Sequential company match deduction example

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Important reminder!

Licenses for Payroll CS, Trial Balance CS, and Write-Up CS (but not Engagement CS) permanently expired on March 1, 2017.

For details, see CSA license expiration 2017 – frequently asked questions.

Some processes documented in the Help & How-To Center are no longer applicable, due to the discontinuation of these CSA modules.

A company may need to match a portion of an employee's 401(k) deduction item that is calculated sequentially after another deduction, such as an insurance item. The match amount may need to be calculated using the same gross pay basis as the employee portion.

In this example, an employee has a gross pay of $1,000 and an insurance deduction of $50 that is deducted before their 4% contribution to their 401(k). The 401(k) is then calculated as 4% of $950.00 and the company match needs to be calculated using the same gross pay basis of $950. The company match is 100% up to 3%.

The following procedure describes how to set up the company match in such a situation.

  1. Choose Setup > Employees.
  2. Highlight the appropriate employee and click the Edit button.
  3. Click the Tax Withholdings and Deductions tab.
  4. Make sure that the insurance deduction item is above the 401(k) deduction in the Tax Withholdings and Deductions grid, and then click the Item Properties button for the insurance item.
  5. In the Deduction Info tab, set the calculation method to Fixed Amount.
  6. In the Amount field, enter $50.00
  7. Mark the Sequential deduction checkbox and then click OK to close the Deduction Item Properties dialog.
  8. Click the Item Properties button for the 401(k) item.
  9. In the Deduction Info tab, change the calculation method to Gross Income Percentage.
  10. Enter 4.0 in the Percent field.
  11. Mark the Sequential deduction checkbox.
  12. Click the Company Match tab and set the calculation method to Gross Income Percentage.
  13. Enter 3.0 in the Percent field.
  14. Mark the Use deduction amount for sequential calculation checkbox.
  15. Click the Match Limits tab and enter 100.00 in the Maximum percent of deduction field.
  16. Click OK to save the information and close the Deduction Item Properties dialog.
  17. Click the Enter button to save the employee information.

See also: Employees > Deduction Item Properties > Company Match tab (Payroll CS)

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