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Administrator Guide
Last Updated: 2024-02-23
Example: Define an Employer Match on 401(k) Pre-Tax Contributions (USA)

Example: Define an Employer Match on 401(k) Pre-Tax Contributions (USA)

Your 401(k) retirement savings plan includes an employer match on 401(k) pretax employee contributions. The employer match contribution is 100%, capped at 6%, subject to the IRS annual compensation limit. The employer match stops when employee reaches the IRS deferral limit.
John earns 114,000 USD/year, or 9,500 USD/month. He's elected to contribute the maximum of 20% of his monthly salary to his 401(k) pretax retirement savings.
You define the 401(k) employer match deduction so that Workday deducts an amount based on the requirements.
  • Your Benefits department has defined a 401(k) retirement savings plan on the
    Create Benefit Plan
     task.
  • Create a
    401(k) Total Contributions: EE + ER [USA]
     pay accumulation for the sum of the employee and employer contributions.
  • Create a
    401(k) Pre-Tax > 0
     value comparison calculation.
  • Security:
    Set Up: Payroll (Calculations - Payroll Specific)
     domain in the Core Payroll functional area.
  1. Access the
    Create Aggregate Calculation
     task.
  2. Enter these settings:
    Option Description
    Name
    Lesser of (Eligible Wages*Max Match %) and 100% of EE Contribution
    Category
    Payroll
    Function
    Minimum
    Operands
    401(k) Pre-Tax
    Base (unprorated) * Percent
  3. Access the
    Create Aggregate Calculation
     task.
  4. Enter these settings:
    Option Description
    Name
    Lower of EE Contrib and 6%
    Category
    Payroll
    Function
    Minimum
    Operands
    .06
    Benefits: Benefit Plan Percentage
  5. Access the
    Create Deduction
     task.
  6. Enter
    401(k) Employer Match
     in the
    Name
     field.
  7. Enter these settings on the
    Effective Dated
    tab:
    Option
    Description
    Effective Date
    Today
    Run Category Eligibility
    Regular
    (Optional)
    Bonus
    Worker Eligibility
    Row 1:
    • Benefits: Benefit Plan Percentage Exists (and <> 0)
    • Retirement Savings Eligible Wages > 0
    • 401(k) Pre-Tax > 0
    Workday recommends you review your benefit plan configuration for worker elections.
  8. Select the
    Calculation
    Lesser of (Eligible Wages*Max Match %) and 100% of EE Contribution
    .
  9. Enter these settings in the
    Related Calculations
     grid:
    Related Calculation
    Override Calculation
    Limit Details:
    Value
    Limit Details:
    Balance Period
    Limit Details:
    Based On
    Base (unprorated)
    Retirement Savings Eligible Wages [USA]
    Section 415 eligible wage limit
    YTD - Current Calendar Year (based on Payment Date)
    401(k) Employer Match [USA] - Base (unprorated)
    Percent
    Lower of EE Contrib and 6%
    1. Don’t select
      Input Allowed
       for either related calculation.
  10. Define the deduction limits in the
    Limit
     section at the bottom of the
    Effective Dated
     tab:
    Value
    Balance Period
    Based On
    Include Current Value
    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]
    401(k) Pre-Tax [USA]
    401(k) Roth
  11. Enter these settings on the
    Non-Effective Dated
     tab:
    Option
    Description
    Groups
    Employer Paid Benefits [FRA GBR CAN USA]
    Benefit Plans
    Select your 401(k) benefit plan.
Workday calculates the employer match based on the same percentage of eligible wages as the employee contribution. When the employee reaches the individual annual contribution limit for the deductions in a pay period, the match is 100% of the employee deduction. This match is rather than the full percentage match on the wages.
The employer match deduction stops when the employee reaches the wage limit or the IRS employee and employer total contributions limit.
When the sum of the total employee and employer contributions exceeds the IRS employee and employer total contributions limit, Workday takes the deductions in this order up to the limit:
  1. 401(k) pretax.
  2. 401(k) employer match.