About Deduction Cap Groups

The Deduction Cap Group feature allows you to create groups of deductions that will be considered together when applying the required caps. For example, this feature makes it possible to correctly cap the deductions for an employee contributing to more than one TSA plan, as required by the IRS.

TSA deductions may have a higher cap than other deductions to allow for age catch-up provisions. This higher cap typically increases every calendar year, and different employees could become eligible for the cap increase every payroll period depending on their age.

• The 403(B) TSA group for IRS-mandated annual caps is a system group and can't be edited or deleted. It will be automatically updated with the basic annual and age catch-up caps for each calendar year, as published by the IRS.

• Deduction cap groups assigned to one or more deductions or employee deduction sets can't be deleted.

• A single deduction cannot belong to more than one deduction cap group. If a deduction must belong to more than one cap group, you'll need to make a copy of the deduction and configure it to belong to a different deduction cap group.

• The deduction cap group can be overridden — for example, for an employee with over 15 years of service who wants to use the TSA service catch-up provision.

Set up a deduction cap group

1. Enter deduction cap groups in Payroll Configuration, if you need groups in addition to the 403(B) TSA group for IRS-mandated annual caps.

2. Assign the deduction cap group to appropriate deductions in Manage Deductions.

3. Enter cap group overrides for individual employees as needed in Deduction Assignment.

How deduction cap groups work with the payroll process

During payroll processing, the system automatically uses the increased TSA annual cap for employees that will be over 50 years old in the calendar year in which the register is processed.

When an employee is contributing to more than one deduction in a group and the paycheck gets near the group cap amount, the first deduction processed may be fully or partially deducted, and the second deduction processed may not be deducted at all. The deduction order and priority set in Manage Deductions will determine the order in which the deductions are processed.

Return to Payroll Configuration — Deduction Cap Groups Tab

Return to Create a Deduction Set — Override Group Cap

Return to Payroll Overview