Set Up a Company 401(k) Plan
To quickly set up a 401(k) plan for your company, use the Payroll Settings wizard. You can then enter the percentages of gross pay each employee wants to contribute to your company's 401(k) plan in their individual records.
- From the Maintain menu, select Payroll and choose Payroll Settings.
- In the left navigation area, click on Benefits and then Summary of Benefits.
- Under the list of benefits, click Add Another Benefit.
- On the Add a Benefit window, select Retirement Plan and click OK.
- On the Retirement Plans window, select 401(k).
- Who contributes money to this plan? Select Employee, Company, or Both.
- Company contributions are based on: a percentage of employee's contributions, a flat dollar amount per pay period, or an advanced formula.
- Contribution Formula: The format of the formula will change based on your previous answer. You can either enter a percentage, a flat amount, or an advanced formula.
- Now you must enter the general ledger accounts for the expense and liability associated with the 401(k). If there is both an employee- and company-paid amount, then you will need to enter accounts for both.
- Click Finish to establish the new payroll defaults.
-
Advanced Formula: For example, many companies match 100% of the employee contribution amounts up to a certain limit. They might match 50% on the employee contribution above that limit. In the example below, the company is matching 100% (dollar for dollar) for all employee 401(k) contributions up to 4%. If an employee contributes a higher percentage (for example, 5%), the company will match 50% of the additional 1% amount. The company has set a matching cap at 6%.
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.