Deduction and Benefit Codes: Implementation Activity

In the following implementation activity, you will learn how to create and set up deduction and benefit codes.

Story

Suppose that the SweetLife company needs to calculate the following deductions and benefits:

  • 401(k) retirement plan, which has an employee deduction part and an employer contribution part
  • Overdue child support deductions
  • Workers' compensation for the New York state where the company is located
  • Union dues

Acting as a system administrator, you need to create and define the needed deduction and benefit codes.

Configuration Overview

In the U100 Payroll snapshot, the following tasks have been performed for the purposes of this activity:

  • On the Chart of Accounts (GL202500) form, GL accounts that you will use for deduction and benefit expenses and liabilities, including 20300 and 69600, have been added.
  • On the Vendors (AP303000) form, the NYBANK, NYLABOR, and NYTAXDEP vendors have been configured.

Process Overview

You create the needed deduction and benefit codes by using the Deduction and Benefit Codes (PR101060) form.

System Preparation

Before you start creating deduction and benefit codes, you should launch the MYOB Advanced website and sign in as a system administrator by using the following credentials:

  • Username: gibbs
  • Password: 123

As a prerequisite activity, in the company to which you are signed in, be sure you have completed the Payment Methods: To Define a Direct Deposit Payment Method.

As a prerequisite activity, in the company to which you are signed in, be sure you have performed the activities in the preceding lessons of this part of the course.

Step 1: Creating a Deduction and Benefit Code for the 401(k) Retirement Plan

To create a deduction and benefit code for the 401(k) retirement plan, do the following:

  1. Open the Deduction and Benefit Codes (PR101060) form.
  2. On the form toolbar, click Add New Record.
  3. In the Summary area, specify the following information:
    • Code: 401K
    • Description: 401(k) Retirement Plan
    • Contribution Type: Both Deduction & Contribution
    • Associated With: Employee Settings
    • Vendor: NYBANK
    • Invoice Description Source: Code + Code Name
    • Active: Selected
    • Affects Tax Calculation: Selected

    Make sure that the remaining check boxes in the Summary area are cleared.

  4. On the Employee Deduction tab, specify the following settings:
    • Calculation Method: Percent of Gross
    • Percent: 6.00
    • Limit Frequency: No Maximum
    • Applicable Earnings: Total Earnings
    • Reporting Type: BOX12D
  5. On the Employer Contribution tab, specify the following information:
    • Calculation Method: Percent of Gross
    • Percent: 3
    • Limit Frequency: No Maximum
    • Applicable Earnings: Total Earnings
    • Reporting Type: NORMAL

    Make sure that the No Financial Transaction check box is cleared.

  6. On the US Tax Settings tab, specify the following settings:
    • Impact on Taxable Wage: Calculated by Tax Engine
    • Code Type: PLAN401K
  7. On the GL Accounts tab, specify the following accounts:
    • Deduction Liability Account: 20300
    • Benefit Expense Account: 69600
    • Benefit Liability Account: 20300
  8. On the form toolbar, click Save.

Step 2: Creating a Deduction and Benefit Code for Workers' Compensation

To create a deduction and benefit code for workers' compensation for the New York state, do the following:

  1. Open the Deduction and Benefit Codes (PR101060) form.
  2. On the form toolbar, click Add New Record.
  3. In the Summary area, specify the following information:
    • Code: NYWC
    • Description: NY Workers' Compensation
    • Contribution Type: Employer Contribution
    • Associated With: Workers' Compensation
    • Vendor: NYTAXDEP
    • Invoice Description Source: Code Name
    • Active: Selected

    Make sure that the remaining check boxes in the Summary area are cleared.

  4. On the Employer Contribution tab, specify the following settings:
    • Calculation Method: Percent of Gross
    • Applicable Earnings: Total Earnings
    • Reporting Type: NORMAL
  5. On the WCC Code tab, in the Summary area, in the State box, select NY.
  6. On the form toolbar, click Save.
  7. In the table on the WCC Code tab, specify the previously created workers' compensation codes by specifying the settings from the following table and save the changes.
    WCC Code Description Benefit Rate Effective Date
    5437 Installation 7.05 1/1/2021
    5606 Project Manager 0.62 1/1/2021
    8292 Warehousing 5.62 1/1/2021
    8742 Salespersons 0.44 1/1/2021
    8810 Clerical Work 0.2 1/1/2021

    Make sure that the check boxes in the Active column become selected after the changes are saved.

  8. On the GL Accounts tab, specify the accounts as follows:
    • Benefit Expense Account: 69600
    • Benefit Liability Account: 20300
  9. On the form toolbar, click Save.

Step 3: Creating a Deduction and Benefit Code for Overdue Child Support

To create a deduction and benefit code for workers' compensation that is applicable to the New York state, do the following:

  1. Open the Deduction and Benefit Codes (PR101060) form.
  2. On the form toolbar, click Add New Record.
  3. In the Summary area, specify the following information:
    • Code: CHILD
    • Description: Overdue Child Support
    • Contribution Type: Employee Deduction
    • Associated With: Employee Settings
    • Vendor: NYTAXDEP
    • Invoice Description Source: Code + Code Name
    • Active: Selected
    • Garnishment: Selected

    Make sure that the remaining check boxes in the Summary area are cleared.

  4. On the Employee Deduction tab, specify the following information:
    • Calculation Method: Fixed Amount
    • Amount: 50
    • Limit Frequency: Per Calendar Year
    • Limit Amount: 2000
    • Reporting Type: NORMAL
  5. On the GL Accounts tab, in the Deduction Liability Account box, select 20300.
  6. On the form toolbar, click Save.

Step 4: Creating a Deduction and Benefit Code for Union Dues

To create a deduction and benefit code for union dues, do the following:

  1. Open the Deduction and Benefit Codes (PR101060) form.
  2. On the form toolbar, click Add New Record.
  3. In the Summary area, specify the following information:
    • Code: DUES
    • Description: Union Dues
    • Contribution Type: Employee Deduction
    • Associated With: Union
    • Vendor: NYLABOR
    • Invoice Description Source: Code + Code Name
    • Active: Selected

    Make sure that the remaining check boxes in the Summary area are cleared.

  4. On the Employee Deduction tab, specify the following information:
    • Calculation Method: Amount per Hour
    • Amount: 0
    • Limit Frequency: No Maximum
    • Applicable Earnings: Total Earnings
    • Reporting Type: NORMAL
  5. On the GL Accounts tab, in the Deduction Liability Account box, select 20300.
  6. On the form toolbar, click Save.