Benefits are additional compensation or perks provided to employees beyond their regular wages or salary. Benefits often hold special taxability and, in some cases, they need to be reported differently at the end of the year on tax returns and employee W-2s. The benefit type selected in the console will determine how the benefit is taxed and reported.

The benefit types below are supported in Arcoro Payroll:

This article will cover how to create and maintain Benefit deductions.

Setting Up a Benefit Deduction for an Employee

1. In Payroll, navigate to the People menu. 
   
2. Click the employee for whom you need to set up the benefit deduction. 
3. Click the Benefits & Deductions tab.
   

IMPORTANT: The ‘Add benefit’ option is used for setting up Cafeteria 125 pre-tax benefit deductions, while the ‘add deductions’ option is for all post-tax deductions. The exception to this is Roth retirement deductions, which should be set up under the ‘add benefit’ button.

4. Click Add Benefit.
   

5. Input the requested fields to ensure a complete deduction setup.

   • Type - Select the 125-benefit type. The type selected will determine how the benefit is taxed and reported. This dropdown list is populated in the Setup > Benefits area of payroll.
   • Company Contribution Amount or Percent - Enter the amount the company is contributing to the employee per period.
   • Employee Contribution Amount or Percent - Enter the amount the employee should have deducted from their paycheck per period.
   • Start Date - The date when the deduction amount should start being calculated. If the start date falls within the pay period being processed for payroll, the deduction will be applied.
   • End Date - For deductions that apply on an ongoing basis, do not set the effective end date.

   

6. Click Save.

Deleting Benefit Deductions

Deleting a benefit deduction will remove it forever. Benefit deductions should only be deleted if they were created by mistake. If a deduction should no longer be applied to payroll, enter an end date to inactivate it.

Overriding Benefit Deductions for a Single Payroll

There are certain situations in which an employer will want to change the amount deducted for a benefit deduction for one payroll only, without affecting the amount that is deducted on future payrolls. The benefit deduction override feature in payroll can be used to accomplish this for any post-tax deduction, allowing for one-time modifications to deduction amounts at payroll and payroll item create/update time.

Excluding Pay Dates

Benefit deductions will be taken from every pay period by default. If deductions should not occur for a specific payroll, you can either temporarily set an end date for the benefit before processing payroll or apply individual overrides within the payroll system.

How to Set Up a New Benefit

If your company has added a new benefit to your benefit offerings, begin by:

1. Expand Setup and click Benefits.
    
2. Click Add Benefit. 
   

3. Set up the benefit:

   • Benefit Type - Choose the appropriate benefit type, as this selection determines how the benefit will be taxed and reported.
   • Enter a benefit description, which will appear on pay stubs and payroll reports.
   • Company & Employee Contribution - Optionally, you may enter the company and employee contribution amounts at this stage. If left blank, these amounts can be defined later when assigning the benefit to an employee's profile.
   • Start & End Date - Set a start date to activate the benefit. Leave the end date field blank to keep the benefit active indefinitely. You can enter an end date later to deactivate the deduction when needed.

   

4. Click Save when finished.

Once completed, the benefit can be assigned to the employee by adding it to the "Benefits & Deductions" menu of their employee record.

FAQS

How do I enter a tiered benefit match for a retirement benefit (ex: employer matches 50% of contribution up to 6%)?

Arcoro Payroll does not currently support tiered matches; however, you can enter the calculated percentage in the employer contribution. Example: if the employee contributed 5%, the employer contribution would be 2.5%. If they are contributing 7%, the employer contribution would be 3%. 

How do I set up an employee with a catch-up contribution for a retirement plan or health savings account benefit?

Arcoro payroll will automatically deduct up to the catch-up limit for every eligible employee. It’s important to have accurate birth dates in payroll.

Please note that Arcoro Payroll does not break record Catch Up amounts under a different deduction codes. Catch up contributions are reported under the standard benefit code and is activated based on the participant’s age.

Do I have to stop an employee’s benefit deduction when they hit a contribution limit set by the IRS?

Arcoro Payroll will automatically stop employee contributions when the limit(s) are met.

Does Arcoro Payroll sum across both traditional and Roth 401k contributions when determining when to automatically stop employee contributions when they’ve hit the limit?

Yes – both traditional 401k and Roth 401k contributions will be summed when determining when the limit is met.

How does the money collected from paychecks get to the benefit provider?

Arcoro Payroll will track the amounts calculated for the employee and employer but will not send funding directly to benefit providers. This will be the responsibility of the employer.

An employee paid too much for a benefit on an earlier paycheck. How do I correct it?

On the employee's next payroll, enter a negative Benefit Override for that benefit. The negative amount gives the over-collected contribution back, and the employee's net pay goes up by that amount.

1. Open the payroll and go to the Employees tab.
2. Find the employee and add a Benefit Override for the benefit that was over-collected.
3. Enter the amount to give back as a negative number. For example, if $50.00 was taken twice, enter -50.00 as the employee amount.
4. If the company contribution was also over-applied, enter a negative company amount as well.
5. Preview the payroll and confirm the override shows as a negative amount and net pay increased as expected.

Important: Use a negative override only to correct over-collections from earlier payrolls in the current quarter. If the over-collection happened in a prior quarter, contact Arcoro Support for help, since the correction can affect quarterly wage reporting.

A post-tax deduction was taken too many times. How do I give it back to the employee?

Enter a negative Deduction Override on the employee's next payroll. This works for post-tax deductions. 

1. Open the payroll and go to the Employees tab. 
2. Find the employee and add a Deduction Override for that deduction. 
3. Enter the amount to give back as a negative number, for example -15.00. 
4. Preview the payroll. The deduction shows as a negative amount and the employee's net pay increases by the same amount. 

Important: Use a negative override only to correct over-collections from earlier payrolls in the current quarter. If the over-collection happened in a prior quarter, contact Arcoro Support for help, since the correction can affect quarterly reporting. 

Note: Child support deductions can't be overridden.

Why does my payroll show a "Negative year-to-date" error after I enter a negative override?

A negative override can't be larger than what the employee has paid toward that benefit or deduction so far this year. If it is, the payroll preview shows an error such as "Negative year-to-date or lifetime post-tax deduction amounts," and the payroll can't be approved until you fix it.

• Check the amount. Lower the negative override so it's no more than the year-to-date total for that benefit or deduction.
• Check whether the earlier payroll has been paid. Year-to-date totals only include payrolls with a status of Paid. If the over-collection happened on a payroll that is approved but still pending, wait until it's paid, then enter the override.
• Preview again after making changes. Always resolve preview errors before you submit the payroll for approval.