401k Roth Contribution Calculation
Hello Payroll Gurus,
Happy New Years to everyone! I need your help on this.
We are working to implement the 401k Roth deduction however there seems to be a confusion on rather this deduction is calculated based on gross wages or taxable wages (gross - taxes). According to our 401k vendor it should be based on taxable wages which I don't feel it's correct. I know this is an after tax deduction but if an employee elected 5% to be deducted every pay period then the deduction should be calculate as 5% of gross wages.
Can someone confirm if my theory is correct? Or should the 5% be calculated towards the taxable wages?
Appreciate your help on this.