Sage Abra Suite

401(k) at Year End for Sage Abra Suite

To ensure your 401k is ready for the New Year, here are some tips to review.

Review the Release Bulletin (PDF) included with the Q4 2012 Product Updates.

The Internal Revenue Service has announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2013. They are as follows:

• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the Federal Government's Thrift Savings Plan is increased from $17,000 to $17,500.
• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $5,500.
• The limit on annual contributions to an Individual Retirement Arrangement (IRA) rises to $5,500, up from $5,000 in prior years.
• The compensation amount for elective deferrals to SIMPLE retirement accounts is increased from $11,500 to $12,000.
• The annual compensation limit is increased to $255,000.
• The limitation for catch-up contributions to 401(k), 403(b), and 457(b) plans for individuals age 50 or over is unchanged at $5,500; the limitation for catch-up contributions to an employer's SIMPLE plan for individuals age 50 or over remains unchanged at $2,500.
• The limitation for the definition of “key employee” in a top-heavy plan remains unchanged at $165,000.
• The compensation amount for the definition of "control employee" for fringe benefit purposes is unchanged at $100,000.
• The limitation used in the definition of "highly compensated employee" remains unchanged at $115,000.

Review the Deduction Goal field to ensure IRS compliance.

The Deduction Goal field is the maximum amount Sage Abra Suite Payroll withholds for the selected deduction code. This is also the maximum goal employees might elect for the deduction. When the fourth quarter trial quarter close is run for the first time and the rule is set to automatically reset balance amount, the product resets balances for inactive deductions, it does not set the status back to Active; you must manually change the status of any inactive deductions, or use the Mass Update process.

Review the Annual Compensation Limit field to ensure IRS compliance.

The Annual Compensation Limit field contains the maximum limit of an employee’s earnings for a specific deduction code. When an employee receives annual compensation over this limit, the deduction becomes inactive and is no longer deducted. An example of this is $245,000 represents the maximum amount of compensation before the product changes the deduction code to inactive.

Review the Automatically Reset Balance Amount at Year End field.

If 'Yes' is selected in the field, the 4th Quarter Trial quarter close automatically resets every employee’s balance (amount yet to be withheld) to equal the amount found in the Goal field on the employee’s Deductions page during year-end processing.

The 4th Quarter Trial quarter close resets the balance to the goal amount found at the employee level (not the rule level.) Therefore, you must ensure that all goals are correct at the employee level (on the Deduction page) after you process the last payroll of the year and before you process the first trial quarter close for the fourth quarter.

To populate Box 13 of the W-2 the pension plan flag on the Payroll > Detail > Tax Withholdings for an employee must be set to 'Yes.'

To set the Annual Compensation Limit, do the following:

1. Select Payroll > Rules > Deduction Codes. The Deduction Codes page opens.
2. Select the Employer to view all deduction codes associated with that employer.
3. Select the qualified plan and click More... to open the Deduction Code's detail page.
4. On the General tab, update the Annual Compensation Limit field to the new limit for 2013 and then click OK.

How to Update the Annual Compensation Limit for Each Employee Record that is Enrolled in a Qualifed Plan

Back up your data before performing a Mass Update.

1. Select Payroll > Processes > Mass Update to open the Payroll Mass Update dialog box.
2. In the Update File field, select Employee Voluntary Deductions Register.
3. For the Update Field, select Annual Compensation Limit.
4. Use Expression Builder to build an expression for the specified deduction code of the qualified plan that you want to update in the Records to Update field.
5. Enter the new amount using this format, 999999.99, in the New Value field and click OK.