Employee Deductions: 401(k) and More
What Are Payroll Deductions?
Payroll deductions are amounts taken out of an employee’s paycheck—either before or after taxes—other than mandatory payroll taxes. Beyond provides pre-built, customizable deductions that you can set up in your account. Depending on the type you select, you’ll be able to configure the deduction to fit your company’s exact needs.
Deduction Types Available in Beyond
When creating a new deduction, the options under Select Type allow you to link it to deductions recognized by federal and state tax authorities.
Common deduction categories include:
- Standard Deduction – After-tax deduction.
- 401(k) Retirement – Pre-tax contribution; lowers federal and state taxable wages.
- 403(b) Retirement – Pre-tax retirement account available to employees of public schools, tax-exempt organizations, or nonprofits; reduces taxable wages.
- 457 Retirement – Pre-tax plan for employees of state/local governments and some nonprofits; lowers taxable wages.
- Roth 401(k) – After-tax retirement deduction.
- Roth 403(b) – After-tax retirement deduction.
- FSA (Flexible Spending Account) – Pre-tax account, typically for medical expenses.
- HSA (Health Savings Account) – Pre-tax account where unused funds roll over year to year.
- Simple IRA – Pre-tax retirement deduction; reduces taxable wages.
- Roth 457 – After-tax retirement plan, offered by some state, local, and nonprofit employers.
- Dependent Care FSA – Pre-tax account for eligible dependent care expenses (e.g., daycare, preschool, after-school programs, summer camps).
- Union Dues – Flat deduction per paycheck for union membership dues.
- Union Dues by Hours – Variable deduction based on hours worked.
- Section 125 – Pre-tax deduction that lowers taxable income.
- Section 132 – Pre-tax transportation reimbursement deduction.
Special Cases
- Roth IRAs and certain state-mandated retirement programs may also apply, depending on your location and compliance requirements.
Assigning Deductions to Employees
Once a deduction type is created, it becomes available for all employees. However, you maintain full control over who receives each deduction and can apply employee-specific customizations if necessary.
To add a deduction:
- Select the employee from the Employees list.
- Apply the desired deduction type.
- Adjust any details as needed.
Need Help?
If you still have any questions, please don’t hesitate to reach out. Our team will be happy to provide answers and assist you in any way we can.