FAQ 391: Calculations--Employer allocation based on net pay instead of gross pay

Problem: A plan excludes overtime and bonuses from comp for allocation of employer contribution purposes. My comp figure is the net comp, or comp as defined in the document. My excluded comp figure is the overtime and bonus number. How do I get the system to use the net figure for allocating the contribution? The deposit summary shows the compensation as gross pay, including bonuses and overtime.

Solution: The deposit summary shows total pay, including any excluded compensation. The allocation is based on the "limited comp" field in the participant's record, which shows the allocation comp as equal to the amount in the COMP field, which does not include the bonuses and overtime coded in the excluded comp field. You can also see the allocation basis on the CONTRIB screen, under "allocation basis". It too shows net pay as the basis for the ER contribution.