Payroll Calculation for Match Limit Deductions

To calculate the company match deduction, the Payroll application determines if the employee's contribution is greater than the Up To percent defined as the limit of the company match on Match Limit Schedule (BN18.6). If the contribution does not exceed the Up To percent, the match is calculated based on the employee's deduction amount. If the contribution exceeds the Up To percent, the percent limit is calculated and the company match deduction based on the reduced amount.

If the employee contributes a flat amount (instead of a percent), the Payroll application first calculates the percent the employee is contributing using the following equation.

For example:

Vinnie's pay is $1,600.00. His deduction amount is $22.13, so he is contributing 1.383% of his pay ($22.13/$1,600.00 * 100 = 1.383).

The Payroll application determines the company's contribution amount as follows:

  • If the employee's percent contribution is equal to or less than the Up To amount, the company match calculates as follows:

    Employee's contribution * Match% = Company match

At ABC Foods, if an employee's contribution is up to 5%, the company match is 50% of the employee's contribution.

For example:

Sheila's pay is $1,600.00.

She contributes three percent of her pay, which is $48.00 ($1,600.00 * 0.03).

The company match is $24.00 ($48.00 * 0.50).

  • If the employee's contribution is greater than the Up To amount, the company match calculates as follows:

    (Employee's pay * Up To percent) * Match% = Company match)

At ABC Foods, if an employee's contribution exceeds 5%, the Payroll application calculates 5% of the employee's pay and calculates the company's contribution as 50% of that amount. For example:

Tony's pay is $1,600.00.

He contributes 7% of his pay, which is $112.00 ($1,600.00 * 0.07).

Because Tony's contribution exceeds 5% of his pay, the Payroll application calculates 5% of Tony's pay, which is $80.00 ($1,600.00 * 0.05).

The company match is $40.00 ($80.00 * 0.50).

In the above example, if the employee contribution is an amount, rather than a contribution of 7%, the employee contribution would be a flat amount of $112.00 each pay period, and the application would have calculated what percent the contribution is.

If there is a dollar amount limit, the company match stops when the descending balance = $0.00.