403b for hourly employee

UPCWash · Post by **UPCWash** » Sat Aug 23, 2008 7:25 am

Our church secretary has $200 per month withheld for a 403(b) plan and she is paid on a per hour basis. I have been manually subtracting hours from her hours worked so her gross taxable salary is correct. Is there a better way to this that would allow the hours worked to be correct. Thanks Jim

karlaj · Post by **karlaj** » Wed Aug 27, 2008 3:48 pm

I'll attempt to explain how i do this. First of all I went to "Maintain item description" in the payroll module and created a 403b item and checked boxes 3, 5, and 12 (E) in the w-2 tab. If income is $400/week and she withholds $50/week for annuity, I would put $350 on income line and put the $50 on another line (403b income) This way the correct taxes will be withheld on each item and the amounts will show on her pay stub. Hope that helps!

tborgal · Post by **tborgal** » Wed Aug 27, 2008 10:18 pm

Subtracting hours does not work because the 403b income is subject to FICA and Medicare taxes. As karlaj pointed out you need to create an income item for the proper taxes to be withheld. You also need a deduction item for the 403b. Look at this thread I think it will explain what you need to do.

http://www.powerchurch.com/forum/viewto ... light=403b

UPCWash · Post by **UPCWash** » Thu Aug 28, 2008 5:50 am

Obviously didn't do a very good job of explaining the question; I use a separate income and deduction line for the amount withheld but since it is an hourly position if the hours worked is entered for her regular income it calculates the amount of pay prior to the 403 b amount. I tried assigning enough hours to the amount withheld income line but there is no way to make it come out to the even $200. I could check and see if it is okay to withhold $200.01 and then it works and then each month her pay stub would show hours worked for regular income and hours worked for 403 b. Thanks for your interest. Jim

karlaj · Post by **karlaj** » Thu Aug 28, 2008 8:28 am

I am also paid hourly, but when I go to "Maintain Employee Pay Items", I check the salary box so that I can put the exact amount needed. Does that make sense?

UPCWash · Post by **UPCWash** » Thu Aug 28, 2008 8:51 am

Makes sense but from my viewpoint has two shortcomings; you have to manually calculate the amount and it doesn't keep track of hours worked. Thanks for your response. Jim