Tuesday, July 27, 2010

401k Match, Make Sure You Get Your Money!

In recent versions, the ability of Dynamics GP to handle the most common 401(k) match scenarios has improved tremendously. But there are several pieces involved, so I thought it might be helpful to list them out here.

Take the example of a 50% match up to 5%. The employer matches 50% of the employee's contribution up to 5% of their gross wages. To accomplish this, you will need to set up both a deduction (to capture the employee contribution) and benefit (to capture the employer match).

First, set up the deduction (Microsoft Dynamics GP>>Tools>>Setup>>Payroll>>Deduction). It is important that you configure the deduction with a "Percent of Gross Wages" calculation method. And don't forget to set the annual maximums as applicable.

Next, set up the benefit (Microsoft Dynamics GP>>Tools>>Setup>>Payroll>>Benefit). Here is where the setup gets a bit tricky. First, you will want to set the calculation method to "Percent of Deduction" and enter the match percent (in our example, 50%). Then, in the bottom left hand corner make sure the Based On field is set to "Deduction". Set the radio button to "Selected" and then insert the deduction code you set up previously. Enter the 5% match maximum in the Employer Maximum field. Viola! You are done.

A few notes:
  • You must use the Percent of Deduction method on the benefit for the Employer Maximum field to be available.
  • For the Employer Maximum to work, the benefit must be based on a deduction that uses the "Percent of Gross Wages" calculation method.
  • Remember to limit the Based On for the benefit to only the 401(k) deduction.
  • Remember to include both the deduction and benefit in your payroll build.

Hope this helps clarify the setup for anyone needing 401(k) match tracking in GP. Feel to post your own tips, tricks, or questions.

Happy set up!



Tom Franz said...

Christina & all,

There are still some limitations to the 401k functionality in GP. Integrity Data solved some of the common pains like tiered employer match amounts (i.e. - 100% to 2% and 50% to 4% match). Additionally, this product handles single maximums across multiple retirement codes as well as catch up provisions. See the Enhanced Retirement Plans product at www.integrity-data.com.

Tom Franz
Sr. QA
Integrity Data

Christina Phillips said...

Hi Tom--

I totally appreciate the limitations, and appreciate you sharing the perspective for more complicated scenarios. I just have found for these basic matches, it works quite well in GP alone.

Take care,