How to create a tiered percent 401(k) deduction with a matching benefit in Payroll in Microsoft Dynamics GP

Article
03/20/2024

This article describes how to set up a tiered percent 401(k) deduction that has a matching benefit in Payroll in Microsoft Dynamics GP.

Applies to: Microsoft Dynamics GP
Original KB number: 946688

Introduction

Many employers match an employee's 401(k) contributions up in a tiered manner.

For example, a company may decide to match 100 percent of an employee's 401(k) contribution up to 3 percent of the employee's gross wages. Then, a company may decide to match 50 percent of an employee's 401(k) contribution from 3.1 percent through 5 percent of the employee's gross wages. The employee can decide to withhold more than 5 percent of the gross wages. However, the amount that exceeds 5 percent of the gross wages is not matched by the company.

First, you've to set up the 401(k) deductions. Then, you've to set up the matching benefits.

Set up the first 401(k) deduction

Use the appropriate method:
- In Microsoft Dynamics GP 10.0, point to Tools on the Microsoft Dynamics GP menu, point to Setup, point to Payroll, and then select Deduction.
- In Microsoft Dynamics GP 9.0, and in Microsoft Business Solutions - Great Plains 8.0, point to Setup on the Tools menu, point to Payroll, and then select Deduction.
In the Deduction Setup window, type the code that you'll use to determine the deduction in the Deduction Code field, and then type a description in the Description field.
In the Start Date field, specify the start date. If the deduction has an end date, specify the end date in the End Date field.
In the TSA Sheltered From area, select the appropriate check boxes.
In the Method list, select Percent of Gross Wages.
In the Deduction Tiers area, select Single. In the box next to the Single field, type a percent to withhold for the first employee matching tier. For example, assume the employee wants to withhold 5% of the gross wages for the 401(k) deduction. The company will match 100 percent of the employee's contributions up to 3 percent of the employee's gross wages, and the company will match 50 percent of the employee's contribution for the next 2 percent of the employee's gross wages. Type 3% for the first tier deduction.

Note

The percentage that you enter in the Deduction Tiers area will be the default percentage when you assign the deduction to employees. You can change the percentage when you assign the deduction to the employees.
Select the appropriate frequency in the Frequency list.
If it's required, enter any maximum deduction amounts in the Maximum Deduction area.
If you want this deduction to be based on only certain pay codes, select Selected in the Based on Pay Codes area, and then insert the appropriate pay codes from the Pay Codes area.
Type the appropriate information in the following fields:
- W-2 Box
- W-2 Label
Select Save.

Set up the second 401(k) deduction

Use the appropriate method:
- In Microsoft Dynamics GP 10.0, point to Tools on the Microsoft Dynamics GP menu, point to Setup, point to Payroll, and then select Deduction.
- In Microsoft Dynamics GP 9.0 and in Microsoft Business Solutions - Great Plains 8.0, point to Setup on the Tools menu, point to Payroll, and then select Deduction.
In the Deduction Setup window, type the code that you'll use to determine the deduction in the Deduction Code field, and then type a description in the Description field.
In the Start Date field, specify the start date. If the deduction has an end date, specify the end date in the End Date field.
In the TSA Sheltered From area, select the appropriate check boxes.
In the Method list, select Percent of Gross Wages.
In the Deduction Tiers area, select Single. In the box next to the Single field, type a percent to withhold for the second employee matching tier. For example, assume the employee wants to withhold 5% of the gross wages for the 401(k) deduction. The company will match 100 percent of the employee's contribution up to 3 percent of the employee's gross wages, and the company will match 50 percent of the employee's contribution for the next 2 percent of the employee's gross wages. Type 2% for the second tier deduction.

Note

The percentage that you enter in the Deduction Tiers area will be the default percentage when you assign the deduction to employees. You can change the percentage when you assign the deduction to the employees.
Select the appropriate frequency in the Frequency list.
If it's required, enter any maximum deduction amounts in the Maximum Deduction area.
If you want this deduction to be based on only certain pay codes, select Selected in the Based on Pay Codes area, and then insert the appropriate pay codes from the Pay Codes area.
Type the appropriate information in the following fields:
- W-2 Box
- W-2 Label
Select Save.

Set up the first matching benefit

Use the appropriate method:
- In Microsoft Dynamics GP 10.0, point to Tools on the Microsoft Dynamics GP menu, point to Setup, point to Payroll, and then select Benefit.
- In Microsoft Dynamics GP 9.0, and in Microsoft Business Solutions - Great Plains 8.0, point to Setup on the Tools menu, point to Payroll, and then select Benefit.
In the Benefit Setup window, type a benefit code in the Benefits Code field.
In the Description field, type a description.
In the Start Date field, enter the start date.
If the benefit has an end date, enter the end date in the End Date field.
In the Subject To Taxes area, select the appropriate check boxes.
In the Method field, select Percent of Deduction.
In the Benefit Tiers area, select Single, and then type the percentage that you want to match. For example, if the company will match 100 percent of the employee's contribution up to 3 percent of the employee's gross wages, and the company will match 50 percent of the employee's contribution for the next 2 percent of the employee's gross wages, then type 3% for the first tier benefit.
In the Frequency list, select the appropriate frequency.
In the Maximum Benefit area, enter any maximum benefit amounts.
In the Based on field, select Deduction, and then select Selected. Next, insert the first deduction that you created into the Selected box.

Note

This deduction is the deduction that you created in the Set up the first 401(k) deduction section. It's the deduction on which the benefit will be based.
In the Employer Maximum field, type the maximum percent of the gross wages that you want to match. For example, if the company will match 100 percent of the employee's contribution up to 3 percent of the employee's gross wages, and the company will match 50 percent of the employee's contribution for the next 2 percent of the employee's gross wages, then type 100% for the first tier benefit.
Type the appropriate information in the following fields:
- W-2 Box
- W-2 Label
Select Save.

Set up the second matching benefit

Use the appropriate method:
- In Microsoft Dynamics GP 10.0, point to Tools on the Microsoft Dynamics GP menu, point to Setup, point to Payroll, and then select Benefit.
- In Microsoft Dynamics GP 9.0, and in Microsoft Business Solutions - Great Plains 8.0, point to Setup on the Tools menu, point to Payroll, and then select Benefit.
In the Benefit Setup window, type a benefit code in the Benefits Code field.
In the Description field, type a description.
In the Start Date field, enter the start date.
If the benefit has an end date, enter the end date in the End Date field.
In the Subject To Taxes area, select the appropriate check boxes.
In the Method field, select Percent of Deduction.
In the Benefit Tiers area, select Single, and then type the percentage that you want to match. For example, if the company will match 100 percent of the employee's contribution up to 3 percent of the employee's gross wages, and the company will match 50 percent of the employee's contribution for the next 2 percent of the employee's gross wages, then type 2% for the second tier benefit.
In the Frequency list, select the appropriate frequency.
In the Maximum Benefit area, enter any maximum benefit amounts.
In the Based on field, select Deduction, and then select 1. Next, insert the first deduction that you created into the Selected box.

Note

This deduction is the deduction that you created in the Set up the second 401(k) deduction section. This is the deduction on which the benefit will be based.
In the Employer Maximum field, type the maximum percent of the gross wages that you want to match. For example, if the company will match 100 percent of the employee's contribution up to 3 percent of the employee's gross wages, and the company will match 50 percent of the employee's contribution for the next 2 percent of the employee's gross wages, then type 50% for the second tier benefit.
Type the appropriate information in the following fields:
- W-2 Box
- W-2 Label
Select Save.

Assign the 401(k) deductions to an employee

On the Cards menu, point to Payroll, and then select Deduction.
In the Employee Deduction Maintenance window, type an employee ID in the Employee ID field. In the Deduction Code field, type the first deduction code that you created.
When you're asked whether you want to use the default information from the Deduction Setup window, select Default. The default entries from the Deduction Setup window will populate specific fields. However, you may want to enter a specific percentage of the gross wages that the employee wants to withhold from each paycheck.
Select Save.
In the Deduction Code field, type the second deduction code that you created.
Select Save.

Assign the matching benefits to an employee

On the Cards menu, point to Payroll, and then select Benefit.
In the Employee Benefit Maintenance window, type an employee ID in the Employee ID field. In the Benefit Code field, type the first benefit code that you created.
When you're asked whether you want to use the default information from the Benefit Setup window, select Default. The default entries from the Benefit Setup window will populate specific fields. However, you may want to change the matching benefit as necessary for specific employees.
Select Save.
In the Benefit Code field, type the second benefit code that you created.
Select Save.

Include deductions and benefits when a pay run is processed

Create the build in the Build Payroll Checks window. To open the Build Payroll Checks window, on the Transactions menu, point to Payroll, and then select Build Checks.
In the Pay Period Date area, type dates for the pay period in the From field and in the To field.
In the Include Pay Periods area, select the appropriate check boxes.
In the Include Automatic Pay Types area, select the appropriate check boxes.
Select Include Deductions.
Select the appropriate deductions individually, select Insert, and then select OK.
Select Include Benefits.
Select the appropriate benefits individually, select Insert, and then select OK.
Select Select Batches, select the batches for the pay run, and then select OK.
Select Build.

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