Table of Contents
- DISPOSABLE INCOME PRORATION
- Overview
- Implementation Approach
- Sundry Items Subject to Net Reduction
- Guaranteed Percentage
- Pay Point Task – Disposable Income Proration
- Pay Point Set - Sample
- PC Usage - ‘Disposable Income Guaranteed Earnings’
- Element - ‘Disposable Income Proration’ (SAMPLE)
- Pay Component - Disposable Income (SAMPLE)
- Typical Exception Messages
- Tax Levies
- Software Needed for this Release
DISPOSABLE INCOME PRORATION#
Overview#
This feature provides for the ability to ensure that an employee receives a guaranteed percentage of their ‘Disposable Income’. Certain deductions that are for payment to other parties for wage garnishment and/or Child support and/or designated others, can be reduced to allow the employee to receive this guaranteed percentage of their ‘Disposable Income.This feature is an extension to the ‘Vendor Payment’ logic and those deductions that can be reduced can only be those that originated as ‘Sundry deductions’.
Implementation Approach#
This feature is a natural extension to the Accounts Payable ‘Vendor’ support logic already existing. Multiple deductions per employee that are direct deductions from the employee net pay, can be entered as Sundry items that are subsequently paid to Vendors during the UPVEND process.The Disposable Income Guarantee, module will be executed as part of UPCALC at a point designated by the Pay Point Set. It will be a new ‘Pay Point Task’, which can be positioned at the appropriate point in the pay calculation. This point would be as soon as all Pay Components that make up ‘Disposable Income’ are available.
An ‘Element’ must be set up that contains all Pay Components (Earnings and Deductions) that would compute the disposable income. Once this number is known, the logic would ensure than the total of all sundry lines marked as ‘Eligible for Disposable Income Guarantee’, does not exceed the percentage. The individual sundry items would be reduced and prorated if needed to provide for the guarantee.
After this logic has been invoked, the remainders of the calculations (including the existing gross to net calculations) are processed without further changes. There must be a Pay Component set up for ‘Disposable Income’, so that the element associated with the PC can be picked up. These earnings may be stored in the pay by marking the Pay Component as ‘Store Results’.
This feature is applied ONLY to the pay categories designated as’Regular Pay’.
Sundry Items Subject to Net Reduction#
Those particular Sundry deductions that may be reduced when this logic is invoked during the calculation of pays are marked accordingly. Only those marked could be affected (reduced) by the Disposable Income Proration.Disposible_Income_Proration_01.jpg
Guaranteed Percentage#
The percentage of disposable income that is guaranteed to an employee is entered on the ‘Employment’ record.Disposible_Income_Proration_02.jpg
Pay Point Task – Disposable Income Proration#
This task invokes the logic that checks the Sundry lines. It can be placed at any point in the ‘Pay Point Set’. Disposible_Income_Proration_03.jpg
Pay Point Set - Sample#
This example demonstrates the proper placement of the ‘Guaranteed Income’ task.Disposible_Income_Proration_03_1.jpg
PC Usage - ‘Disposable Income Guaranteed Earnings’#
Disposible_Income_Proration_04.jpg
Element - ‘Disposable Income Proration’ (SAMPLE)#
The element may be a compound element. Disposible_Income_Proration_05.jpg
Pay Component - Disposable Income (SAMPLE)#
Proration will ONLY be performed on Pay Component Details with a ‘PC Detail Type’ of ‘Computed Value’. Details with ‘Entered Value’, ‘Additional Computed Value’, etc. will NOT be prorated. This is needed to ensure that the declining balances, original amounts and fees attached to Child Support Orders, etc. are not altered.Disposible_Income_Proration_06.jpg
Example:
| PC | Sundry Deduction | Amount |
|---|---|---|
| 1000 | Earnings | $400.00 |
| 2000 | Federal Tax | $100.00 |
| 2001 | State Tax | $50.00 |
| 500 | Child Support Payment | $150.00 |
| 501 | IRS Charge | $50.00 |
Guaranteed Disposable Income on IEEI 50%
| Element | +/- | PC | |
| DISPOSABLE | + | 1000 | Earnings |
| - | 2000 | Federal Tax | |
| - | 2001 | State Tax |
Calculate Disposable Income
$400.00 less $100.00 (FT) Less $50.00 (PT) = $250.00
NOTE: If Disposable income is negative then the sundries will NOT be prorated!
Calculated Disposable Income Guarantee
$250 Multiplied by 50 and divided by 100 = $125.00
Calculate Total Deductions Subject to Guarantee
Child Support $150.00 + IRS Charge $50.00 = $200.00
Calculated the required reduction amount
Total Deduction (3) $200.00 less the Guarantee (2) $125.00 = $75.00
If this value is greater than zero ($75.00), then each of the deductions from step (3) are reduced by the appropriate proration of this amount
Compute Revised Deduction Amounts
| Child Care | $150 - (($75.00 / $200) * $150)= $93.75 |
| IRS Charge | $50 -(($75.00 / $200) * $50)= $31.25 |
Net Pay Calculation (Done later in the Pay)
| + | $400.00 | Earnings |
| - | $100.00 | Federal Tax |
| - | $50.00 | State Tax |
| - | $93.75 | Child Care |
| - | $31.25 | IRS Charge |
Net Pay = $125.00!!!!!!!!
Typical Exception Messages #
These messages are not representative of the example on the previous page, but provide a sample of the exceptions that would be issued in a situation where Sundry deductions had to be reduced to provide the employee with a ‘Guaranteed Disposable Income’.
Tax Levies #
Sometimes there is a Sundry Item that requires an employee to pay Additional Tax on each pay to make up for previous tax shortages. These deductions are not subject to any kind of pro ration, and therefore are not handled by this particular P2K feature.These levies can further reduce the 50% left after ‘Disposable Income Pro ration’. This can be accomplished by having ‘Tax Levy’ Pay Component processed on a Pay Point after ‘Disposable Income Pro ration’.
When the net income, and the Tax Levy are both available in the pay, invoke a UserCalc to manipulate the Tax Levy amount any way needed. The ‘Net Pay’ available (even after Net Income Pro ration), can be retrieved along with the amount of the tax levy.
In this example, the employee has $400.00 Car Loan, an $800.00 Child Support Payment, and a $400.00 Tax levy. After the Car Loan and Child Care, the employee is guaranteed 50% of disposable Income. The Employee does NOT have enough income in the pay to handle the two deductions completely, so ‘Disposable Income Proration’ kicks in and reduces each of the Car Loan and the Child Support Payment proportionally.
After proration, the employee has 50% of the disposable income left, but there is still a tax levy to deduct. There is a UserCalc invoked to ensure that the employee gets a minimum of $100.00 Net Pay after all deductions. The $400.00 Tax Levy is reduced to $$$$ to ensure that the employee gets the minimum of $200.00. The UserCalc to limit the Tax Levy is subsequent to the ‘Income Proration Task’. After being audited, the Pay will look like this … User Calc to ensure the employee gets $100.00 Minimum Net Pay after the Tax Levy.
The results of the pay will be as displayed, and note that all three deductions have been reduced, two by ‘Disposable Income Proration’, and the tax levy by the UserCalc.
Software Needed for this Release#
| File Name | Type | Components |
|---|---|---|
| GES_Q1144_Disposable_Income_Proration.doc | Word | This document |
| SEED_Q1144_20030207.sql | Seed | Payroll Messages X_PAY_POINT_TASK |
| P2K_SPPG_GUAR_INCOME.sql | PLSQL | Server Code |
| P2K_SPPGMAIN.sql | PLSQL | Server Code |
| SEED_USAGE7_20030207.sql | Script | PC Usage |
| HR_IEEI.rdf and rep | Form | Employment Form |
| PR_IPSN.rdf and rep | Form | Sundry Form |
