The Employee Retirement Plan module is located within Datatech’s Human Resource Management software. At this time, the focus of the programming is to handle employee census exports, contribution file imports, and contribution exports for the CalSavers and OregonSaves programs.
This blog will cover the setup required to use this module. If you are using an alternate retirement plan provider and have programming requests, please submit your requests to support@datatechag.com.
Setup
General Ledger Account
- To create this account go to General Ledger > Chart of Accounts. Go to your Payroll Liabilities section.
- Bring up an existing G/L account used for another miscellaneous payroll deduction.
- Click Clear or press the F5 key.
- Enter the available account # and description for the account (i.e. CalSavers Contributions). If using the Chart of Accounts set up with Groups, click on Groups and assign accordingly).
- Click Save.
Note: Image is showing a standard Setup Chart of Accounts window, your program window may vary.
Payroll Miscellaneous Deduction
A separate Miscellaneous Deduction should be set up for the contributions.
- To do this go to Payroll > Setup > Miscellaneous Deductions
- Scroll down to a blank line and enter an available deduction #. Enter the Description and a Short Description for the Check Stub.
- Enter the General Ledger account # you set up for the liability.
As the CalSavers and OregonSaves are post-tax ROTH plans, you DO NOT enter a pre-tax Wage Type. If you are setting up an alternate retirement plan that is pre-tax on Federal & State Income Tax Withholding, you should have a default 401(k) Wage Type available with these parameters.
The Column & Heading fields are no longer needed for customized deduction reports and should be left blank. Since this is a liability posting, a Cost ID is not needed either.
System File - Retirement Setup
A new Retirement tab has been added to Tools > HR Setup.
Require Retirement Plan
If you are located in a state with a mandated retirement system (CalSavers/OregonSaves) select Require Retirement Plan.
Retirement Plan Operator
Select the Operator account that should receive the reminders for running the Employee Census export.
Last Retirement Plan Ctrl/Last Retirement Record Ctrl #
These control numbers are assigned by the software and should not be changed.
Census Export Folder/Import Folders
These are the default folders where the program will export your Employee Census and look for the Contribution Import file. The software will create the respective folders in your accounting files – HR > Retirement > Census and Import. If you would like to change the default folder, you can do so.
Save
If you have made any changes to the Retirement setup/settings, click Save before closing the window.
Retirement Plan Setup
At least one retirement plan must be set up, and if you offer employees a choice between different plans, you should set up each one of the plans in this window.
To set up your Retirement plans go to Retirement > Plan Setup.
Plan ID
Enter up to 8 characters to identify the plan.
Description
Enter the plan description.
State
Enter the state for the plan.
If you have employees located in more than one state, the software will only include employees that have received a check for the state entered on the plan.
For example, say you have employees working in California and Arizona. An employee that only has checks for work in Arizona will not be included in a plan that applies to California employees.
Deduction #
Select the deduction you set up for the plan.
Loan Deduction #
The Loan Deduction is not used for the state run (CalSavers/OregonSaves) programs. This may be used for other retirement programs that allow for withdrawing funds as a loan.
Export Format
At this time, CalSavers is the only Employee Census export option. This can also be used for OregonSaves. As we have templates from other retirement plans, we will add to this selection list.
Vendor #
If you will be issuing the payment for the retirement contributions through Datatech software, select the Vendor account for the retirement provider.
Enrollment
Automatic
Select Automatic if employees are automatically enrolled. This would be the case for CalSavers/OregonSaves. If you are setting up a plan that employees opt-in to, leave this setting unselected.
# Days After Hire to Enroll
For the CalSavers program, you should upload/enroll employees within 30 days of hire.
This prompt acts in a similar way to the New Hire Report reminder. The software will record when an Employee Census was last generated. If the last census created is 25 days old, you will start receiving reminders to generate the Census.
# Days After Hire to Enroll
For the CalSavers program, you should upload/enroll employees within 30 days of hire.
This prompt acts in a similar way to the New Hire Report reminder. The software will record when an Employee Census was last generated. If the last census created is 25 days old, you will start receiving reminders to generate the Census.
This setting does not control employees that are included in the Census file, which will be covered in the Census Export section.
Enrollment Waiting Period
The Enrollment Waiting Period is the amount of days from when an employee is eligible to when they will start enrollment. For CalSavers/OregonSaves, once you have uploaded your census, the state program will send the employee(s) an enrollment package. The employee will be auto-enrolled after 30 days from this point if there is no action taken to opt-out.
By entering 30 days here, the program will calculate an initial Contribution Start Date when the retirement record is created. When you import your Employee Data (Contribution information) if a date is reported in column E – “Eligible for Contribution”, this date will be updated on the retirement record.
Election Good for # of Days
This entry is not used at this time.
It is for CalSavers/OregonSaves. This may be used in the future for other retirement plans to indicate how long an employee’s decision to enroll or decline to enroll is effective.
CalSavers has not indicated how long an opt-out status would be retained.
Last Census File Date
You do not need to enter a date here. It will be updated when you run the first census. As mentioned above, the software will check that the census has been run at least every 30 days and will store the last date the export was generated here.
Eligibility
Minimum Age to Enroll
The Minimum Age to enroll for most retirement plans is 18. This should be entered and adjusted if your plan varies.
Waiting Period After Hire/Minimum Hours
These settings are not used for state run plans, since all employees are eligible to participate.
These settings may be used for other retirement plans that have eligibility parameters. This includes the length of employment and an hour requirement the employees must meet before becoming eligible to participate in the program.
Employee Contributions
The state run programs fall under ROTH IRA Contribution limits set by the IRS.
Note: When employees are enrolled in a retirement plan, the program will automatically create the Miscellaneous Payroll Deduction. This deduction will be set to Percent of IRA/401k Wages.
If you have a Wage Type for non-wage payments (i.e. Reimbursement) that should not be subject to the IRA percentage calculation, make sure the IRA/401k Wages calculation on that Wage Type is not selected.
Default Percentage Rate
Enter the default percentage rate for the plan. For example, the default rate for CalSavers is 5%.
Standard Limit/Year
Enter the annual, maximum contribution an employee can have withheld for the plan. The software will stop contributions if they have met this limit.
Catch Up Contribution Age & Catch Up Limit/Year
If the plan allows for employees over a certain age to contribute a higher amount, enter that age and respective amount.
For example, in 2020, the maximum ROTH contribution an employee under 50 can make is $6,000. Employees over 50 can contribute $7,000.
Employer Contributions
The state run programs do not allow for employer contributions.
Important: Leave everything in the Employer Contributions section blank when setting up a CalSavers/OregonSaves plan.
Contribution Limit
Enter the maximum percent of an employee’s gross/IRA wages that the Employer will contribute.
Method
Select the Method used for calculating the employer contribution:
% of Deduction – This will calculate a percent of what the employee contributed.
For example, if an employer matched 50% of the employees contribution, and the employee had $40 withheld, the employer contribution would be $20.
% of Wages – This setting will calculate based on the IRA/401(K) wages.
For example, if you are contributing 2% of employees’ wages and the employee earned $600, the employer contribution would be $12, regardless of what/or if the employee contributed.
Note: Most Wage Types in your payroll software will be included as IRA/401(k) wages. Some customers may have used wage types for non-wages and these wage types should not have the IRA/401(K) Wages selected. You may want to review your wage types if this situation applies to you.
% of Wages/Match – The setting will also calculate based on a percentage of wages, but only if the employee has contributed. This would be used if the employer contributes a set percentage, but only if the employee also contributes.
None – No employer contribution.
Maximum Contribution/Year
If applicable, enter the maximum dollar amount the employer will contribute. For example, if you contribute a percentage, but no more than $3,000 per employee/per year, enter 3,000 here.
Save/Delete/Clear
Click Save to save the plan or changes to the plan.
Click Delete to delete the plan (if not used yet).
Click Clear to clear the window without making any changes.