not a number or a symbol. The Reporting Name is a short name (less than 12 characters) that appears on reports and the statement of earnings.
Select Pre-Tax Deductions in the Classification field. Select the appropriate category (such as Deferred Comp 401k) in the Category field.
If you are using Basic Benefits, select the appropriate classification in the Benefit Classification field.
Important: Do not select a benefit classification if your site uses Standard Benefits or Advanced Benefits.
Optionally, change the default priority. The deduction's classification determines its default processing priority in the payroll run. Deductions with lower processing priorities process first.
Make sure Recurring is enabled in the Type region.
Select one of the following from the Start Rule region:
On Entry, to start the deduction on the effective date you enter it for the employee.
Earnings Threshold, to start the deduction when the employee's gross earnings reach a specified amount. You specify this amount using the entry value Threshold Amount in the Element Entries window.
Note: You can specify independent Threshold Amount values for each element--for example, the base deduction and the catch-up deduction.
Check the appropriate boxes in the Deferred Compensation Rule region:
Employer Match creates an ER Match element you can enter for employees who are eligible for employer matching (or partial matching).
After-Tax Component creates an AT element you can enter for employees who elect to contribute after-tax money.
Note: You cannot select After-Tax Component for your own categories of pretax deductions.
Enabling an Employer Match or After-Tax Component check box creates a separate after-tax element. This element takes the same name as the Pre-Tax element, but is followed by the letters ER (in the case of Employer Match) or AT (in the case of After-Tax).
Select a Run Type:
Regular, for the deduction to process only in Regular runs, that is, the runs that produce employees' regular pay in each period.
All, to process the deduction in both Regular and Supplemental runs.
In the Termination region, select a termination rule to determine how entries of the element are processed after termination of the employee:
Actual Termination, if you want recurring entries to close down on the date the employee leaves. For a nonrecurring element, select Actual Termination if you want the entries to close down at the end of the pay period in which the employee leaves, or on the date the assignment ends (the final process date) if this is earlier.
Final Close, if you want the entries to stay open beyond the employee's leaving date so that you can continue to pay the employee.
Last Standard Process, for all recurring and nonrecurring elements if you want their entries to close down on the Last Standard Process date or on the date the assignment ends (the final process date) if this is earlier. The Last Standard Process date defaults to the last day of the pay period in which the employee is terminated, but you can set it to a later period when you terminate an employee.
In the Catch-Up Processing option group, select one of the following:
None, if the deduction has no catch-up processing component.
Sequential, to tell the application to process catch-up deductions only after reaching the base limit.
Concurrent, to tell the application to process base plan and catch-up deductions at the same time.
Note: Selecting this option sets the default for the deduction. You may change the option later per employee in the Element Entries window.
Note: When the Catchup option is selected as Sequential or Concurrent and the Employer Match check box has been selected, an Employer Match element for Def Comp 401k Catchup element is also created. This can be used appropriately for those employees who are eligible for Catchup Employer Matching. This is applicable only for the Def Comp 401k Deduction Elements.
Check the Standard Link check box only if you want to attach the deduction to all employees.
Check the Total Reached stop rule check box if the deduction should stop when the total sum taken from an employee for this deduction reaches a specified total. You enter this total in the entry value Total Owed:
Specify a Total Reached default value for all eligible employees in the Total Owed Default field of the Input Values window of the Element Link window.
Specify a Total Reached value for an individual employee in the Total Owed field of the Entry Values window of the Element Entries window.
Uncheck the Total Reached check box if the deduction should stop on the effective date you delete the deduction for an employee. (This is the On Entry stop rule.)
Check the Frequency Rules Exist check box, and click the Frequency Rules button to enter the appropriate information (if necessary).
In the Rules region, select the appropriate amount rule:
Flat Amount, if you want to deduct a fixed amount of money each pay period. You enter this amount using BEE or the Element Entries window for each employee.
%Earnings, if you want to deduct a percentage of the employee's earnings each pay period. You enter this percentage using BEE or the Element Entries window for each employee.
If AT or catch-up elements exist, the amount rule applies to them as well.
For more information about BEE, see Making Batch Element Entries Using BEE.
If appropriate, make a selection in the Insufficient Funds region.
Save your work.
Oracle Payroll generates the 401(k), 403(b) or 457 elements, formulas and balances.
Note: You cannot update deduction criteria once you have saved the deduction.
Link the generated elements.
If your deduction has both pre-tax and after-tax elements, you must create a link for both elements. If you are going to maintain costing information on the employer contribution (ER) element, you must also create a link for this element.
Mark the generated balance for gross-up processing if you will ever process the deduction with a net-to-gross element. You do this by querying the balance in the Balance window, choosing the Dimensions button, and checking the Grossup Balance box for the assignment-level current run dimension (ASG_RUN).
Note: You must perform this step for all 401k deductions that might be processed with a net-to-gross element. You can then exclude the deduction from the net-to-gross processing of some or all of your net-to-gross elements, if required.
See: Excluding Balances From an Element's Gross-up Calculation
If you have employees in Puerto Rico, you must reduce their 401(k) limit.