Correcting Errors Recording Cafeteria Plans

This is one of the more complex problems to correct. Not difficult, just complex. It will help you to read the next few paragraphs in order to understand how cafeteria plans are processed, before going to the step-by-step instructions.

When you set the Type of any deduction in the Employee Master record of any employee to be pretax Cafeteria Plan, you are instructing Industrial Strength Payroll to keep two separate accumulators for that deduction. Deductions for §125 cafeteria plans are kept in separate accumulators. This allows you to convert ordinary deductions into cafeteria plans at any time.

Changing the Type of a deduction doesn't change what's already in a cafeteria plan accumulator. Industrial Strength Payroll only updates these special cafeteria plan accumulators when recording payroll using one of the Calculate Pay functions.

The only way to change the contents of a cafeteria plan accumulator is by using one of the Calculate Pay functions.

Therefore, if an amount is wrongly classified as being a cafeteria plan, simply changing its Type will not correct the error. You need to move the money into a properly Typed deduction field. Here's how.

Write down exactly what you want to do. For example, you have a deduction labeled "Health" that should be a cafeteria plan but isn't. Your action statement would be "I want to remove the money from the old "Health" label, and put it into a new "Health" label that has a Type containing pretax Cafeteria Plan.

Next, write down how you're going to do it. In this example, you need to:

1. Create a new label called "Health".

2. Change the old "Health" label to "OldHlth".

3. Give the new "Health" deduction of every employee in the cafeteria plan a Type containing pretax Cafeteria Plan.

4. Subtract the money from "OldHlth" and add it to "Health".

Now, perform these steps:

Each employee that you want to change needs at least two available deductions. One that is a Type containing pretax Cafeteria Plan, and another that is an ordinary Type. Neither deduction can be a deferred compensation plan.

Click the Employees link if necessary to make sure that the employee has at least one deduction Type containing pretax Cafeteria Plan and one ordinary deduction. Repeat for all employees that participate in the plan and need correction.

Print an All Quarter Report. This report tells you the amounts that have been accumulated as §125 cafeteria plans.

If you need to REDUCE cafeteria plan amounts, follow the steps in Adjusting payroll to SUBTRACT the amount from the cafeteria plan deduction and ADD it to the ordinary deduction.

or

If you need to INCREASE cafeteria plan amounts, follow the steps in Adjusting payroll to ADD the amount to the cafeteria plan deduction and SUBTRACT it from the ordinary deduction.

Print an All Quarter Report to verify the cafeteria plan accumulators.

If you made a temporary deduction label earlier in this procedure, you might want to remove it.