Before You Begin: Ensure that you are familiar with the concepts in the topic Deduction and Earning Groupings.
You can configure a deduction grouping to include all of the deductions that represent employee contributions to deferred compensation plans or pension plans. This is useful for US employees who might contribute to more than one plan or account. Grouping together all contribution deductions allows Dayforce to refer to the single grouping, rather than each deduction individually, and to limit contributions made by way of any of the deductions in the deduction grouping.
For example, imagine an organization that has employees who contribute (via deductions) to different types of a 401(k) accounts, and each employee uses one of three different contribution method, (for example, some contribute 5% of their gross pay, some contribute 10% of their gross pay, and some contribute a flat amount of $100 each pay period). Each deduction type, in this case, each different 401(k) account, is represented by a different deduction code.
Now imagine that there are annual, aged-based cumulative limits for 401(k) employee deductions for the year. For this example, this limit is $22,500 for employees over 50 years old and $16,500 for employees under 50 years old. Regardless of whether employees contribute to one or several 401(k) accounts, the annual deduction limit for the year is the same.
With all of that in mind, you can create a payroll deduction grouping to include all of the 401(k) account types. Then you can create a deferred compensation and pension plan that includes the payroll deduction grouping containing the different types of 401(k) account. In that deferred compensation and pension plan configuration, you can choose between several plan limits options, which, when you select them, display system limits based on the plan limit option you selected. The deferred compensation and pension plan then enforces limits on contributions made using any of the deduction types included in the deduction grouping.
In this example, without using a deduction grouping with the deferred compensation and pension plan configuration, you would have to configure three separate deferred compensation plans. Each would have to reference and limit a specific, individual deduction type.
In the same way, you can configure deferred compensation and pension plans with earnings groupings that you can, and you can limit eligible wages, so that employees cannot contribute from wages beyond $250,000, configure an earning grouping that includes all earnings that count towards this $250,000 threshold;
Payroll groupings for both deductions and earnings are configured in Payroll Setup > Groupings. See Deduction and Earning Groupings.