401K Contribution

Hi Sage,

I have an employee who wants to contribute 100% of his bonus to his 401K.  The FICA taxes calculate on the full amount, so I reduced the contribution by the  FICA taxes and now it calculates a state tax, which there shouldn't be a state tax against it. Any suggestions

  • Does your plan allow for changes at any point like this and on specific types of wages? Most plans dictate when an employee is allowed to change their deferral and what wages the deferral is calculated on. For instance, our plan just allows deferrals to be changed quarterly. Also, it doesn't differentiate between wages and bonus pay, they're both just wages in our plan so there wouldn't be a way for an employee to defer a specific amount just on bonus pay. 401k plans are fairly customizable, so it could be your plan does allow this type of action. Just something to check.

  • In our plan document, employee's must opt IN to have 401k taken from their bonus checks, is there anyway to stop 401k/RothIRA from coming out for one payroll?



  • Our plan only allows for deferral changes quarterly, so there would be no way to allow for a one time change like that. If your plan allows for deferral changes at any time, they could probably change it for one pay period. Every plan document is different, so you'd want to read through and be sure to understand the definitions of wages and deferrals for your plan.

  • These are bonus checks for 1,400 ee's.  I have had to go through each check to zero out the 401k/Roth.  Past systems I used had a special file they could run to take them out.

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