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SIMPLE IRA Limit Issue

  • 29 November 2023
  • 4 replies
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We have one employee choosing to max out his SIMPLE IRA deduction limit for the year.  The employee is over 50, so the deduction limit for 2023 is $19,000 (15,500 normal limit + 3,500 “catch-up” provision).  The deduction is set up with the higher limit for those 50 and older:

The employee’s individual setup reflects the higher limit:

Processing the employee’s check, today, Payroll limited the deduction to $500.00, thereby limiting the employee’s cumulative deduction to $15,500.  The employee has $3,500.00 remaining by statute.

Does anyone have any idea why Acumatica Payroll is overriding the Deduction setup as if the employee were under 50 years of age?   More to the point, does anyone have any idea how to fix this so the remaining allowable deductions can be made prior year end?

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Best answer by SoniaEchols90 29 November 2023, 20:02

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Two things to check:

  1. Employee’s birthday is in employee payroll settings and shows the employee is over 50. 
  2. Use Catch-Up Contribution Limits on employee’s tax settings.

 

 

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This (Use Catch-Up Contribution Limits) very well could be the answer!  It was not checked for this employee.  I’ll need to wait until the next payroll to confirm, but this appears to be the answer.

Now the follow-up question (prompted by the wording in Tax Settings): the Additional Information field reads, “Select if the employee is aged 50 or older to make additional contributions to 401(k) accounts and individual retirement accounts (IRAs). It will increase the limit enforced by the tax engine.”  Does this mean I will need to monitor the age of every employee and check the box any one of them turns 50? If that is the case, wouldn’t it be far more efficient / effective for the system to be coded for this box to be “checked” for all employees and then the system make the age calculation itself?  We are talking about a limit here, not a hard rule (in other words, the setting would make no difference unless an employee bumped up against the limit).

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Your theory is correct, for now you will need to monitor and check the box for an employee’s that will be 50 or greater in the calendar year.  I agree with you that this is an area we could improve since we have the information if the birthday is populated.  As for the limit itself, that is maintained by our tax engine provider, so you do not need to update that amount every year.

 

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Thank you so much for your help!  Hopefully this will fix the issue - only three more payrolls left to catch up to the limit.

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