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457(b) Annual Limitation Paycheck Scripting

Employee deductions and contributions made by employers to 457(b) plans cannot exceed the specified annual limits. To combine the deduction (employee) and earning (employer) amounts and limit the total contribution to the annual maximum, add a paycheck calc script (sample below). Using the Earning and Deduction Types below also ties these amounts into Box 12G on the W2.

The Deduction type is: 457b

The Earning type is: Memo 457b ERMatch

As with 401(k) plans and the like, there are three possible scenarios.

Scenario One — Employee Deduction Only​

Set up Deduction codes using the 457b ded type. The Deduction type handles the taxability, cap, and W2 field.

Scenario Two — Employer Contribution Only​

Set up an Earn Code using the Memo 457b ERMatch earntype and add a paycheck calc script to cap it per the 457(b) limit.

Scenario Three — Employee and Employer Contribution​

There are two parts to this scenario. First, set up the employer contribution:

  • Set up an Earn Code using the Memo 457b ERMatch earntype.
  • Set up a Ded Code using the 457b dedtype.
  • Use a paycheck calc script to cap it per the 457(b) limit.

Sample Script​

Sub PaycheckCalculator_PostCheckCalculation()

    'Get the cap from the system
    capAmt = GetCodeLimit("457b")

    'Get the EE and ER Codes
    earnCode = "E457bER"
    RothCode = "DR457b"
    RegCode  = "D457"

    'Get the YTD information for each
    earnCodeYTDAmt = EYTDAmount(earnCode)
    RothCodeYTDAmt = EYTDAmount(RothCode)
    RegCodeYTDAmt  = EYTDAmount(RegCode)
    TotalYTDAmount = earnCodeYTDAmt + RothCodeYTDAmt + RegCodeYTDAmt

    'Get the current information for each
    earnCodeAmt = GetAmount(earnCode)
    RothCodeAmt = GetAmount(RothCode)
    RegCodeAmt  = GetAmount(RegCode)
    TotalCurrentAmount = earnCodeAmt + RothCodeAmt + RegCodeAmt

    'Figure the amount based on YTD info and Pay Entry Amounts
    If TotalYTDAmount >= capAmt Then
        allowedAmt = 0
    Else
        If TotalYTDAmount < capAmt Then
            If TotalYTDAmount + TotalCurrentAmount >= capAmt Then
                allowedAmt = capAmt - TotalYTDAmount - TotalCurrentAmount

                'Do some calculations here to decide how the remaining amount
                'is allocated. This example allocates 33% to the Match and the
                'Roth Code and the remainder to the regular 457b code.
                earnCodeAmt = allowedAmt * 0.33
                RothCodeAmt = allowedAmt * 0.33
                RegCodeAmt  = allowedAmt - earnCodeAmt - RothCodeAmt

                'Loop through items on check and update per the calc above
                For index = 0 To GetTransactionCount - 1
                    code = GetDet(index) + GetDetCode(index)
                    If code = earnCode Then
                        SetAmount(index, earnCodeAmt)
                    End If
                    If code = RothCode Then
                        SetAmount(index, RothCodeAmt)
                    End If
                    If code = RegCode Then
                        SetAmount(index, RegCodeAmt)
                    End If
                Next
            Else
                'do nothing
            End If
        End If
    End If

End Sub

Questions?​

Contact your Payroll Service Provider.