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Contribution calculation rates (form) [AX 2012]

Updated: November 27, 2013

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2

Click Payroll > Setup > Benefits > Contribution calculation rates.

Use this form to set the rates for worker deductions and employer contributions for retirement plans.

These rates are used together with the Calculation rate field in the Benefits form to determine the amount of the employer contribution for retirement plans.

NoteNote

This topic describes functionality that is available only if Payroll for Microsoft Dynamics AX 2012 R2 is installed.

This topic has been updated to include information about features that were added or changed for cumulative update 6 for Microsoft Dynamics AX 2012 and for cumulative update 7 for Microsoft Dynamics AX 2012 R2.

Don’t know what version you’re using? See Find out which version of Microsoft Dynamics AX you are using.

Buttons

Information

New

Delete

Create or delete a contribution calculation rate table.

Fields

Information

Name

Description

The unique name and the description that you use to identify the contribution calculation rate table.

Tier type

Select one of the following options:

  • Single line – Use this tier type to use only one line from the rate table to calculate the employer contribution amount.

  • Cascading tier – Use this tier type to use multiple lines from the rate table to calculate the employer contribution amount.

See the example later in this topic to learn more about tier types.

Button

Information

Maintain versions

Open the Maintain rate structure versions form, where you can control the effective and expiration dates for contribution calculation rate tables. For more information, see Maintain payroll versions (form).

Grid columns

Information

Worker deduction

The lowest percentage of a worker’s pay that is matched by an employer contribution at the specified rate.

Employer contribution

The matching contribution to an employee’s retirement plan, expressed as a percentage of the employee’s pay or as a percentage of the employee’s own contribution to the plan.

The Contribution method field determines how this rate is used to calculate the amount of the employer contribution.

Contribution method

This control is not available in versions of Microsoft Dynamics AX 2012 prior to cumulative update 6 for AX 2012.

Select the method to use to calculate employer contributions for the selected row.

NoteNote

The worker deduction and employer contribution rates are determined by the rate table that is defined in the Contribution calculation rates form and assigned to the benefit in the Benefits form. For more information, see Benefit setup tasks.

  • Fixed percent - The employer contribution is calculated by multiplying the employer contribution rate by the employee earnings. For example, if the rate for the worker deduction is .03 and the rate for the employer contribution is .02, the amount of the employer contribution is .02, or 2 percent of the employee earnings. For this option, the worker deduction amount and the employer contribution amount are calculated separately.

  • Percent of employee - The employer contribution is calculated by multiplying the employer contribution rate by the worker deduction rate. For example, if the worker deduction rate is .03 and the employer contribution rate is .5, the amount of the employer contribution is .03 * .5 = .015, or 1.5 percent of the employee earnings.

Your organization offers two retirement plans. For Plan 1, your organization matches the worker’s own contributions to their plan at 50 percent up to the first 3 percent, and at 100 percent up to 6 percent. For Plan 2, your organization contributes 1 percent of the worker’s pay to the 401(k) plan when the worker’s own contributions are between 1 percent and 3 percent of their pay; 2 percent when the worker’s own contributions are between 3 percent and 6 percent; and 3 percent of the worker’s pay when the worker’s contributions are 6 percent or more. In this example, your two tables would look like this.

Plan

Worker deduction rate

Employer contribution rate

Contribution method

Plan 1

0.0000

0.5000

Percent of employee

0.0300

1.000

Percent of employee

0.0600

0

Fixed percent

Plan 2

0.0100

0.0100

Fixed percent

0.0300

0.0200

Fixed percent

0.0600

0.0300

Fixed percent

For Plans 1 and 2, the actual amount that the employer contributes depends on the tier type that you select in the Contribution calculation rates form. The following list describes each tier type and includes an example of how the tier types affect the employer contribution amount for Plans 1 and 2.

  • Single line – Use this tier type to use only one line from the rate table to calculate the employer contribution amount.

    For Plan 1, if the worker’s contribution rate is 10 percent of their 1000.00 earnings, the employer contribution is 0.00. For Plan 2, the employer contribution is 30.00 for an employee who earns 1000.00 and whose contribution rate is 10 percent.

  • Cascading tier – Use this tier type to use multiple lines from the rate table to calculate the employer contribution amount. Only lines that have a deduction rate of less than or equal to the actual worker’s deduction rate are used to calculate the employer deduction amount.

    For Plan 1, if the worker’s deduction rate is 10 percent of their 1000.00 earnings, the employer contribution is 45.00. For Plan 2, the employer contribution is 60.00.

The following table lists the formula for calculating the employer contribution amount for Plans 1 and 2 for each tier type.

Plan

Tier type

Employee earnings

Employee deduction amount

Employer contribution amount

Formula used to calculate employer contribution amount

Plan 1

Single line

1000.00

100.00

0.00

Cascading tier

1000.00

100.00

45.00

(1000 * 0) + ((1000 * (.06 - .03)) * 0.5) + ((1000 * (.03 - .00)) * 1) = 45

Plan 2

Single line

1000.00

100.00

30.00

Cascading tier

1000.00

100.00

60.00

(1000 * .03) + (1000 * .02) + (1000 * .01) = 60


Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services (LCS).
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