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Administrator Guide
Last Updated: 2024-02-23
Example: Set Up 401(k) Deduction for Multiple States (USA)

Example: Set Up 401(k) Deduction for Multiple States (USA)

This example illustrates how to set up 401(k) deductions for multi-state workers.
Erin works in both Arizona and New Mexico, and has hours entered and approved in Time Tracking for both states. Her 401k deduction is 12%, which should apply to her eligible wages earned in each state.
Your company has created a 401(k) retirement savings plan.
A
Retirement Savings Eligible Wages
 pay accumulation.
A
Retirement Savings Eligible Wages > 0
 value comparison calculation.
These pay accumulations if there's another employee deduction, or an employer match:
  • 401(k) Total Contributions: EE [USA]
  • 401(k) Total Contributions: EE + ER [USA]
Security:
Set Up: Payroll (Calculations - Payroll Specific)
 domain in the Core Payroll functional area.
  1. Access the
    Edit Company Federal US Tax Reporting
     task.
  2. Select the checkbox for
    Allow Pre-Tax Deduction Allocation
    .
  3. Enable one or both of the following:
    Allow Ongoing Work Jurisdiction Tax Allocation
    or
    Enable Tax Mapping on Location
    .
  4. Set up Arizona and New Mexico as locations enabled for tax location mapping.
  5. Access the
    Create Deduction
     task.
  6. Enter these settings:
    Option
    Setting
    Name
    401(k) Pre-Tax
    Code
    401k
  7. Enter these settings on the
    Effective Dated
     tab:
    Option
    Setting
    Effective Date
    Current date
    Run Category Eligibility
    Bonus
    Regular
    Worker Eligibility
    Row 1:
    • Retirement Savings Eligible Wages > 0
    • Benefits: Benefit Plan Percentage Exists (and <> 0)
    Workday recommends you review your benefit plan configuration for worker elections.
    Calculation
    Base (unprorated) * Percent
    Recalculate during Retro
    Workday recommends that you don't select this check box for percentage-based deductions.
  8. Ensure
    Do Not Apply Percentage Splits
     is not enabled at the pay component level.
  9. Enter these settings in the
    Related Calculations
     grid:
    Option
    Value
    Related Calculation
    Base (unprorated)
    Override Calculation
    Retirement Savings Eligible Wages (Pay Accumulation)
    Do Not Apply Percentage Splits
    Select the option.
  10. Enter these settings in the
    Limits
     grid (below the
    Related Calculations
     grid):
    Value
    Balance Period
    Based On
    Elective Deferral Annual Limit for 401(k), 403(b), 457(b), and 408(k) SEP Plans
    YTD - Current Calendar Year (based on Payment Date)
    401(k) Total Contributions: EE [USA]
    IRS Annual Contributions Limit Value (only looks at the specified dollar value / not at annual compensation)
    YTD - Current Calendar Year (based on Payment Date)
    401(k) Total Contributions: EE + ER [USA]
  11. Enter these settings on the
    Non-Effective Dated
     tab:
    Option
    Setting
    Groups
    Federal Taxable Reduction [USA]
    Pre Tax Deductions
    State Withholding Taxable Reduction [USA]
    Withholding Order (All): Retirement Plan Deductions [USA]
    Benefit Plans
    Select the relevant benefit plan.
  12. (Optional) Once you’ve created a
    401(k) Roth
     deduction, update the
    401(k) Total Contributions: EE [USA]
     pay accumulation:
    1. Access the
      Edit Pay Accumulation
       task.
    2. Select these
      Deductions
       on the
      Add and Subtract Calculations
       tab:
      • 401(k) Pre-Tax
      • 401(k) Roth
    3. Access the
      Calculate/Display Exceptions
       tab and enter these settings:
      Option
      Description
      Option
      Calculate and display only if specified Earning/Deduction exists
      Specified Earnings/Deductions
      401(k) Pre-Tax
      401(k) Roth
  13. (Optional) Once you’ve created a
    401(k) Employer Match
     deduction, update the
    401(k) Total Contributions: EE + ER [USA]
     pay accumulation:
    1. Access the
      Edit Pay Accumulation
       task.
    2. Select these
      Deductions
       on the
      Add and Subtract Calculations
       tab:
      • 401(k) Pre-Tax
      • 401(k) Roth
      • 401(k) Employer Match
    3. Access the
      Calculate/Display Exceptions
       tab and enter these settings:
      Option
      Description
      Option
      Calculate and display only if specified Earning/Deduction exists
      Specified Earnings/Deductions
      401(k) Employer Match
On her first pay result for both states, Erin's 401(k) deduction is allocated between the two states at 12% of her unprorated earnings.