You are here: TSM SmartClient Menu Options > Setup Menu > System > Max Compensation and Contribution Limits
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Max Compensation and Contribution Limits

Use the Max Compensation and Contribution Limits option to enter contribution and salary limitation information, as defined by the Internal Revenue Code (IRC). TSM SmartClient references this information when contributions are processed and will provide the appropriate warnings, when applicable. TSM SmartClient also applies these values when running discrimination tests in the Compliance Processing module. Note: You must define the Contribution Sequences with the appropriate Compliance Classifications flags for these warnings to appear correctly.

The payroll processing options affected include Transactions > Contributions > Individual Contributions and Direct Client Entry.

Note: Be sure you enter this information on an annual basis.

How to access this option

On the Setup menu, point to System, and then click Max Compensation and Contribution Limits.  The Max Compensation and Contribution Limits window displays.

 

 

How to Add a New Employee Maximum Compensation and Contribution record

  1. Click the  icon. A new row is added to the table and TSM SmartClient populates the Year field with the next year.
  1. Enter the Year for which the contribution information is in effect.
  1. Enter the corresponding dollar amounts in each of the columns.
  1. When you are done, click the  icon. The following message displays:

Your changes were saved successfully.

Click OK.

 

How to Delete an Employee Maximum Compensation and Contribution Record

  1. Highlight the Employee Maximum Compensation and Contribution record you want to delete.
  1. Click the Delete icon. The following message displays:

Are you sure you want to delete this record?

Click Yes to delete it or No to retain it.

  1. Click the  icon to confirm the deletion. The following message displays:

Your changes were saved successfully.

Click OK.

  1. When you are done, click the  icon.
  1. If you are deleting more than one Employee Maximum Compensation and Contribution record, repeat steps 1 and 2 for each. When you are done, proceed to steps 3 and 4.

 

Explanation of Fields:

 

Field Name

Field Description

Required/Optional

Year

Enter the year for which the maximum salary and contribution limits are in effect, using YYYY format.

The IRC defines the year for the Salary limit under Section 401(a)(17) as the year in which the plan year begins. For example, if a plan year runs from 04/01/2007 to 3/31/2008, the Salary limit of $225,000 for 2007 applies.

The IRC defines the year for the Contribution limits as the calendar year [Section 401(k) and 403(b) for Employee Pre-Tax contributions and 414(v) for Catch-Up limits]. For off calendar year plan years, the contribution limits for the two calendar years falling within the plan year would apply. For example, for a plan year that runs from 04/01/2006 to 3/31/2007, both the contribution limits of $15,000/$5,000 for 2006 and $15,500/$5,000 for 2007 apply.

Required

Max Salary Amount

Enter the salary amount the IRS has defined as the maximum limit on compensation for qualified plans. TSM SmartClient will use this cap for 415 limits, ADP/ ACP non-discrimination testing, calculating company contributions, and monitoring elective deferral and after-tax contributions when the plan limits a participant to contribute a certain percentage of compensation. TSM SmartClient will display the compensation limit on various reports when a participant's salary exceeds the limit. Each year the IRS adjusts this cap for the cost of living. For example, in 2007, the maximum compensation limit was $225,000.00.

Required

Officer Compensation Requirement

Not currently used.

 

HCE Lookback Year Dollar Limit

Not currently used.

 

Max Annual Additions Dollar Amount

Not currently used.

 

Max Employee Pre-Tax

Enter the maximum employee pre-tax contribution amount allowed for each plan participant. This is the maximum 401(k) contribution dollar amount as defined by the IRS. Each year, the IRS adjusts this amount for the cost of living. For example, in 2007, the maximum contribution dollar amount was $15,500.

Required

Max Catch-up Amount

Enter the maximum amount to be used for the catch-up contribution. If an eligible participant exceeds the catch-up limit, the following message will display: Participant has exceeded catch-up contribution limit in YYYY calendar year. For 2007, the maximum catch-up contribution limit was $5,000.

Required if the plan offers catch-up contributions