401(k) Plan Company Match Formula

[NDGParkview]

I inherited a Peachtree payroll setup with the 401(k) formulas already setup – which has worked fine up to this point – and I definitely don’t want to change it significantly mid-year anyway. I have included as much info as I thought that you might need to help! And we have PT Premium 2006. Sorry – if it is toooo much!

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We have a 401(k) plan where for some reason we input the employee’s contribution percentage into the Local Tax area. Adn we have a company match of …

Discretionary matching contribution is 25% of employee salary deferral not to exceed 1.5% of the employee’s annual gross salary.
[Company match is 1.5% of your wage not to exceed 6% of your annual gross salary.] (25 cents for each $1 of your own deferral.)


Here is my current Employee Contrib/Deferral formula:

Tax ID= 410K EE
Tax Name = 401K EE 07

LIMIT=15500.;
A=EMP_LOCAL_NUMBER%*ADJUSTED_GROSS;
B=YTD(K401);
C=A-((A+B)-LIMIT);
D=IF((A+B)<LIMIT,A,C);
ANSWER=-D

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Our Employer Match formula:

Tax ID = 410K ER
Tax Name = 401K ER 07

LIMIT=15500.;
A=-YTD(K401);
B=-K401;
C=ADJUSTED_GROSS*.015;
D=MAX_LIMIT(B,C);
E=D-((A+D)-LIMIT);
F=IF((A+D)<LIMIT,D,E);
ANSWER=-F

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Since I started here, we have used a benefit sheet that showed the employees could contribute to their 401(k) plan starting with 6%. Unfortunately, by law I cannot make my employees start contributing at 6% - only encourage it so that they can get the full benefit of the company match. I just had two people – this same exact week – decide to join our plan - and each want to contribute only 3%. Thus, if I use the Employer Match formula that I have in Peachtree – they will get double of what they are entitled to for a match.

So I don’t have to change the employer match amount on each of these employees manually each payroll, I need to setup a formula, etc that will compute the Employer Match based upon what they are actually contributing themselves – whether it be 1-5%. I’ve read everything that I can on the subject here, in Peachtree, etc. – have tried various formulas, tried adding a new employee default fields, etc. Nothing seems to work. I would love some info from you guys so that I can do it correctly without screwing up everything else!

I only have about 25 people on my payroll at any given time – so if I have to adjust other default fields individually on all employees – it wouldn’t be a big deal. But I know that a less complicated solution for this has to exist!

Thanks in advance for your help! I love you guys!


And while I was looking around and trying to do this by myself - and totally off the subject, well not totally, I have never changed the Tax Name on the “EmployER Fields” tab or the “EmployEE Fields” tab in Maintain Employees. I update the tax tables every year by adding a new Tax ID and Tax Name – change the 401(k) limit in the formula, etc. – but no where did my instructions ever say that I needed to go back into Maintain Employees and change the Tax Name every year from the original default name of 401K EE to for example, this year’s name of 401K EE 07. Same thing for the employer match and state unemployment tax names. So how does this work – does it know that 401K EE is 401K EE 07? Or is it even working? I don’t have anyone that ever gets close to the annual limit – so maybe it isn’t working at all?

Thanks again!!!

[SEARCHINGPATHS]

I have been away for a while. What would I do. I would set up new fields with new names, such as
Tax ID = 410K01 ER
Tax Name = 401K01 ER 07
and
Tax ID = 410K02 ER
Tax Name = 401K02 ER 07
If someone only contributes 2%, I would make one of these for his match. If another contributes 3%, use another one for his match. In other words, one for each percentage chosen by the employees. Remember to add new fields to show on the pay check stubs.
Hopefully that will solve your problem

[SMC]

I don't know if you're still looking for a solution, but this employer formula should allow for a 25% match no matter what the employee's contribution is. The maximum is set to 25% of 6%.

LIMIT=15500.00; "The value specified by the user for the 401K limit fields."

A=0.00; "ER contribution % over the breakpoint % of EE contributions"
B=25.00; "ER contribution % up to the breakpoint % of EE contributions"
C=6.00; "EE contribution % breakpoint"
D=1.50; "ER maximum contribution %"
Z=EMP_LOCAL_NUMBER%;

E=-YTD(K401)+K401;
F=IF(Z>(C%),B%*C%*ADJUSTED_GROSS,B%*Z*ADJUSTED_GROSS);
G=IF(Z>(C%),A%*ADJUSTED_GROSS*(Z-(C%)),0);
H=D%*ADJUSTED_GROSS;
I=F+G;
J=IF(H=0,I,IF(H<I,H,I));
K=E+J;
ANSWER=-IF(E>LIMIT,0,IF(K<LIMIT,J,LIMIT-E))

The reason that your 401k percentage is on the local withholding line is because older versions of Peachtree didn't have the 401k line that you see now. So that is not unusual. If you would like, you can move everyone's 401k percentage to the new field, but you will have to adjust your formula's accordingly. In your employee formula, you would need to change
A=EMP_LOCAL_NUMBER%*ADJUSTED_GROSS;
to
A=EMP_401K_NUMBER%*ADJUSTED_GROSS;

and in the employer formula that I just gave you, you would need to change
Z=EMP_LOCAL_NUMBER%;
to
Z=EMP_401K_NUMBER%;



You do not have to update the tax name in the employee tab and employer tab each year. When calculating payroll, Peachtree combines the tax name it finds there with the year from the payroll check to get the right formula. Also, you do not have to manually create the new year's user maintained tax tables any more. When you do payroll, if Peachtree doesn't see current year entries for your user maintained taxes, it will pop up a wizard that prompts you for any new limits, rates, etc, and then creates the new entries for you.