This section explains how the Benefits application creates employer match
deductions. These contribution types create employer match deductions:
- Match Limit Schedule
- Match Percent Schedule
Each contribution type works differently. For both types of match calculations, the Benefits
application creates the employer match deduction based on the benefit plan's contribution
schedule, which is defined in the contribution setup.
For Match Limit Schedule contributions, the Benefits application creates the deduction
without any special calculations. It creates the deduction by using the values in the
schedule.
For Match Percent Schedule contributions, the Benefits application performs unique
calculations to determine the values to be used when the deduction is created.
Employer match deduction creation for match limit schedules
The Match Limit
Schedule is based on the employee’s years-of-service range. The Benefits application uses
the figures in the contribution schedule to create the employer match deduction. The match
deduction Up To percent and Descending Balance are prorated when both pre-tax and after-tax
employee contributions are being matched. The Descending Balance is adjusted for calendar
year-to-date employer contributions.
The calculation used to determine the descending balance is:
Contribution Rule's Maximum Amount - Year-To-Date Employer Contributions x Proration Based on Employee Contribution Allocation
Note: It is recommended that the
Deduction Code for the employer match is defined with the Calculation Type of Percent Of
Employee Deduction.
This table shows the contribution schedule on which the following deduction
creation examples are based:
| Years Of Service |
Employer Match |
Up To |
Maximum Amount |
| 1-4 |
25% |
5% |
1,000.00 |
| 5-99 |
50% |
10% |
2,000.00 |
Mary has two years of service. The standard deduction (employee deduction)
for the match shows:
| Employer Match |
Balance Type |
Balance Amount |
Percent Matched |
| 25% |
Descending Balance |
1,000.00 |
5% |
Bob has 15 years of service. The standard deduction (employee deduction)
for the match shows:
| Employer Match |
Balance Type |
Balance Amount |
Percent Matched |
| 50% |
Descending Balance |
2,000.00 |
10% |
Amy has 15 years of service. She has calendar year-to-date contributions
with the employer amount of $500. The standard deduction (employee deduction) for the match
shows:
| Employer Match |
Balance Type |
Balance Amount |
Percent Matched |
| 50% |
Descending Balance |
1,500.00 |
10% |
If the employee’s contribution is split between pre-tax and after-tax, and
the company matches both types of contributions, the match is prorated.
For example, Joe has 10 years of service and contributes 10% pre-tax and 5%
after-tax. Two company match deductions are created as follows.
This table shows Joe's pre-tax employer match:
| Employer Match |
Up To |
Balance Type |
Balance Amount |
| 50% |
6.67% |
Descending Balance |
1,333.33 |
This table shows Joe's after-tax employer match:
| Employer Match |
Up To |
Balance Type |
Balance Amount |
| 50% |
3.33% |
Descending Balance |
666.67 |
When created, the employer’s match is further adjusted for year-to-date
organization contributions taken. The year-to-date amounts can be viewed on the employee’s
eligibility record. The detail is available at .
For example, Jane has 10 years of service, contributes 10% pre-tax and 5%
after-tax, and the employer year-to-date contribution history is $1,000.
This table shows Jane's pre-tax employer match:
| Employer Match |
Up To |
Balance Type |
Balance Amount |
| 50% |
6.67% |
Descending Balance |
666.67 |
This table shows Jane's after-tax employer match:
| Employer Match |
Up To |
Balance Type |
Balance Amount |
| 50% |
3.33% |
Descending Balance |
333.33 |
Employer match deduction creation for match percent schedules
The Match Percent Schedule uses the employee’s contribution percent to
determine the employer match. If the employee contributes a flat amount instead of a
percent, the application determines the percent of the employee's contribution, using this
equation:
(Employee’s Contribution / Employee’s Annual Salary) x 100 = Employee's Percent Contribution
For example, Bart's annual salary is $40,000.00 based on the salary
definition in the contribution setup. His flat amount contribution is $4,500.00, so he is
contributing 11.25% of his salary:
(4,500.00 / 40,000.00) x 100 = 11.25
Types of match calculations
Match calculations are defined by the Calculation field in the Match section of the contribution
setup.
There are two types of match calculations:
- Fixed - The employer match percent is determined using only the values
from the detail line that contains the percent the employee elected.
Note: It is recommended that the
Deduction Code for the employer match is defined with the Calculation Type of Percent Of
Employee Deduction.
- Cumulative – The employer match percent is determined using the values
of all contribution levels up to and including the detail line that contains the percent
the employee elected. The balance amount is determined from the top level for the employee
contribution.
Note: It is
recommended that the Deduction Code for the employer match is defined with the
Calculation Type of Percent.
Employer match deduction creation for fixed match calculations
This table shows the contribution schedule on which the following
deduction creation examples are based:
| Employee Contribution |
Employer Match Percent |
Amount |
| 0-4% |
50% |
500.00 |
| 5-10% |
25% |
1,000.00 |
The employer deduction is created as follows:
Niki contributes 3%, which falls within the first range on the schedule (between 0% and
4%).
| Employer Match |
Balance Type |
Balance |
| 50% |
D – Descending |
500.00 |
Mike contributes 7%, which falls within the second range on the schedule (between 5% and
10%).
| Employer Match |
Balance Type |
Balance |
| 25% |
D – Descending |
1,000.00 |
Susan contributes a total of 10% that is split 5% pre-tax and 5% after-tax. This falls
within the second range on the schedule (between 5% and 10%).
This table shows Susan's pre-tax employer match:
| Employer Match |
Balance Type |
Balance |
| 25% |
D – Descending |
500.00 |
This table shows Susan's after-tax employer match:
| Employer Match |
Balance Type |
Balance |
| 25% |
D – Descending |
500.00 |
James contributes a total of 10% that is split 5% pre-tax and 5% after-tax. This falls
within the second range on the schedule (between 5% and 10%). The employer year-to-date
contributions for James are $400.00.
This table shows James's pre-tax employer match:
| Employer Match |
Balance Type |
Balance |
| 25% |
D – Descending |
300.00 |
This table shows James's after-tax employer match:
| Employer Match |
Balance Type |
Balance |
| 25% |
D – Descending |
300.00 |
Employer match deduction creation for cumulative match
calculations
This table shows the contribution schedule on which the following
deduction creation examples are based:
| Employee Contribution |
Employer Match |
Amount |
| 0-4% |
100% |
500.00 |
| 5-8% |
50% |
1,000.00 |
| 9-15% |
25% |
1,500.00 |
The employer deduction is created as follows:
Robin contributes 3%, which falls within the first range on the schedule
(between 0% and 4%).
| Employer Match |
Balance Type |
Balance |
| 3% |
D – Descending |
500.00 |
Walter contributes 7%, which falls within the second range on the schedule
(between 5% and 8%). The employer match is calculated as:
(4% x 100.00) + (3% x 50) = 4 + 1.5 = 5.5
| Employer Match |
Balance Type |
Balance |
| 5.5% |
D – Descending |
1,000.00 |
Fred contributes 11%, which falls within the third range on the schedule
(between 9% and 15%). The employer match is calculated as:
(4% x 100.00) + (4% x 50) + (3% x 25) = 4 + 2 + .75 = 6.75
| Employer Match |
Balance Type |
Balance |
| 6.75% |
D – Descending |
1,500.00 |
George contributes a total of 10%, which is split 6% pre-tax and 4%
after-tax. This is within the third range on the schedule (between 9% and 15%). The employer
match is prorated between the pre-tax match and the after-tax match calculated as:
Total Match = (4% x 100.00) + (4% x 50) + (2% x 25) = 4 + 2 + .5 = 6.5
Pre-Tax Proration = Pre-Tax Contribution / Total Contribution = 6 / 10 = .6
After-Tax Proration = 1 – Pre-Tax Proration = 1 – .6 = .4
Pre-Tax Match Percent = Total Match x Pre-Tax Proration = 6.5 x .6 = 3.9
Pre-Tax Balance = (Total Balance – Year-To-Date Employer Contributions) x Pre-Tax Proration =
(1500 – 0) x .6 = 1500 x .6 = 900.00
| Employer Match |
Balance Type |
Balance |
| 3.9% |
D – Descending |
900.00 |
After-Tax Match Percent = Total Match x After-Tax Proration = 6.5 x .4 = 2.6
After-Tax Balance = (Total Balance – Year-To-Date Employer Contributions) x After-Tax Proration =
(1500 – 0) x .4 = 1500 x .4 = 600.00
| Employer Match |
Balance Type |
Balance |
| 2.6% |
D – Descending |
600.00 |
Ron contributes a total of 10%, which is split 6% pre-tax and 4%
after-tax. This is within the third range on the schedule (between 9% and 15%). The employer
year-to date contributions for James are $400.00.
The employer match is prorated between the pre-tax match and the
after-tax match calculated as:
Total Match = (4% x 100.00) + (4% x 50) + (2% x 25) = 4 + 2 + .5 = 6.5
Pre-Tax Proration = Pre-Tax Contribution / Total Contribution = 6 / 10 = .6
After-Tax Proration = 1 – Pre-Tax Proration = 1 – .6 = .4
Pre-Tax Match Percent = Total Match x Pre-Tax Proration = 6.5 x .6 = 3.9
Pre-Tax Balance = (Total Balance – Year-To-Date Employer Contributions) x Pre-Tax Proration =
(1500 – 400) x .6 = 1100 x .6 = 660.00
| Employer Match |
Balance Type |
Balance |
| 3.9% |
D – Descending |
660.00 |
After-Tax Match Percent = Total Match x After-Tax Proration = 6.5 x .4 = 2.6
After-Tax Balance = (Total Balance – Year-To-Date Employer Contributions) x After-Tax Proration =
(1500 – 400) x .4 = 1100 x .4 = 440.00
| Employer Match |
Balance Type |
Balance |
| 2.6% |
D – Descending |
440.00 |