Company Contributions – Based On Deductions

April 10, 2018

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When adding or editing company contributions, there is a “For Deduction” field.

 

You have the option to “tie” the contribution to a deduction so that the contribution will only calculate if a specific deduction is taken in the paycheck.  This field is optional, so you can leave blank if this contribution is not tied to a deduction.  Once you have used this contribution in a payroll, this field cannot be edited.

An example is a 401(k) company-match contribution based on an employee’s 401(k) deferral deduction.  If the employee has an active 401(k) deduction that’s included in the payroll, then the corresponding contribution would also calculate.  Another example is the company-paid portion of the medical insurance premium that is based on the employee’s medical deduction.

First, in order to tie a contribution to a deduction, the deduction must already be created at the company level. When the deduction is created, it will appear in the “For Deduction” dropdown list in the Contribution page. Select the corresponding deduction from the dropdown list. Note that if the tied deduction is not taken from the check for whatever reason, the contribution amount also will not calculate.

A contribution can only be tied to one deduction at a time. If you have two deductions set up for different methods (i.e. fixed dollar and percent), you will need to create two contributions and tie the corresponding contribution and deductions together. An example of this is two 401(k) deductions for fixed dollar and percent of pay.  You would need to create two contributions – one to be tied to the fixed dollar deduction, and one to be tied to the percent deduction.

Another example is having four medical deductions set up, each with a different rate level for Employee Only, Employee+Spouse, Employee+Child, and Family. If you wanted to track and show the company-paid portion, you would need to create four contributions to be tied to each of these deductions.

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