Transaction Type - Deduction Examples

Below are examples of the different types or components to a deduction.

 

DI Exempt

Example 1

Deduction D is a DI Exempt deduction for retirement fund. Deduction D requires $300 per paycheck, regardless of the net pay.

An employee's gross pay is $1000 and the employee must make $450 per paycheck to satisfy the set limit.

After all deductions and taxes, the employee's paycheck is equal to $675. Since Deduction D is DI exempt, the employee's net pay will be equal to $375, even though the total is below the set limit.

 

Non-DI Exempt

Example 1

Deduction N is a Non-DI Exempt deduction for $250.

An employee's gross pay is $750 and the employee must make $300 per paycheck to satisfy the set limit.

After all deductions and taxes, the employee's paycheck is equal to $500. Since Deduction N cannot be taken out in full without causing the employee's net pay to fall below to set limit, Deduction N will only take out $200 of the $250.

If the employee's paycheck was $1000 and after deductions and taxes, the pay is equal to $700, then the full $250 would be taken out for Deduction N.

 

Sequence

Example 1

An employee's gross pay is $1500, and the employee must make more than $650 per paycheck in order to satisfy the set limit.

The deduction sequences are as follows:
    • Deduction A (Non-DI Exempt) = $150
    • Deduction B (Non-DI Exempt) = $50
    • Deduction C (Levy) = All but $1200
    • Deduction D (Tiered)
      • $0-$250 = $0 deducted
      • $251 - $500 = $10 deducted
      • $501 - $1000 = $20 deducted
      • $1001 - $1500 = $50 deducted
      • $1501 - max = 10% deducted.
    • Deduction E (DI Exempt) - $300
    • Deduction F (DI Exempt) - $50
    • Deduction G (All-Or-Nothing, Non-DI Exempt) - $200
    • Deduction H (All-Or-Nothing, DI Exempt) - $250

Since sequences dictate priority in most scenarios, Sequence 1 is taken out first. Both are able to be taken out. So the remaining pay is ($1500 - $150 - $50) = $1300.

Sequence 2: The levy takes out "All But $1200," so the levy takes $100 from the paycheck leaving $1200.

Sequence 3: Since we are at $1200 remaining, the deduction would be equal to $50. So the remaining pay is ($1200 - $50) = $1150.

Sequence 4: Both deductions are able to be withheld, so the remaining pay is ($1150 - $300 - $50) = $800.

Sequence 5: Since ($800 - $200) is $600 and that is below the set limit, none of Sequence 5 will be processed. So the remaining pay is still $800.

Sequence 6: Since Deduction H is an All-Or-Nothing and DI Exempt, all $250 will be taken out, even though it goes below the set limit. So the employee's net pay is ($800 - $250) = $550.

 

Tiered Deductions

Example 1

An employee's gross pay is $1000. At the time of the deduction (Deduction T), the remaining pay is $750.

Deduction T is set up so that:

  • $0-$800 = $50 deducted
  • $801 - $1200 = $75 deducted
  • $1201 - $1600 = $150 deducted
  • $1601 - max = 25% deducted

Since the employee's pay is $750 at the time of the deduction, only $50 is deducted from the paycheck for Deduction T.

 

All-Or-Nothing

Example 1

Deduction A is an All-Or-Nothing deduction for $200.

An employee's gross pay is $900, and the employee must make $500 per paycheck to satisfy the set limit.

After deductions and taxes, the employee has a pay of $600.

If Deduction A is a DI Exempt deduction, the full $200 would be taken out, leaving the employee with a net pay of $400.

If Deduction A is a Non-DI Exempt deduction, then nothing would be taken out, and the employee would have a net pay of $600.

 

Limits

Example 1

Deduction L (a levy) has a pay period limit of $75.

An employee's gross pay is $1000, and after deductions, the employee has a remaining pay of $800. The levy is "All but $700". Since the pay period limit is $75, the levy takes $75, leaving $825 for a net pay.

 

Example 2

Deduction D has a monthly limit of $100.

An employee has a gross pay of $700 per pay period on a semi-monthly schedule.

Per pay period, Deduction D is set for $75. The first period, Deduction D takes out the full amount, leaving the employee with a remaining pay of $625.

The second period, Deduction D takes out $25, due to reaching its limit, leaving the employee with $675 remaining pay.

 

Max Percent Of Net

Example 1

An employee's Max Percent of Net is 50%. Their Gross Pay is $1000, which means no more than $500 can be taken from their paycheck, unless the deduction is DI Exempt.

Deduction A is Non-DI Exempt for $200. Deduction B is Non-DI Exempt for $250. Deduction C is $75. If Deduction C is Non-DI Exempt, the deduction will take out $50 of the $75 leaving the employee with $500. If Deduction C is DI Exempt, it will take out the full $75 leaving the employee with $475.

 

Deduction Max Percent

Example 1

A deduction's Deduction Max Percent is set for 25%. An employees remaining pay at the time of the deduction is $750. This means that the deduction can take no more than $187.50 from the paycheck.

 

California Garnishment Example

To comply with the requirements of the new CA garnishment law that went into effect on 9/1/2023 you can set up a formula with the below specifications.

This new law updates the garnishment calculations so that California employers must not withhold in excess of the lesser of 20% of the individual’s disposable earnings for that week or 40% of the amount by which the individual’s disposable earnings for that week exceed 48 times the state minimum hourly wage.

 

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