Monday, September 10, 2018

Set up Catch Up Contribution over the General Pension Plan Limit

According to the IRS 401(k) Resource Guide, Catch up contributions refer to a plan that allows participants who are age 50 or over at the end of the calendar year to make additional elective deferral contributions.
These additional contributions are not subject to the general limits that apply to 401(k) plans, thus this needs to be recorded separately from the regular 401 (K) Deduction.
An employer is not required to provide for catch-up contributions in any of its plans. However, if employer's plan does allow catch-up contributions, it must allow all eligible participants to make the same election with respect to catch-up contributions.

Use the steps below to set-up the catch up payroll item:
1. Navigate to List > Employees > Payroll Items > New
2. Item Type = Deduction
3. Enter the Name, Liability Account, Agency, and Pay code
---- For list of Pay Codes, kindly refer to SuiteAnswers ID: Using Deduction Codes, Answer Id: 8605
4. Limit Type = Withholding
5. Save the payroll item
6. To assign this to the employees, Edit the payroll item again and tick the Apply Box before the employee name.
7. Save the payroll item again
8. Update the payroll information
---- Setup > Payroll > Update Payroll Information > Agree > Commit Updates

For additional information please see related articles: 
1. IRS Pension Plan Rates and Limits for 2016

2. SuiteAnswers ID: Using Deduction Codes, Answer Id: 8605
3. SuiteAnswers ID: Creating Payroll Deduction Items, Answer Id: 8564

DISCLAIMER: This article is written with the undertaking that tax rules and laws are constantly changing and is intended for informational purposes only. The topic is updated up to the Publish Date found at the top portion of this page (below the Subject Title). We are not providing tax consulting or legal advice. If you have any questions concerning your situation or the information provided, please contact your tax consultant, accountant or attorney.

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