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

Last updated on NOVEMBER 29, 2023

Applies to:

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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