Defining Contribution Limits

This procedure enables you 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 where the company 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 employee groups, you only need to define this form once for a plan by leaving the Employee Group field blank. If you define multiple contribution records for one plan, you may choose to leave the employee group field blank on one of the records. The application applies the record with no employee group to all eligible employees who do not belong to the group(s) attached to the other record(s).

To base a percent contribution on specific kinds of pay rather than all pay, assign a pay class to the deduction when you define the deduction in Deduction (PR05.1).

To define contribution limits

Access Benefit Plan (BN15.1).
Select the Company, Benefit Type, and Plan for which you want to define contribution limits.
Select the Inquire form function.
Click the Contrib button. The Company, Benefit type, and Plan are already filled in once Contribution Limits (BN18.5) opens.
Select the plan participants for the contribution record from the Coverage Type field.
Type the start date for the contribution.
If you are defining contributions that are unique to a particular group of employees, select the employee group for which this contributions applies.

Note: If you choose to leave the group field blank, the application applies the record with no employee group to all eligible employees who do not belong to the group(s) attached to the other record(s).

If you are defining contributions for COBRA participants, leave this field blank.

Note: If you define contributions by employee group, make sure employee groups are defined such that an employee can be a member of only one group at a time. If an employee belongs to more than one group for which contributions have been defined, benefit entry programs and benefit update reports show the situation as an error.
Define the contribution attributes for this contribution using the following guidelines:

Contribution Type

Select whether employees can contribute as a percent, an amount, or either a percent or an amount.

If the plan does not allow employee contributions, select No Employee Contrib.

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.

Contribution Tax Type

Select whether the employee contributions are pretax, after-tax or both pretax and after-tax.

If the plan does not allow for employee contributions, select No Employee Contribution.

If you are defining contributions for COBRA participants and retirees, select After-Tax.

Note: This must match with the deductions attached to the plan.

Default Tax Type

If employees can choose between pretax and after-tax contributions and you want a tax type to default on benefit entry forms, select the contribution tax type that you want as the default. You can override the default contribution tax type on benefit entry forms.

If you selected Pretax or After-Tax in the Contrib Tax Type field and you leave this field blank, this field defaults to the value in the Contrib Tax Type field.
If the plan specifies a minimum contribution for employees or COBRA participants, complete the Minimum Contributions section. Use the following guidelines to enter field values:

Pay Period

Type the minimum pay period amount.

Annual

Type the maximum annual amount.

Percent

Type the minimum percent contribution.

You can use the minimum percent limit for employee percent or amount contributions. If the employee contributes an amount, the application calculates the percent based on the salary specified in the Salary subform to test minimum and maximum percents.

Note: This field is not valid for COBRA participant contributions.
If the plan specifies a maximum contribution for employees or COBRA participants, complete the Maximum Contributions section. Use the following guidelines:

Pay Period

Type the maximum pay period amount.

Annual

Type the maximum annual amount.

Percent

Type the maximum percent contribution.

You can use the minimum percent limit for employee percent or amount contributions. If the employee contributes an amount, the application calculates the percent based on the salary specified in the Salary subform to test minimum and maximum percents.

Note: This field is not valid for COBRA participant contributions.
If the company contributes a flat amount for this benefit, complete the Company Contribution section. Use the following guidelines:.

Amount

If the company contributes a flat amount for this benefit, type the amount.

If employees make only percent contributions for this benefit, leave this field blank. If the company contributes a percent, leave this field blank.

This contribution creates a flat amount deduction.

Note: This field is not valid for COBRA participant contributions.

Percent

If the company contributes a percent, type the percent. If you type a percent company contribution, leave the Amount field blank.

If employees make only amount contributions for this benefit, leave this field blank. If the company contributes an amount, leave this field blank.

This contribution creates a percent deduction; when you define the deduction, you can select the type of pay on which the deduction is based.

Note: This field is not valid for COBRA participant contributions.
If you are defining a flex vacation plan, complete the Vacation section using the following guidelines:

Maximum hours

Type 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, type 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, type 100. If employees can sell vacation at half their hourly rate of pay, type 50.
If employees can contribute an amount and there are percent contribution limits, click the Salary button. The Salary (BN18.9) form opens. Define how you want the application to determine employee salaries for contribution calculations.
Select the Add function.

Related Reports and Inquiries


To	Use
List benefit plan information	Plan Parameter Listing (BN215)