Calculation Methods for Recurring Earnings and Deductions
Most of the calculations offered are available for all recurring earnings, deductions and memo items:
Flat dollar amount - this calculation is used when the same dollar amount is earned regularly. For example, an employee may earn a salary of $500.00 per pay period.
Annualized calculation - this calculation may be used when a recurring earning is based on a percentage of annualized wages minus a specific amount. For example, some Massachusetts educators may be offered a retirement plan where they contribute each pay period based on a percentage of their annualized wages minus $30,000. You cannot modify any data for a pay component with this calculation type.
Percentage - this calculation is used when a recurring earning is based on a percentage of a group of recurring earnings and deductions (called a calculation base) on a regular basis. For example, an employee’s 401(k) contribution is often calculated as a percentage of all his recurring earnings.
This calculation may also be used if a recurring earning is calculated as a percentage of a single recurring earning or deduction. For example, an employer’s 401(k) match may be 50% of each employee’s 401(k) contribution.
Rate X hours - this calculation may be used when a recurring earning is based on the number of hours entered for another recurring earning, deduction, or memo item. For example, machinist union dues may be calculated as $ .30 for every hour paid with “machinist pay” (a recurring earning).
Rate X units - this calculation may be used when a recurring earning is based on the number of units entered for another recurring earning, deduction, or memo item. For example, commission may be calculated as $5.00 for every unit of “# of bottles sold” (a memo item).
Tiered match - this calculation may be used when a recurring earning varies based on the tiered value of another recurring earning or deduction, or group of recurring earnings or deductions. For example, an employer’s 401(k) match may be 30% of each employee’s 401(k) contribution (a deduction) of less than 5% of all recurring earnings, but it may go down to 25% for each employee’s contribution of more than 5%. Or, a bonus earning may be $0 if “gross sales” (a memo item) is equal to $10,000 or less; it increases to $500 for “gross sales” between $10,001 and $30,000; and caps out at $1,000 for “gross sales” at $30,001 and up. You cannot modify any data for a pay component with this calculation type.
Leave employee with net pay equal to - this calculation is used when an employee wants all but a certain net pay amount deducted. For example, an employee may want pay back a 401(k) loan amount by having all but $500.00 deducted every pay period. Deduction calculation method only. You cannot modify any data for a pay component with this calculation type.
For group term life recurring earnings, there is an additional calculation available:
Value of excess group term life insurance - This calculation is used when an employer wants to calculate the imputed value of employer-provided group-term life insurance every pay period. It takes the value of the group term life policy that goes over the federal limit, and calculates the imputed value of the excess based on the employee’s age on the check date.