Example: Calculate a 401(k) Employer Match on Employee Contributions (USA)

Administrator Guide

This example illustrates the high-level steps in creating an employer match deduction based on employee contributions.

Your 401(k) retirement savings plan includes an employer match on both 401(k) pretax and 401(k) Roth post-tax employee contributions. The employer match contribution is tiered:

100% is matched on the first 3%.

An additional 50% is matched above that, capped at 6%.

When calculating the match, you want to consider the IRS individual contribution limit. When the employee reaches the IRS limit for the year, you want to calculate the corresponding match based on the percent the employee actually contributed in that period, as opposed to their elected percent.

You want to calculate the employer match percent and add it to a deduction. You want to create 1 calculation that covers all periods, regardless of whether the employee reaches the IRS limit for the year.

Example:

Eligible Wages	Employee Contribution	Employee Percent	Matching Rule	Employer Match
1000	80 (based on the elected percentage)	8%	100% of first 3 percent + 50% of the remaining 3% (up to 6)	4.5%
1000	44 (available amount before reaching the IRS limit)	4.4%	100% of first 3 percent + 50% of the remaining 1.4%	3.7%

Create step-based conditions to identify when the matched percentage is:

Less than or equal to 0.03.

Greater than 0.03.

See Example: Create Step-Based Conditions for a 401(k) Employer Match (USA).

Create a step-based calculation to calculate the employer match amount.

See Example: Create a Step-Based Calculation for a 401(k) Employer Match Amount (USA).

Create 401(k) employer match deduction.

Example: Create a 401(k) Employer Match Deduction (USA).

Workday calculates the employer match deduction based on the calculated employer match percentage.