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Fusion Global Payroll: Need to Understand the Functionality of PreTax Iterative Calculations (Doc ID 2516653.1)

Last updated on JUNE 17, 2022

Applies to:

Oracle Fusion Global Payroll Cloud Service - Version 11.13.19.01.0 and later
Oracle Fusion Global Payroll - Version 11.12.1.0.0 and later
Information in this document applies to any platform.

Goal

In recent quarterlies, Oracle has introduced the iterative calculations for PreTax elements. We did not find suitable documentation and as such, tried to implement a scenario but would want to understand Oracle's perspective on the calculations

Scenario: A person elects 100% Pre-Tax 401(k0 deferral on their Bonus payment through a separate STB 401k (Short Term Bonus 401k) pretax element. Regular payments will proceed with a regular 401k element on which we have no issues as election is capped to 12-15%

Expected calculation: Only FICA taxes will come out (and any locals that follow FICA rules for PRetax 401k deferrals and rest all will go to the 401k deferral

Observation: FICA is correctly withheld, but Oracle is also withholding FIT/SIT and the client doesn't think these should be withheld.

Use Case: Processed a person with Bonus of $1000 and STB 401k of 100% election and ran a quick pay using these two elements and the US Taxation element.

Results:
FICA taxes came out correct on the $1000 i.e. $62 and $14.5
In addition we had the following taxes come out (This was a NY employee, hence SIT and Family Leave were also deducted0
FIT Withheld - 25.10
SIT Withheld - 10.98
FLI - 1.53

Remaining balance of 885.89 was put as the STB 401k deferral leading to a zero net check.

Client Expectation:
I would have expected the deferral calculation reduce to $1000*92.35% (100% - 6.2% Social Security – 1.45% Medicare) = $923.50.
NY Family Leave does follow SDI rules, which does not get a pre-tax benefit for 401(k) so that deduction may be correct.

Solution

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In this Document
Goal
Solution
References


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