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Deductions for Benefit Plans

A deduction that is linked to a benefit (selected on the Benefit Codes Table) uses costing information from that benefit to process the deduction that is defined on the Deductions Code Table.

Payroll can process payroll deductions whether or not the deductions are linked to a benefit.

To track employer costs for benefits, a Deduction Code for the employer's contribution is needed in addition to the employee-paid deduction code.

Business Scenario

Deductions for benefit plans are not required to be linked to Benefit codes, but more reporting, management and processing options are available when benefit setup is defined.  

Different deductions codes are needed for different types of benefit plans. The Deductions Codes Table is used in setting up benefit plans that result in after-tax or pre-tax deductions as defined by the Federal tax guidelines. Generally, state and local taxes follow the Federal guidelines, but pre-tax and after-tax deductions should be verified for compliance.

• Deductions for Medical, Dental, Vision, etc. Benefit plans require Deductions Codes to deduct amounts for employee deductions and calculate the employer's contribution.

OR

• Deductions for Deferred Comp. Deferred compensation plans require specific deductions codes in order to function properly. Define the codes for deferred compensation deductions for employees and the employer.