Many states are starting to implement State-sponsored retirement plans. State-sponsored retirement plans are typically ROTH IRA retirement plans (post-tax). You will not find an option for ROTH IRA in the payroll system. To set up a deduction for a State-sponsored retirement plan, use ‘Other Post-Tax Deduction’.
CAUTION: DO NOT select Simple IRA. Simple IRAs are pre-tax and not the correct way to set up company deductions for a State-sponsored retirement plan! W-2 reporting is not required for a State-sponsored ROTH IRA. A post-tax deduction is the correct way to set up withholding for a State-sponsored retirement plan.
To set up a company deduction for a State-sponsored retirement plan:
-
Log into your payroll account and click on the Company Tab. Under Deductions, select Company Deductions.
-
Click Add New Deduction.
-
Select the deduction category “Other Post-Tax Deduction”.
-
Select the Deduction type “Miscellaneous with Goal” and enter the name of the deduction and the abbreviation you want displayed on the paystubs and reports. Note: Please read the description carefully to ensure the taxability any special reporting is correct.
-
Click Create Deduction.
-
You can now allocate this deduction to each of the employees it applies to on their employee profile along with the amount of the deduction.
a. Click the Employees Tab.
b. Locate the employee you would like to update and click their name.
c. Click Deductions.
d. From the Create Deduction menu, select the deduction you just added (you may need to reset payroll to finish).
e. Enter the deduction percentage (if using a dollar amount, select Flat Dollar Amount and enter the amount).
f. Enter the deduction goal amount.
g. Click Save. Repeat as needed for other employees.
7. Click on the Payroll Tab. Enter payroll and preview the payroll details for accuracy. You will see these deductions on the payroll approval details for each employee this deduction applies to.
Note: This type of deduction requires a goal amount to be set. The goal amount is the total amount the employee contributes for the year. Please be aware that without a goal entered for this deduction type, the deduction will not occur on payroll.