Deduction Models

401(k) - A 401(k) is a retirement savings account that allows eligible employees to contribute a portion of their wages to individual accounts. While 401(k) deferrals are subject to Social Security and Medicare taxes, deferrals reduce the employee's Federal and State Withholding liability at the time of calculation. The IRS provides additional guidance and resources for 401(k) plans here.

403(b) - "A 403(b) plan, also known as a tax-sheltered annuity plan, is a retirement plan for certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers. A 403(b) plan allows employees to contribute some of their salary to the plan. The employer may also contribute to the plan for employees." 403(b) deferrals are subject to Social Security and Medicare taxes, deferrals reduce the employee's Federal and State Withholding liability at the time of calculation. Source IRS FAQs regarding 403(b)

After Tax Deduction - This deduction is subtracted from employee wages after any applicable federal, state, and/or local taxes have been calculated and deducted. 

Cafeteria - "A cafeteria plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code." This allows employees to choose from a variety of pre-tax benefits to create a custom plan that meets the needs of the employee and those of their family. "Participants in a cafeteria plan must be permitted to choose among at least one taxable benefit (such as cash) and one qualified benefit." Additional information is provided by the IRS here

Dependent Care - Salary reductions can occur to pay for Dependent Care benefits received by an employee. Per the IRS, Dependent Care benefits include:

  • Amounts your employer paid directly to either you or your care provider for the care of your qualifying person while you work,
  • The fair market value of care in a daycare facility provided or sponsored by your employer, and
  • Pre-tax contributions you made under a dependent care flexible spending arrangement.

Employee Loan - Loan made by employers to their employees that are deducted during the payroll process until the loan has met its goal amount. This is a post-tax deduction.

FSA - A Flexible Spending Account is a savings account where eligible employees can allocate pre-tax money to cover out of pocket health care costs. 

Health Plan Premium (Pre-Tax) - The Health Plan Premium deduction is calculated on a pre-tax basis for applicable health plan deductions and will be reflected in Box 12 Code DD at the time of W2 generation. Go to Employee & Employer Health Plan Contributions for more information. 

HSA - Family - An Health Savings Accounts is a type of savings account that allows employees to set aside pre-tax money to cover qualified medical expenses. An employee may contribute to an HSA only if enrolled in a High Deductible Health Plan. Yearly contribution limits apply and differ if the employee has self-only coverage or family coverage.  

HSA - Single - An Health Savings Accounts is a type of savings account that allows employees to set aside pre-tax money to cover qualified medical expenses. An employee may contribute to an HSA only if enrolled in a High Deductible Health Plan. Yearly contribution limits apply and differ if the employee has self-only coverage or family coverage. 

HSA Post Tax - Family - An Health Savings Accounts is a type of savings account that allows employees to set aside post-tax money to cover qualified medical expenses. An employee may contribute to an HSA only if enrolled in a High Deductible Health Plan. Yearly contribution limits apply and differ if the employee has self-only coverage or family coverage. 

HSA Post Tax - Single - An Health Savings Accounts is a type of savings account that allows employees to set aside post-tax money to cover qualified medical expenses. An employee may contribute to an HSA only if enrolled in a High Deductible Health Plan. Yearly contribution limits apply and differ if the employee has self-only coverage or family coverage. 

Non-Cash Taxable Benefit - Non-Cash Taxable Benefits are extra benefits offered to employees and are considered additional compensation. For more information on Fringe Benefits, please visit the IRS site and Publication 15-B

Roth 401(k) - A Roth 401(k) is a retirement savings account that allows eligible employees to contribute a portion of their wages to individual accounts to a post-tax elective deferral basis. 

Roth 403(b) - A Roth 403(b) is a retirement plan for certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers. A 403(b) plan allows employees to contribute some of their salary to the plan on a post-tax elective deferral basis. 

SIMPLE Plan - (Savings Incentive Match PLan for Employees); A SIMPLE Plan provides small employers with a simplified method of contributing to employees' retirement savings. "Employees may choose to make salary reduction contributions and the employer is required to make either matching or nonelective contributions. Contributions are made to an Individual Retirement Account or Annuity (IRA) set up for each employee (a SIMPLE IRA)."  The IRS provides additional information about SIMPLE Plans as well as FAQ's on IRA's

Additional Information:

  • Setting up deductions for your employees
  • View the IRS's Roth Contribution Chart here. 
  • Most retirement plans are subject to annual contribution limits the CertiPay Online payroll application is updated each year with the current year's limit. 
  • Learn more about De Minimis Fringe Benefits 
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