CenterPoint^® Payroll - Roth Catch-Up Deduction for High Earners

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In CenterPoint, a 401K can be set up so that when the pretax limit is hit on employees that are high wage earners, the standard 401K will stop and a Roth Catch-Up deduction will start calculating up to the annual limit (both deductions then stop). For employees who are not high earners and do not have the Roth Catch-Up deduction, the standard 401K will stop at the pretax limit.

Step A: Create a new Roth Catch-Up Deduction

Step B: Edit the Standard 401K Deduction

Step C: Add the Roth Catch-Up Deduction to High Wage Earners (In the Catch-up Age Range)

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Step A: Create a new Roth Catch-Up Deduction (one-time setup)

1. Select Setup > Payroll Details > Deductions & Benefits.
2. Click New.
3. Enter an Abbreviation and Name to easily identify this deduction.
4. In the Type box, select Roth Retirement Plan.
5. In the Contributor box, select Employee.
6. In the Liability Account box, select the liability account this deduction should post to. The Liability Account also controls who the deduction will be paid to.

7. Select the Limits tab.
8. Under Employee Detail, select the Use check box next to the Annual box and enter the Annual limit.

9. Select the Taxes tab, verify the tax setup by selecting the The tax setup for this deduction/benefit has been reviewed and verified check box.
10. At the Do you want to add this Deduction/Benefit to Employees? message, click No.
11. If you offer both Fixed Amount and Percent of Wages 401K plans, repeat Steps 1-10 for each type of 401K plan.

Step B: Edit the Standard 401K Deduction

1. Select Setup > Payroll Details > Deductions & Benefits.
2. Select your Standard 401K deduction and then click Edit.
3. Click the Limits tab.
4. Select the Stop Deduction When Limit Reached, Start New Deduction option and then select the Roth Catch-Up deduction created in Step A.

5. Click Save.
6. If you offer both Fixed Amount and Percent of Wages 401K plans, repeat Steps 1-5 and select a different Roth Catch-up deduction created in Step A.

Step C: Add the Roth Catch-Up Deduction to High Wage Earners in the Catch-up Age Range

1. Select Setup > Employees.
2. Select a high wage earner and click Edit. Then select the Deductions/Benefits tab.
3. In the lower left portion of the screen, select the Roth Catch-Up deduction from the list. Once selected it will display in the upper left portion of the screen, below the employer.
4. On the right side of the screen, enter the Rate (the same as the Standard 401K) and the Annual Limit for the catch-up (limits vary by employee age).

5. From the upper-left side of the screen, select the Standard 401K deduction and verify/enter the Non-taxable Limit for 2026 based on the employee's age.

6. Click Save.

Document: 3480

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