Decreasing Elective Deferral Limits for an Employee

By default, an employee’s elective deferrals are capped at the IRS limit for the calendar year. If necessary, you can set custom elective deferral and catch-up over age 50 limits for employees on their records for the following plans:

401(k)
403(b)
SARSEP
SIMPLE IRA

Before you can override elective deferral limits, you must first set the Decrease Elective Deferral Limits and Automatically Calculate Catch-Up preference. This preference is on the Set Up Payroll page. After you set this preference, deduction limits set for payroll items are ignored. Limits set for employer contribution payroll items still take effect. For more information about this preference, see General Payroll Preferences and Setting Up Automatic Catch-Up Over Age 50 Calculations.

Note:

Elective deferral limits set on the employee’s record take precedence over limits set for payroll items.

To override an employee’s elective deferral and catch-up over age 50 limit:

Go to Setup > Payroll > Setup Tasks > Set Up Payroll.
In the Paychecks section, check the Decrease Elective Deferral Limits and Automatically Calculate Catch-Up box.

Warning:
Do not set this preference if your company uses 457(b) plans.
Click Save.
Go to Lists > Employees > Employees.
Next to the employee’s name, click Edit.
Click the Payroll subtab.
Ensure the employee is included in payroll. For more information, see Including an Employee in Payroll.
You can check the following boxes to override limits:
- Override Elective Deferral Limit -Check this box if you want to decrease the annual elective deferral limit for this employee. Enter the limit for this employee as a dollar amount.
- Override Catch-Up Limit – Check this box if you want to decrease the annual catch-up over age 50 limit for this employee. Enter the limit for this employee as a dollar amount.
Important:
Overridden limits do not reset at the end of the calendar year. You must manually clear or update any overridden limits at the beginning of each year.
Click Save.

To override an employee’s elective deferral and catch-up over age 50 limit:

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