Overriding the 401(k) Employer Match

Overview

A new option is now available to override the 401(k) Employer (ER) Match amount during payroll processing. This override can be used to correct the ER match when the system's automatic calculation does not reflect the intended amount for a given payroll run. The override option is accessible from the modify screen after clicking the override deduction section of the program once you reach the review step.

How It Works

  • The Employee Contribution Override continues to function as before, referencing the deduction annual limit.
  • The Employer Match Override accepts any amount. No additional setup or annual limit is applied to the override value.
  • Negative override amounts are accepted, allowing adjustments in either direction.
  • The override applies to the specific payroll run. If two consecutive payrolls are overridden for the same employee and a subsequent payroll is processed without an override, the system will resume calculating the ER match using year-to-date (YTD) totals as usual.

How to Apply the Override

  1. Process the payroll as normal and proceed to the Review step.
  2. On the review screen, click into the Override Deduction section.
  3. On the Modify screen, locate the Employer Match Override field.
  4. Enter the desired override amount and save.
  5. Complete the payroll run.

Examples of When to Use the Employer Match Override

Bonuses or Commissions Included in the ER Match Calculation

If the ER match should not include bonuses or commissions, the applicable earnings can be turned off for the ER match during that payroll run, and the calculation will be correct. However, if bonuses and commissions are later turned back on, the system recalculates the ER match on prior payrolls and includes those earnings in the calculation. The override can be used to set the correct ER match amount and prevent the recalculation from affecting the intended result.

Match Percentage Changes Mid-Year

When the ER match percentage changes during the year the system recalculates prior payrolls as though the new percentage had always been in effect. Because the system does not retain the earlier percentage value, this can result in the ER match being overstated or understated. The override allows you to enter the correct match amount for the current payroll run without being affected by the retroactive recalculation.

Key Takeaways

  • The ER Match Override is available on the modify screen during the review step of payroll processing.
  • The override accepts any amount, including negative values, with no annual limit applied.
  • Overrides are payroll-specific — the system returns to its standard YTD-based calculation on subsequent payrolls if no override is entered.
  • This feature is particularly useful when earnings exclusions or mid-year percentage changes cause the automatic calculation to differ from the intended match amount.