Employer 401k Match Calculation Incorrect When Arrears Amount is Deducted (Doc ID 469549.1)

Last updated on DECEMBER 06, 2016

Applies to:

Oracle HRMS (US) - Version 11.5.10.2 and later
Information in this document applies to any platform.
*** Checked for relevance on 17-DEC-2010 ***
*** Checked for relevance on 11-JAN-2014 ***

Symptoms

-- Problem Statement:
The 401k employer match calculation is not taking arrears 401k contributions into account when they are deducted from the employee

SCENARIO:

An employee has chosen a 10% deferral for 401k.
The employer match should be 2%.


In Week 1 their paycheck only included the Flex Credits they received.
In week 1, their paycheck shows that no 401k deferral or match were calculated (the deferral amount for week 1 went into arrears).

In week 2, the employee did not work again - and their paycheck (again) only included flex credits.
In week 2, no 401k deferral or match were calculated (week 1 and week 2 deferrals are now in arrears).

In week 3, the employee worked and was paid for their hours worked.
The deductions on their check for week 3 include:

401k deferral (amount which equals Week 1 + week 2 + week 3)
401k employer match (amount which equals the amount from week 3 only)

The calculation did not include the company match value from week 1 and week 2 (we assumed it should have also been put in arrears).

DETAILS:

Week 1 check Gross pay: $23.27
Week 1 401k deferral deduction (on paycheck): $0.00
Week 1 401k employer 2% match (on paycheck): $0.00
Week 1 401k deferral (calculated amount): $2.33 (not on paycheck due to lack of $)
Week 1 401k employer 2% match (calculated amount): $0.47 (not on paycheck)

Week 2 check Gross pay: $23.27
Week 2 401k deferral (on paycheck) $0.00
Week 2 401k employer 2% match (on paycheck): $0.00
Week 2 401k deferral (calculated amount): $2.33 (not on paycheck due to lack of $)
Week 2 401k employer 2% match (calculated amount): $0.47 (not on paycheck)

Week 3 check Gross pay: $198.91
Week 3 401k deferral (on paycheck): $24.55 (19.89 + 2.33 + 2.33)
Week 3 401k employer 2% match (on paycheck) : $3.98 (2% of 198.91) (does not match what we expected)
Week 3 401k deferral (calculated amount): $19.89 (10% of 198.91)
Week 3 401k employer 2% match (calculated amount): $3.98 (2% of 198.91)

The issue seems to lie with the 401k employer 2% match in week 3.

The 401k employer 2% match for week 1 and week 2 should have been held - along with the 401k deferral into week 3. Week 3's 401k employer 2% match should have been $4.92 (3.98 + .47 + .47).

-- Business Impact:
Employer Match not calculated on entire 401k amount deducted for the employee if arrears was collected.


Cause

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