401(k) 100% deferral

I believe that there are wage and hour (labor) issues if you try to provide a "no net" check to an employee. I have a vague recollection of this from when we had an employee who wanted to do the "no net" check and deposit the full balance into her 401k.

So before you spend a lot of time figuring out how to set up Lawson to do this, you may want to make sure that it is legally okay in your state.

I believe that there are wage and hour (labor) issues if you try to provide a "no net" check to an employee. I have a vague recollection of this from when we had an employee who wanted to do the "no net" check and deposit the full balance into her 401k.

So before you spend a lot of time figuring out how to set up Lawson to do this, you may want to make sure that it is legally okay in your state.

Thank you - I will definitely look into it. If you have further information on this, please let me know. That would be greatly appreciated!

thanks.

Hello,
After further research, a participant is allowed to elect for his/her remaining base pay to be deferred into his/her 401(k) leaving no net pay. As long as it is described in our plan document, which it is.

Does anyone know how to set this logic up in LAWSON?

thank you!

Try setting up the plan to allow 100% and the deduction to take "net to zero" no arrears.

Make sure you test to see that you get the results you expect.

You may want/need to take into consideration priority of deduction.  Do health insurance deducts come out before 401k, etc.

Taxes always are first by default.

Our plan documents allow for a 100% 401k deferral.  And we are having an issue with one-time deductions for purchases at our coffee shop and cafeteria which are priority 1, not processing for employees that have 100% 401k.

There are hard coded deduction rules within Lawson that indicates what order does payroll apply deductions to employee pay.From the payroll user guide; within Payroll, the deductions that reduce employee pay are applied to employee pay in the following specific order:

1 Current tax deductions

2 Current garnishment deductions and one-time garnishment deductions

3 Current other deductions (includes 401k)

4 One-time tax deductions

5 One-time other deductions (includes purchases like the coffee shop and cafeteria and insurance in arrears)

We want employees to have to pay for their purchases (one-time deductions) before their deferrals. But since these are number 5 (one- time other deductions) in the above hierarchy; they are deducted after the 401k (which is a 3 in the hierarchy). 

 

Does anyone know how to flag these unique deductions on PR05 for these purchases so that they will be deducted before the 401k?  Essentially moving them up from #5 to #3. 

 

Thank you!

Bonnie

My first thought - How about loading them to a PR14 as descending balance deductions with the deduction amount to equal the balance amount? Requiring more thought - What if they don't have enough pay to cover? Do you set it to be all or none, no arreas - create arrears - net/zero, no arrears? If net to zero/no arrears - does the balance adjust and the remainder taken next pay?

Some quick thoughts for investigation testing.

We have the same issue - and haven't found a good way around it. Currently, we look for anyone who has elected 100% deferral, and someone will manually figure out the "real" percentage after taking out deductions. So technically, a 100% deferral works out to 75-90% depending on what the employee is having withheld for benefits, etc. It's ugly - so if there are other ideas, I'm willing to listen!!

Hello,

We have figured out how to handle this.  We enter a declining balance for the value of the PR39 on the employees PR15.2 and then you don't need to touch the actual 401k deduction. It is a manual intervention; but then you shouldn't have to wait and end up re-running your PR140.