Deduction and Contribution Limits
Background
A deduction is money withheld from a paycheck in order to pay taxes, insurance, garnishments, or other payments. See a full definition ofDeductionin our Payroll Glossary. In Patriot Software, a contribution is a company-paid amount that is only included on a pay stub for informational purposes. It does not affect the paycheck amounts.
Using Deduction and Contribution Limits in Patriot Software
Both Deductions and Contributions can be set up with dollar limits so that once the limit is reached, the Deduction or Contribution will automatically stop. The limits fields are optional, and if a limit is not needed, you can leave the field blank.
For deductions, you can enter a pay date, monthly, calendar year, or lifetime limit. For contributions, you can enter a monthly or an annual limit.
Pay date限制与员工层面最常用的气ld support and other garnishment deductions. These deductions are normally a specific percentage of disposable income, up to a specific dollar amount each pay date. If there is not enough net pay to deduct the entire child support or garnishment amount, the deduction will still calculate on the percent of disposable income.
Amonthlylimit is useful for benefit premiums that are the same each month regardless of how many pay dates are in the month. Once the monthly limit has been reached, the deduction or contribution would stop, and then automatically start again on the first pay date of the next month. For example, if you are paid biweekly, a monthly limit would prevent the deduction/contribution from happening if there is a third pay date in the month.
Thecalendar year annual limit最常与IRS贡献限制一起使用，例如401（k）和HSA贡献。一旦达到年度限额，扣除或贡献将停止，然后在下一个日历年的第一个工资日期内重新开始。日历年度限制将自动设置以下内容deduction types:
- 401（k）和罗斯401（k）
- 403(b) and Roth 403(b)
- 457(b) and Roth 457(b)
- Simple IRA
- HSA Single
- HSA Family
If you use multiple deductions with the same deduction types in the above list, each year-to-date deduction total will count toward the combined IRS contribution limit. For example, if you use two different 401(k) deductions on an employee, both deductions would stop for the year when the combined deduction limit for reached $20,500 (for 2022).
Lifetime limitsare most often used with long-term deductions such as wage garnishments or loan repayments that are not based on time intervals. Once the lifetime limit has been reached, the deduction would stop and not restart again unless the lifetime limit is increased or removed by the user.
[RELATED ARTICLE: Company-Level Deduction Setup: Field-Level Help]
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