Set Up Salary Deferrals
The Sparkrock 365 salary deferral functionality provides the capability for you to withhold for each pay a specific amount of an employee pay check. The money that is withheld is paid back to the employee in even payments at a later time when the employee is not receiving their normal salary earnings.
This functionality is only offered for earnings that are associated with positions and assignments where the Pay Type is Salary and on non-excluded allowance records.
For information about processing salary deferrals, see Salary Deferrals.
Set up the salary deferral method
On the HR Pay Cycles page, the Salary Deferral Method determines whether a salary deferral is to be calculated. If a salary deferral is to be calculated, the Salary Deferral Method determines which method is to be used.
To set up the salary deferral method
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
For each HR Pay Cycle record that you want to update, in Salary Deferral Method, specify one of the following allowable options:
- No Deferral: Any employee using the pay cycle will not have deferrals.
- Pay Grid Deferral Factor: Employees using this pay grid will have the deferral amount calculated per the factor from the pay grid on their employee Assignment.
The deferral amount calculation is: Compensation Journal Earned Amount x Pay Grid Deferral Factor - Working Days in Pay Period: Employees using this pay grid will have the deferral amount calculated per the working days in the pay period.
The deferral amount calculation is: Assignment Amount and the fraction of Compensation Journal Days Worked in Pay Period / Days / Year
Set up the salary deferral adjustment factor
On the Pay Grids page, the Salary Deferral Adjustment Factor is used in the salary deferral amount calculation.
When a salary deferral is to be calculated, this factor specifies the fraction of periods for the payout divided by the total number of pay periods. For example, 0.192307692 is 5 / 26, where = 5 represents the number of pay periods for a bi-weekly cycle.
To set up the salary deferral adjustment factor
On the Human Resources Manager role center, choose
, enter pay grids, and then choose the related link.The Pay Grids page opens.
For each pay grid record that you want to update, specify a value for Salary Deferral Adjustment Factor.
Set up salary deferrals for HR Pay Cycle Periods
The following salary deferral setup is required for HR Pay Cycle Periods.
Set up the salary deferral action
On the HR Pay Cycle Periods page, the Salary Deferral Action determines whether the pay period is to defer a portion of the salary or to pay a portion of the deferred amount back to the employee.
To set up the salary deferral action
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Ensure that the HR Pay Cycle that you want to edit is selected, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
For each HR pay cycle period that you want to set up the salary deferral action, specify one of the following values for Salary Deferral Action:
- Blank: The pay period is not used in the salary deferral functionality.
- Deferral: The pay period withholds a portion of the employee salary.
- Payout: During the pay period some portion of the total amount is paid to the employee.
Set up a new deferral year
Salary deferral calculations use the values in New Deferral Year to determine the start and end of salary deferral cycles.
When the Update Salary Deferral Setups action is chosen, New Deferral Year is automatically populated based on the value that is specified in New Deferral Year Period Starting Date.
When the New Deferral Year checkbox is selected for a record, the related HR Pay Cycle Period is defined as a new deferral year and is considered during the calculation of salary deferral. Otherwise, when the New Deferral Year checkbox is clear, the related HR Pay Cycle Period is not considered to be a new deferral year and is excluded from the salary deferral calculation.
If there are no HR Pay Cycle Periods that have the New Deferral Year checkbox selected, the salary deferral calculations use a salary deferral method equal to working days in the pay period to determine the start and end of salary deferral cycles.
Note
Note:
Changes can only be made to New Deferral Year when on the HR Pay Cycles page, the related Salary Deferral Method is equal to Working Days in Pay Period or Pay Grid Deferral Factor.
The following table displays the scenarios that are supported for New Deferral Year setup.
| Scenario Number | Deferral Year Starts With | Payout Mid-Year | Deferral Year Ends With | Example |
|---|---|---|---|---|
| 1 | Deferral period | No | Consecutive payout periods | Biweekly pay cycle = 23 deferrals, and 3 payouts. |
| 2 | Payout period | No | Consecutive payout periods | Biweekly pay cycle = 1 payout, 23 deferrals, and 2 payouts. |
| 3 | Deferral period | Yes | Consecutive payout period | Biweekly pay cycle = 8 deferrals, 1 payout, 13 deferrals, and 4 payouts. |
| 4 | Payout period | Yes | Consecutive payout periods | Biweekly pay cycle = 1 payout, 8 deferrals, 1 payout, 13 deferrals, and 3 payouts. |
To set up a new deferral year
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Ensure that the HR Pay Cycle that you want to edit is selected, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
For each HR pay cycle period that you want to set up a new deferral year, select the New Deferral Year checkbox.
Allow negative deferral balances
On the HR Pay Cycle Periods page, the Allow Negative Deferral Balance checkbox indicates whether the overall year-to-date deferral amount can be negative for employees in the HR Pay Cycle Period. This information identifies scenarios where the payout period is at or near the beginning of the deferral year and the deferral balance is not enough yet to cover the payment that is required.
When Allow Negative Deferral Balance is selected for a record, the negative deferral balance for the HR Pay Cycle Period is considered during the calculation of salary deferral. Otherwise, when the checkbox is clear, the negative deferral balance is excluded from the salary deferral calculation.
Note
Note:
The Allow Negative Deferral Balance checkbox can only be changed when on the HR Pay Cycles page, the related Salary Deferral Method field is equal to Working Days in Pay Period or Pay Grid Deferral Factor.
To allow negative deferral balances
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Ensure that the HR Pay Cycle that you want to edit is selected, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
For each HR pay cycle period that you want to allow negative deferral balances, select the Allow Negative Deferral Balances checkbox.
Set up the HR Base Calendar Code
On the HR Pay Cycle Periods page, the HR Base Calendar Code displays the HR base calendar code that was specified the last time the Update Salary Deferral Setups action was run. When the Update Salary Deferral Setups action is run, the value in HR Base Calendar Code is updated automatically.
To set up the HR Base Calendar Code
On the Human Resources Manager Role Center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Ensure that the HR Pay Cycle that you want to edit is selected, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
Select the HR pay cycle period for which you want to set up the HR base calendar code, and then on the action bar, choose Update Salary Deferral Setups.
The Update Salary Deferral Setups page opens.
Specify a value in HR Base Calendar Code.
Choose OK.
Set up working days
On the HR Pay Cycle Periods page, Working Days displays the number of working days in each HR Pay Cycle Period for the HR base calendar that was specified when the Update Salary Deferral Setups action was last run. Working Days is updated automatically every time the Update Salary Deferral Setups action is run and is useful for confirming that calendars are set up correctly.
To set up working days
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Ensure that the HR Pay Cycle that you want to edit is selected, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
Select the HR pay cycle period for which you want to set up the set up working days, and then on the action bar, choose Update Salary Deferral Setups.
The Update Salary Deferral Setups page opens.
Specify a value in HR Base Calendar Code.
Choose OK.
Update salary deferral setups
To automatically populate and update data in the following fields, use the Update Salary Deferral Setups action:
Pay Period No.
Salary Deferral Action
New Deferral Year
Allow Negative Deferral Balance
HR Base Calendar Code
Working Days
Salary Deferral Action is automatically populated based on the HR base calendar that is specified when the action is run. Salary Deferral Action is populated with the values of Deferral or Payout based on the number of working days in the period.
The Update Salary Deferral Setups action is only enabled when on the HR Pay Cycles page, the related Salary Deferral Method is equal to Working Days in Pay Period or Pay Grid Deferral Factor.
Note
Note:
It is recommended that the Update Salary Deferral Setups action be run any time changes are made to the related HR base calendar.
To update salary deferral setups
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Select the record for which you want to view the HR Pay Cycle Periods, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
On the action bar, choose Update Salary Deferral Setups.
The Update Salary Deferral Setups page opens.
Specify the HR Base Calendar Code that represents the HR Base Calendar you want to use.
The HR base calendar is used to populate the salary deferral fields on HR Pay Cycle period records.
To update the Allow Negative Deferral Balance for HR Pay Cycle Periods that have a Salary Deferral Action of Payout and that are in the middle of a deferral year, turn on Update Allow Negative Deferral Balance.
Choose OK.
Clear salary deferral setups
If required, on the HR Pay Cycle Periods page, you can clear the following salary deferral related fields for selected lines:
Salary Deferral Action
Working Days
New Deferral Year
Allow Negative Deferral Balance
The Clear Salary Deferral Setups action is only enabled when on the HR Pay Cycles page, the related Salary Deferral Method is equal to Working Days in Pay Period or Pay Grid Deferral Factor.
To clear salary deferral setups
On the Human Resources Manager role center, choose
, enter hr pay cycles, and then choose the related link.The HR Pay Cycles page opens.
Select the record for which you want to view the HR Pay Cycle Periods, and then on the action bar, choose Periods.
The HR Pay Cycle Periods page opens.
Select the records for which you want to clear the salary deferral related setup.
On the action bar, choose Clear Salary Deferral Setups.
Set up allowances for salary deferral
On the Allowances page, if there are allowance amounts for which a portion is not to be deferred, select the Exclude from Salary Deferral checkbox. Otherwise, if the Exclude from Salary Deferral checkbox is clear, when the Compensation Journal is loaded during the deferral period, allowance earnings are subject to the deferral calculation.
Note
Note:
On HR request pages where you can add or change employee assignments, Exclude from Salary Deferrals is also visible.
To set up allowances for salary deferral
On the Human Resources Manager role center, choose
, enter allowances, and then choose the related link.The Allowances page opens.
For each record that you want to exclude from salary deferral, select the Exclude from Salary Deferral checkbox.
Set up HR position classes for salary deferral
On the HR Position Card page, on the Payroll FastTab, Enable Salary Deferrals is set by default when an employee is assigned the HR Position. The value of the field is defaulted from the parent HR Position Class Card.
To set up HR position classes for salary deferral
On the Human Resources Manager role center, choose
, enter hr position classes, and then choose the related link.The HR Position Classes page opens.
Select the record for which you want to enable salary deferrals, and then on the action bar, choose Manage > Edit.
The HR Position Class Card page opens.
On the General FastTab, turn on Enable Salary Deferrals.
Set up HR employee assignments for salary deferral
On the HR Employee Assignment Card page, on the Payroll / Compensation FastTab, Enable Salary Deferrals specifies whether a portion of the employee's salary is to be deferred to later in the year. The value is defaulted from the parent HR Position.
To set up HR employee assignments for salary deferral
On the Human Resources Manager role center, choose
, enter hr employee assignments, and then choose the related link.The HR Employee Assignments page opens.
Select the record for which you want to set up an HR employee assignment for salary deferrals, and then on the action bar, choose Edit.
The HR Employee Assignment Card page opens.
On the Payroll / Compensation FastTab, turn on Enable Salary Deferrals.
Payout period calculation considerations
Consider the following information regarding payout period calculations:
A payout period in the middle of the year is capped at the per pay amount.
A payout period in the beginning of the deferral year, before a full per pay amount is accumulated, can result in negative overall deferral amounts.
Salary Deferral Setup Test report
To test whether the salary deferral setup is correct for an employee assignment, use the Salary Deferral Setup Test report. It is recommended that this report be run before running the compensation journal and posting payroll. The report displays the expected results of the salary deferral amounts for the year.
To run the Salary Deferral Setup Test report
On the Human Resources Manager role center, choose
, enter hr employee assignments, and then choose the related link.The HR Employee Assignments page opens.
Select the HR Employee Assignment record that you want to view, and then on the action bar, choose View.
The HR Employee Assignment Card page opens.
On the Payroll / Compensation FastTab, ensure that Enable Salary Deferrals is turned on.
On the action bar, choose Salary Deferral Setup Test.
The Salary Deferral Setup page opens.
In HR Pay Cycle, specify an HR Pay Cycle that you want to test.
The default value is based on the HR Position Code.
In HR Pay Cycle Starting Date, specify the HR Pay Cycle Starting Date that you want to test.
In Yearly Amount, specify the yearly amount that is to be used for calculations.
To view the report, choose Send to, Print, or Preview & Close.
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