Setting up a 401(k) deduction to continue on a taxable basis

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Some processes documented in the Help & How-To Center are no longer applicable, due to the discontinuation of these CSA modules.


To set up an employee's 401(k) deduction to continue on a taxable basis after the pre-tax deduction reaches its annual limit, follow these steps.

Creating the 401(k) after-tax deduction item

  1. Choose Setup > System Configuration > Deduction Items.
  2. In the Deduction Items dialog, highlight the 401(k) % of Gross deduction item, press the F3 key on your keyboard, and then choose Copy Deduction Item from the menu.
  3. Enter a description and report description for the new deduction item, modifying information on each tab as necessary, including the information on the Tax Treatment tab to make the item taxable.
  4. Click the Calculations tab, mark the Use after the annual limit reached for checkbox, and then choose the corresponding 401(k) pre-tax deduction item.

    Note: Once the original pre-tax deduction item reaches the global or deduction item limit, it will stop calculating and the new after-tax deduction will begin to calculate instead.

  5. Click Enter to save the deduction item.

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Adding the 401(k) after-tax deduction item to the employee record

  1. Choose Setup > Employees, highlight the appropriate employee in the list, and click the Edit button.
  2. Click the Tax Withholdings and Deductions tab.
  3. Click inside the first empty field in the Tax Withholdings and Deductions grid and select the 401(k) %/Gross Cont. or 401(k) Fixed Cont. deduction item from the drop-down list.
  4. Click the Item Properties /_images/acct_pr/csa/ebx_-1208420037.gif button and enter the appropriate amount or percent of the deduction, modifying information on each tab as necessary.
  5. Click OK to save the information and close the Item Properties dialog.
  6. Click Enter to save the information for this employee.

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