Setting up 401K and Roth Retirement Account Deductions

This option is setting up the employees to have the deduction taken from their paycheck.

Index Link to each step:

Step One: Setting up Deduction Code

PAY > Setup > Deduction Codes
AGRIS has 30-deduction codes that can be defined to remove/add to paychecks.
This example shows codes as deduction 1. and 2. but they could be setup on any of the deduction fields.

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Example of Deduction Code Setup

• Description - Long name for deductions.

• Abbreviation - 8 character name for deduction (prints on paychecks and as title headers on reports)

• Deduction Before FICA? Y/N response to indicate a deduction is subject to FICA withholding
  401k - No - deduct before FICA
  ROTH - No - deduct before FICA

• FIT/FUTA Exempt? - N/I/U/B response to mark a deduction for inclusion or exclusion from taxable amounts.
  401k - B - exempt from Fed Income Tax (FIT) and Fed Unemployment Tax (FUTA)
  ROTH - N - No Exempt from FIT or FUTA

• W-2 Code - Search and select the code to print in box 13 of the W02 form. Only deductions that must be reported to the government need a code.
  401K - code D - Elective deferrals to a section 401(k) cash or deferred arrangement
  ROTH - AA or BB - Designated ROTH contributions under section 401(k) plan or 403(b) plan

Step Two: Setting up Deduction status in State Tax

PAY > Payroll Tax Tables > State/Local > Select state code > screen 2

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Screen 2 of 4 - state/local tax table

The deduction will be listed in the possible 30-deduction codes.
Determine the Tax Exempt status for the deduction for this state/local taxing code.

• 401k - B - Exempt from both SUTA (State Unemployment tax) and SIT (State Income Tax)

• ROTH - N - Not Exempt

Step Three: Ledger/SJI Setup

1. Setup or identify a liability account for the employee withholding.
   LDG > Maintenance > Chart of Accounts

2. Setup or identify an expense account for the employer share of retirement.
   Note that this setup has the employer expense of 401k/ROTH as a separate expense that does not print on paychecks detail.
   Only the employee share of 401k/Roth will print on paychecks.

3. Setup Deduction code in SJI
   SJI > System Accounts > Payroll Accounting > Leave source codes blank > search for deduction code.

4. Assign 401k Deduction to Liability withholding account
   Assign ROTH Deduction to Liability withholding account.

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Selecting Deduction Code for Transaction code

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Assign Liability Withholding Account

Step Four: Setup Deduction to print on Paycheck form

PAY > Forma Manager > Paycheck Forms > Select paycheck that is printing.
Give the deduction code a place to print on the check stub. Every check will be different.
Look for your “Deduction Abbreviation #” and your “Deduction # Amount”
Please be aware that on the forms it is the deduction number you are looking for, not the actual title assigned.
Below are examples of a text based check and a graphic check. The report writer is different in each but the field names stay the same.

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Text Based Form - Note the deduction Names and Amounts

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Graphic Paycheck Form Layout - Note deduction Abbreviation numbers along with amount-numbers.

Step Five: Setup Deduction on Employee

PAY > Employee Information > Select Employee > Deductions menu option.

Select Deduction code.

Answer YES to each pay period they could receive this deduction. (for example bi-weekly and bonus)

Key in:
Calculation Type
Amount/Precent/rate
Minimum Net Wage - do not take if paycheck is this amount or less
Use Remain Balance - Y/N
Balance/Wage Ceiling - If YES to Use Remain Balance, keyed amount here will lower each deduction until all funds are used.
Deduction Stops when balance is used.
If NO to Use Remain Balance, Wage Ceiling amount will allow deduction to be taken until employee’s year to date wages reaches ceiling.
Deduction stops when Year-to-day wage reaches ceiling.

After setting up an employee, do a test payroll to verify amounts are as expected.

Step Six: Paying 401K and ROTH to Investing Firm

PROCESS:

1. Take from paychecks

2. paycheck deduction will post to Employee Withholding Liability

3. when you pass this money to the investment company
   create a voucher for gross dollars which credits A/P
   GL coding would be debit entries
   employee withholding liability will be debited to clear out account of the employees holding
   Employer Expense Account will be debited with the employer expense