Common deduction limits are used when multiple deductions are under the same limit requirement. Common examples are:
- Multiple retirement accounts (401K% and Roth% or 401K catchup and Roth catchup)
- Multiple garnishments or child support payments
To enter Common Deduction Limits:
- Select Setup/Payroll/ under Earnings/Deductions/Taxes section.
- Click on Common Deduction Limits.
Or, you can access from the top menu bar:
- Select Rules/Payroll/Common Deduction Limits.
Next, set up the new group or edit existing group from this screen:
- Define new deduction groups code and description.
- Edit or delete existing deduction groups if limit changes or become obsolete.
- Selection List: Choose the selection list for which you want to apply the deduction group. If you have only one employee, you must create a selection list for that employee. If you leave the selection list blank, the deduction group will apply to all employees.
- Define the annual maximums. Quarter updates do not automatically update these fields. They need to be manually changed in the group when change is required.
- Select the deduction codes included in the deduction group. Limits on the deduction code will have to be updated manually but if use in the group is not needed but makes it look uniformed. The system will use the order by which the deduction codes are listed on the Common Deduction Limits window to determine the order in which the deductions will reduce the limit.
Note: The Employer Annual Maximum in the above example is just for demonstration.
You would use what your company’s policy states.