Creating contribution limits rules

Use this procedure to define contribution limits and company contributions for a plan in which employees elect contributions levels within limits. The typical plan is a spending account in which the employer limits the amount an employee can contribute. You also use this procedure for vacation plans to define the maximum number of hours employees can buy or sell and the cost of those hours.

Note: If the plan does not have unique contributions for specific benefit groups, you are only required to define this contribution type once for a plan by leaving the Benefit Group field blank. If the plan has different contributions for different groups of employees, define one of these contribution types for each benefit group for which contributions are unique. If you define multiple contribution records for one plan, you may choose to leave the benefit group field blank on one of the records. The record with no benefit group is applied to all eligible employees who do not belong to the groups attached to the other records.
  1. Select Benefits > Plans > Benefit Plans.
  2. On the Benefit Plan Contributions tab, click Create.
  3. Select a Coverage Class, Benefit Group, and the Contribution Start Date.
  4. Specify this information for all Contribution Types:
    Contribution Tax Type

    Select whether the employee contributions are pre tax, after tax or both. If the plan does not include employee contributions, select No Employee Contribution.

    Note: This field must match with the deductions attached to the plan.
    Default Tax Type

    Select a Default Tax Type when the Contribution Tax Type is Both.

    Currency

    Select the currency in which to display tax type.

  5. In the Calculation section, specify this information:
    Employee Contribution Type

    Select whether contribution type is an Amount, Percent, Both, or No Contribution.

    If you are defining contributions for COBRA participants, select Amount.

    Note: The calculation type selected must match the calculation type defined on the deduction codes that are attached to the plan.
    Limit Year
    Use this field to identify which records from contribution history are used to determine year-to-date contributions already made by a resource.
    Note: When the Limit Year is Calendar Year then contributions from January 1 – December 31 of the same year as an enrollment are considered when determining year-to-date contributions. Calendar year is the default.

    When the Limit Year is Plan Year then the plan year is defined either as starting on the associated flex plan’s start date when there is a flex plan associated to the benefit plan or as starting on the benefit plan’s start date month and date when there is not a flex plan associated to the benefit plan.

    Minimum Pay Period, Annual, Percent

    If the plan specifies a minimum contribution for employees or COBRA participants, complete the Minimum Contributions section.

    Maximum Pay Period, Annual, Percent

    If the plan specifies a maximum contribution for employees or COBRA participants, complete the Maximum Contributions section.

  6. If the company contributes a flat amount for this benefit, complete the Employer Contribution section.
    Amount

    If the employer contributes a flat amount for this benefit, specify the amount. If employees make only percent contributions for this benefit, leave this field blank. If the employer contributes a percent, leave this field blank. This contribution creates a flat amount deduction.

    This field is not valid for COBRA participant contributions.

    Percent

    If the employer contributes a percent, specify the percent. If you specify a percent of employer contribution, leave the Amount field blank. If employees make only amount contributions for this benefit, leave this field blank. If the employer contributes an amount, leave this field blank. This contribution creates a percent deduction. When you define the deduction in payroll, you select the type of pay on which the deduction is based.

    This field is not valid for COBRA participant contributions.

  7. If you are defining a Buy Sell Vacation plan, specify this information:
    Maximum

    Specify the maximum number of vacation hours an employee can buy or sell each flex year.

    Cost

    To calculate the cost of buying or selling vacation hours for a flex vacation plan, specify the percent by which employee hourly rates are multiplied. For example, if employees can purchase vacation hours for the same rate as they are paid, specify 100. If employees can sell vacation at half their hourly rate of pay, specify 50.

  8. If employees can contribute an amount and there are percent contribution limits, complete the Salary section. Define to determine employee salaries for contribution calculations.

    See Calculating contributions based on salary.

  9. Optionally, define how adjustments are to be calculated.
    See Calculating adjustments for contributions.
  10. Click Save.