How To Set Up a 401K Benefit
Use the Benefit Setup window to enter and maintain records of the benefits your company offers, such as a 401(k) contribution.
The records you enter using this window will be used as the basis for setting up employee benefits. After the benefit is set up, you'll need to assign it to the appropriate employees and make any necessary modifications using the Employee Benefit Maintenance window Cards | Payroll | Benefit
1. From the Setup menu, choose Payroll | Benefit.
2. In the Benefit Setup - USA window, enter a code - such as 401(k) and a description to identify the benefit.
3. Enter the starting and ending dates for the benefit.
Start Date - Enter the date on which you want to start paying this benefit. The date you enter should be on or before the ending date of the pay period when the benefit should be in effect; otherwise, the benefit won't be applied for that pay period.
End Date - Enter the date on which you want to stop paying the benefit. If it is a continuous benefit, leave this field blank.
4. Mark Variable if the amount or percentage of the benefit varies each time it is calculated. If you mark the benefit as variable, you'll need to enter a transaction for the amount or percentage of the benefit for each pay run in which the benefit is applied.
5. Select a frequency at which to annualize taxable benefits for tax calculation purposes. The frequency you enter should match the frequency that will be used for the pay run that includes this benefit. (The pay run frequency is based on the selections you make in the Include Pay Periods field in the Build Payroll Checks - USA window.)
6. Select Based on Pay Codes or Based on Deduction if you want the benefit to be based on all pay codes or all deductions, or based on selected pay codes or selected deductions.
7. Select one of the following methods for calculating the 401(k) benefit:
Percent Of Gross Wages - Select this method if you want to calculate the benefit as a percentage of total wages before taxes are deducted.
Percent Of Net Wages - Select this method if you want to calculate the benefit as a percentage of gross wages minus taxes.
Percent of Deduction - Select this method if you want to calculate the benefit as a percentage of the deduction on which its based. If you select this method, select Deduction in the Based On field.
Note - If your company matches a certain percentage of what the employee contributes, you would select this method to calculate the 401(k) benefit.
Fixed Amount - Select this method if you want to enter a fixed amount that will be contributed for each employee to whom this benefit is assigned.
Amount Per Unit - Select this method if you want to calculate the benefit based upon hours or units using piecework, hourly, or overtime pay.
8. Select either a single tier or multiple tiers on which you want to calculate the benefit amount per pay period.
Single - If you select Single, enter an amount or percentage.
Multiple -If you select multiple tiers, choose the Tiers button and the Tiered Benefit Setup - USA window will open. Enter tiers for the benefit. For more information, see Calculating tiered benefit in Dynamics on-line help.
9. Mark all applicable boxes for which the benefit is subject to tax in the Subject To Taxes field. If you want to override the federal or state tax table calculations that are normally used for Payroll calculations and calculate the tax at a specific flat rate, you can enter the tax rate in the flat federal and flat state tax rate fields.
10. Enter the maximum amount each employee can receive for this benefit for each pay period, year or lifetime. These fields can be left blank if a maximum amount isn't applicable.
11. If the benefit amount needs to be printed in a special box on the W-2 statement, enter the number of the W-2 statement box in which the amount should appear.
12. If the benefit amount must be printed on the W-2 statement and you are required to enter a label, type the label you want to appear. See IRS rules for the applicable year for a current list of labels.
13. Assign the 401(k) benefit to the appropriate employees and make any necessary modifications using the Employee Benefit Maintenance window
This article was TechKnowledge Document ID: 3248