[PR] How to setup a Pre-Tax Deduction Group

Created by Crystal Ann Harvey, Modified on Wed, 27 Aug at 9:53 AM by Crystal Ann Harvey

Pretax groups are used when multiple deductions need to share the same limit and are primarily used for 401K deductions.

In this sample we will be setting up a 401K pretax group with 2021 limits.

Anyone who has a 401k and 401k catchup contribution will need to use a pretax group.

Note: Each calendar year you will need to review/update these limits.

Link to IRS webpage

Steps

Open the PR Pre-Tax Deduction Group form
Click the paper icon to create a new record
Description: Use a description that makes sense to you, up to 30 characters.

Standard Annual Contribution Limit: 19,500.00 (2021 401k limit)

Enter the standard annual limit amount for employee 401(k) contributions.
The limit you set here will apply to all deduction codes associated with this pre-tax deduction group.
If this Limit is left at 0.00 Vista will calculate 0.00 amount during PR Process.

Note: If the pretax deduction code(s) are using a Calculation Category of E-Employee the limit can be overridden at the employee level.(PR Employee Deduction/Liability Form)

Catch up Annual Contribution Limit: 6,500.00 (2021 catch-up contribution allowed for those turning age 50 or older)

Enter the annual limit for employee 401(k) catch-up contributions.
The system applies the limit specified here across multiple catch-up deductions. For example, if an employee contributes to both a traditional 401(k) and a Roth 401(k), with an annual limit of $6,000, the system applies this limit across both plans.

Annual Compensation Limit: 0.00 we do not have a limit on employer match so leaving this field at the default of 0.00

Enter the annual compensation limit to apply to all 401(k) employer match liabilities.
The system applies the limit specified here across multiple 401(k) employer match liabilities. For example, if you set up employer match liabilities for both traditional 401(k) and Roth 401(k) employee contributions, the system applies this limit across both plans.