Enter Employee 401(k) Contribution Rates
Note: This procedure assumes you have set up a 401(k) plan using the Payroll Setup Wizard. How do I set up a 401(k) plan?
- From the Maintain menu, select Employees/Sales Reps. Sage 50 displays the Maintain Employees/Sales Reps window.
- Enter or select an employee who wants to contribute to your company's 401(k) plan. To display a list of existing employees, type ? in the Employee ID field, or select the Lookup button.
- On the Withholding Info tab, locate the 401K field in the Withholding Information table.
- Enter the percentage claimed by this employee for 401(k) contributions in the Percentage column. Enter the amount as a number, for example 4.00 (for 4%).
- If the employee is eligible for catchup contributions, select Yes in the Catch Up column.
- Save the employee record. Repeat this procedure for each employee that participates in your 401(k) plan.
What is catch up?
The government allows employees over a certain age to make additional contributions to most retirement plans. This helps people who are closer to retirement age to "catch-up" on their retirement savings. For example, in 2010 and 2011, employees 50 and over can make additional contributions (above the universal limit) of up to $5,500 for 401(k)'s. Learn more about retirement plans and contribution limits
How it works
If you subscribe to a Sage Business Care plan, during payroll entry, the employee's 401(k) contribution will be automatically calculated and subtracted from gross pay before calculating and deducting federal and state payroll taxes. The employee contribution amount will be recorded and tracked in the K401 payroll field. If your company matches the employee contributions, these amounts will be recorded and tracked in the K401_C payroll field.
If you don't subscribe to a Sage Business Care plan, the contribution details are for informational purposes only since payroll deductions will not be calculated. You will have to manually calculate and enter 401K amounts.