Maintaining Global Deduction Codes

Use the Deduction Codes form to maintain global deduction codes. There are four main panels on this form (five if the deduction is marked Voluntary):

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Deduction Codes: Set basic information about the code, such as a description, its calculation method, and whether it prints on employee pay stubs

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Voluntary Classifications: This panel only displays if the deduction is voluntary. Select the type of voluntary deduction on this panel.

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Maximums: Set the maximum amount to be deducted from an employee's check during a specified period.

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Limits: Set payroll batch limits for this deduction code.

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Other Processing Parameters: Miscellaneous settings specific to different circumstances. See the table for information about each field.

Viewing and Editing Existing Deduction Codes

You can view or edit deduction code information on the Deduction Codes form. Enter or select the Deduction Code you want to view. The form populates with the relevant information.

Note:  When making edits to an existing deduction code, be aware that you can cause issues with any existing records that use the deduction code.

Creating a New Deduction Code

Setting Up Basic Deduction Code Information

Select the parameters that define the new code in the Deduction Codes panel.

To set up basic deduction code information, do the following:

1.

Enter or select the code in the Deduction Code field. (When creating a deduction code, use something brief but descriptive, such as LIFE for life insurance.) If you select this field, a selector form displays where you can search for a specific deduction code or its description or select a code from the list that displays. When this form opens, the description, deduction type, and obsolete date display.

To filter the search further:

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Select a Deduction Type (the default is All).

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To display only obsolete codes, select Yes in the Obsolete field (the default is No). (Note: Codes with an obsolete date earlier than the current date do not display in the selector form.)

To refresh the list, select Reset Search and Filters.

2.

Enter a more detailed Description of the deduction code.

3.

Select the Deduction Type. If you select Voluntary, the Voluntary Classifications panel displays.

Important! Some deduction types and calculation methods are not compatible with each other. If you make an incompatible selection, the system displays a validation message. For example, if you first select a deduction type and then make a calculation method selection that is incompatible with the deduction type, the following message displays, "That method is invalid for this Deduction Type." (The reverse applies if you first select a calculation method.) The message includes a warning that changing an existing deduction type or a calculation method may adversely affect any employee records that have already been setup. (If you are unsure whether or not to continue, check with your local system administrator or contact PrismHR Customer Support.)

For proper reporting on W2 forms, do not set up Roth retirement contributions using the Post-Tax Retirement Contribution deduction type.

Note: A warning displays if you try to update the Deduction Type for an existing Deduction Code, which results in the following after clicking OK and saving the record:

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You cannot delete or update a Deduction Type after the system processes an updated Deduction Code through a complete payroll process.

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A tool tip displays next to the Deduction Type field, "This deduction has already been applied to a payroll voucher. The type can no longer be adjusted and the code can no longer be deleted."

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The Deduction Type field and Delete button are disabled.

4.

Select the Calculation Method used to calculate the payroll deduction amount for this deduction code.

5.

Enter the Pay Stub Name, which is a brief description that prints on pay stubs and certain reports.

Optional Settings

If necessary, you can also set up other basic deduction settings in this panel:

Field	Description
Mandatory	Select this option if this deduction code is for goods and services that are a mandatory part of employment.
Print on Paystub	Select whether or not you want this code to display on employee pay stubs.
Third Party Required	Voluntary deductions only. Select this option if this deduction must have a Third Party Payee associated with it. You can set this at the client level. See Maintaining Third Party Payees Vendor Information for more information.
To Arrears	Voluntary deductions only. Select this option if the deduction can go into arrears when the employee does not have enough pay to cover it.
Obsolete Date	The date after which this deduction code is no longer in effect.

Rate X Hours Paid (Selected Pay Codes)

If the Calculation Method is Rate X Hours Paid (Selected Pay Codes), use the RPS Pay Codes panel to select the pay codes.

Enter each applicable Pay Code in the table.

Selecting Voluntary Classifications

The Voluntary Classifications panel only displays if the Deduction Type is Voluntary. Select any options that correspond to the type of voluntary deduction.

Note:  Selecting both of the Section 125 and Health Savings Account fields causes a double-shelter of the deduction amount. Only select one of these fields since each performs the same function.

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401(k) Retirement: This deduction is for client-sponsored 401(k) retirement plans.

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457 Retirement: This deduction is for contributions to a supplemental retirement plan.

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FSA Dependent Care: This deduction is for flexible spending dependent care plans.

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401(k) Catch-Up: This deduction is for 401(k) catch-up contributions.

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409(a) Retirement: This is for deducting contributions to a 409(a) deferred compensation plan.

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Health Savings Account: This deduction is for client-sponsored Health Savings Accounts.

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414h Retirement: This deduction is for contributions to a 414h tax-deferred government retirement plan.

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Group Medical: This deduction is for client-sponsored medical plans.

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Section 132: This deduction is for client-sponsored transportation plans.

Configuring Maximums and Limits

If necessary, use the Maximums and Limits panels to establish the maximum deduction amounts and the deduction limits for this deduction code.

Setting up Maximums

You can define monthly, quarterly, and annual maximums. Payroll automatically tracks the amount deducted from an employee's pay during the period and stops making the payroll deductions once the maximum is reached. Enter maximums only when the maximum amounts apply to most employees.

To set up deduction maximums, do the following:

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Set the time period in the Basis field.

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Enter the Maximum amount that the system will deduct during the selected Basis. You can define maximum amounts for a specific employee on the employee’s Payroll Deduction form, which overrides the amount in this field.

Setting up Limits

You can define limits for the deduction. Since PrismHR only checks limits during batch payroll processing (as opposed to when you enter an online pay check), you can specify only pay periods supported during batch payroll processing. Enter limits only when the limit amounts apply to most employees.

Note:  The payroll period used as the basis for defining a limit displays in the Cd and Period fields.

To set up deduction limits, do the following:

1.

Enter the deduction's Limit amount for the payroll period.

The value in the Limit field defines the maximum amount that PrismHR can deduct for this code during a payroll period. You can also define limits for a specific employee on the employee’s Payroll Deduction form, which overrides the value of this field.

Configuring Other Specific Deduction Options

The Other Processing Parameters panel establishes additional deduction code parameters. When you finish, click Save.

Field	Description
Default Amount	This value varies depending on the Calculation Method. It can be an amount, a percentage, or an hourly rate. The value entered here displays when you set up the employee's deduction form. For any employee, you can override the value on that form. If you leave this field blank, you must set it at the employee level.
Default Periods	Enter the Default Periods when the system should make this deduction; this displays when you set up each employee’s deduction form. You can override the default period on the employee form. Define up to five deduction periods, each one represented by a single digit corresponding to the deduction period. • To process the deduction in the second period, enter 2. • For multiple period deductions, enter multiple digits with no spaces; to process the deduction in periods two and four, type 24. • For deductions that should be made on every pay check, enter 12345. The frequency with which you pay your employees determines the length of these deduction periods. For employees paid on a weekly basis, the PrismHR Customer Support Team recommends that you make each week of the month a separate deduction period (deduction period one corresponds to week 1, deduction period two to week 2, and so on).
Union Related	Display this deduction as a default on Union Codes.
Certified Description	Enter a description to display on a Certified Payroll Report. The report summarizes all deduction codes with the same description.
Time Sheet Heading	This appears on the Fax Back time sheet.
Allow Desc Override	Select to allow users to override this deduction description at the company level. Use this field to prevent codes from being misused, allowing specific variable codes.
KPERS Contribution	Select if this deduction is for contributions to the Kansas Public Employees Retirement System
MTRB Contribution	Select if this deduction is for contributions to the Massachusetts Teachers Retirement Board
"In" Pay Code	Enter the "In Pay Code" to display on reports for vacation, holiday, and union dues.
Match Percent	If there is a match for this deduction, enter the percentage here.
Match Description	If there is a match for this deduction, enter the description. If you do not enter a description, the system uses the deduction code.
Form W2 Box	Select the box in which this deduction prints.
Form W2 Code	Select the code that should precede the amount in Box 12 of Form W-2.
Other	If you selected Allow Other Codes from the Form W-2 Code drop-down, enter the code here.
Job Rate Bill Code	Enter the Job Rate Bill Code deduction code. The system uses Job Rate Bill Code only if this deduction code is billed on a Job Rate client. If you leave this field blank, no bill reduction occurs for the deduction.
Rebate Bill Code	Enter the Rebate Bill Code this deduction uses to reduce a company’s bill amounts, if applicable. Deductions from employee checks can reduce the amount that the company owes for a check run. Your organization would typically use client rebate bill codes on items such as client loan repayments or client-sponsored benefit plans. Leave this field blank if the deduction is for a PEO-paid benefit or tax.