401K annual compensation limits when using only payroll deductions(PR14.1)

I am trying to set up 401K deductions using only payroll deductions(PR14.1). In other words, I am not using the benefits module. I need assistance getting Lawson/BSI to recognize there is a $275,000 annual compensation limit on any 401k contributions. Here is an example of the scenario:

Employee earns $300,000 of wages and elects a 3% contribution rate towards their 401K.

Lawson/BSI is calculating an amount of $9,000 ($300,000 * 3%) for the contribution.

The accurate calculation is $8,250 ($275,000 * 3%).

BSI says that they maintain the annual 401k contribution limits for withholding by utilizing the Payment Overrides but Lawson controls the annual compensation limits. The BN12 (Benefits Annual Limits) has been populated with the maximum contribution limit of $275,000 but it isn't working. (Maybe because there isn't a plan set up in benefits?)

Where is the maximum annual compensation of $275,000 stored so BSI/Lawson knows to stop the deduction?

Any assistance would be greatly appreciated.

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Comments

unknown

Hi Kelly, is BN12 the screen you are looking for?

unknown

The form help says: "Use Benefits Annual Limits (BN12.1) to define the maximum compensation and maximum annual limits for a calendar year. The Benefits application uses these limits for discrimination testing, while the Payroll application uses these limits to determine when contributions for defined contribution plans should stop."

leathel-grody

The BN12 screen has been populated but the calculation still isn't correct. It's not stopping at the annual compensation limit of $275,000.

unknown

OK as I am rereading the form help, the payroll system will only use this if it is part of a DC plan

Is there a reason why you don't want to set up the 401k as a benefit plan?

unknown

you can set up annual limit on pr14 filling in the Balance Type L

Balance Amount of the annual amount of deduction should be.......It does work but must be updated on an annual basis. You can change them thru pr14 or interface thru pr514 csv format. I hope I understood the question, call me if you need help 212-598-6882

leathel-grody

John P - The employees have the option to change their percentage every pay period as well as elect both Roth and Traditional or both. Can the Limits on the PR14.1 be changed every pay period?

com201011_proactive.pdf

Jill

Yes, you will need to change the limit every time a new election is made or you risk going over the annual allowed limit. The descending balance will not calculate correctly without changing it.

GMT20200514-185124_MT-Cloud-S.m4a

sriman-shivakoti

It is unfortunate that you don't have the means to set up as a benefit plan. You can process it all via PR14 and BSI will enforce limits but you will lose historic aspect of deductions and some automation. Do you also match any of the employee's contributions?

leathel-grody

Just to update.....we ended up setting up a "shell" 401K plan on BN15 in order to utilize the annual compensation limits of $275K on the BN12. Still in testing mode but it seems to be working.

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