Understanding Matching Annuities

This topic describes how to set up matching annuities in Payroll, and then how to process them during the Payroll Run.  You can create matching annuities to process Payroll deductions for the employees with matching deductions for the employers' contributions.  The employee deductions, which are the annuity deductions, are withheld from the employees' pay.  The employer deductions, which are the matching annuities, are not withheld from the employees' pay - however the amounts print on the check stubs and the Employee Annuity Report for your reference.  For example, an employer may offer matching benefits such as contributing a matching amount for 401K, savings bonds, or some other investment.

Tips:

• You must assign both the annuity deductions and matching annuity deductions to the employees.

• When you assign the deductions to the employees, you can determine if the annuities and matching annuities are calculated as flat amounts or as percentages of pay - just like any other deduction.

Scenario:  In the examples depicted in this topic, Employee #102, Richard A. Richardson, contributes 1% of his gross pay to a 401K plan.  His employer, the town of Faircity, contributes a matching amount of 2% of gross pay (up to an annual maximum of $3,000.00).

Directions:  Setting Up Matching Annuities

To see how to set up...

• Deduction Master Maintenance, click More.

   

  Use Deduction Master Maintenance to create the Deduction Codes for the annuity deductions and their associated matching annuity deductions.

  Tips:

  • The Deduction Type determines whether the deduction is for the employee's share (the annuity) or the employer's share (the matching annuity).

  • Deduction Type 5 = Annuity Deduction for the employee's share

  • Deduction Type 2 = Matched Annuity Benefit for the employer's share

  • The association between a specific annuity deduction and the matching annuity deduction is defined later during Annuity Table Maintenance (ANNUITY).

   

  Annuity Deduction Code Example:

  Tip:  In the following example, Deduction Code 850 - 401K is the annuity deduction for the employee's share.

  

   

  Matching Annuity Deduction Code Example:

  Tip:  Deduction Code 851 - 401K Matching is the matching annuity deduction for the employer's share.

  

   

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• Annuity Table Maintenance, click More.

   

  Use Annuity Table Maintenance (ANNUITY) to enter the annuity deductions with the associated matching annuity deductions.  This is essential to define the link between each employee's annuity deduction and the employer's matching annuity deduction.

   

  Annuity Table Maintenance Window Example:

  

   

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• Employee Master Scheduled Deductions, click More.

   

  Use the Employee Master Maintenance - Employee Master Scheduled Deductions Area or Employee Master Scheduled Deductions Maintenance to assign the annuity and matching annuity Deduction Codes to the employees.

  Here, you assign the Deduction Codes to the employees and define the amounts or percentages.

   

  Employee Master Scheduled Deductions Area - Employee's Share for 401K Example:

  

   

  Employee Master Scheduled Deductions Area - Employer's Share for 401K Example:

  

   

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Directions:  Processing Matching Annuities

To see how to...

• Enter payroll checks, click More.

   

  When you enter Payroll checks, you can see the annuity and matching annuity deductions automatically calculated and displayed during Check Entry at the Scheduled Deductions Area.

   

  Check Entry - Scheduled Deductions Area Example:

  

  Tip:  The 401K deductions for both the annuity (the employee's share) and the matching annuity (the employer's share) appear in the Schedule Deductions Area during Check Entry.  However, the employer's share ($18.89), although considered income, is not deducted from the employee's gross pay.  The additional income from the employer's share does affect the standard deductions for the employee's retirement contribution, Fed W/H, FICA, Med FICA, and State W/H.  Therefore, the net pay is indirectly affected.

   

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• Print the Employee Annuity Report, click More.

   

  The Employee Annuity Report prints when you run the Payroll Check Edit Register Report or the Payroll Check Register Report.  Make sure you select the annuity report at the prompt.

   

  Check Register Prompt Window Example:

  

   

  Employee Annuity Report Sample:

  

   

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• Print the Payroll Checks, click More.

   

  The Payroll Checks stub prints both the annuity deduction for the employee and the matching annuity deduction for the employer.

  Tip:  Payroll Check layouts are tailored for your facility during the software installation.

  Payroll Check Sample:

  

   

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