Govt. EE 457(b) Catch-Up Contributions in NetSuite 2025.2

Starting in NetSuite 2025.2, the handling of Govt. EE 457(b) catch-up contributions has been updated. Specifically, the automatic catch-up calculation feature for the Govt. EE 457(b) - Catch-up, Additional - 3 Years to Retirement-ROTH and the Govt. EE 457(b) - Catch-up, Additional - 3 Years to Retirement payroll items will not function as per the standard payroll item assignments. Instead, the system will compute catch-up contributions for these items irrespective of whether the employee has achieved the annual deferral limit. This adjustment provides clarity for administrators and payroll managers when managing retirement plans under these categories.

Understanding the Changes

• Automatic Calculations: Unlike other payroll items where catch-up contributions are calculated automatically when certain thresholds are reached, these specific items will perform calculations based solely on their designated rules, bypassing the annual deferral limit requirement.
• Compliance Considerations: Organizations should consult with their plan sponsors to understand the implications of this requirement, ensuring that all contributions align with IRS regulations.

Implementation Considerations

1. Review Employee Records: Verify employee records assigned to these payroll items to ensure correct catch-up contributions are computed.
2. Consult Plan Sponsors: It is prudent to regularly engage with your plan sponsors to remain updated on compliance and policy details regarding catch-up contributions.
3. Training for Payroll Staff: Conduct training sessions for payroll staff to ensure they understand the specifics of how these catch-up contributions are calculated to prevent errors.

Who This Affects

• Payroll Administrators: Responsible for setting up and maintaining accurate payroll configurations in the system.
• HR Managers: Need to ensure compliance with retirement contribution regulations and communicate changes to employees.
• Finance Teams: Must adjust financial forecasting and budget planning in light of updated retirement contributions.

Key Takeaways

• The 2025.2 update simplifies catch-up calculations for Govt. EE 457(b) payroll items.
• Catch-up contributions are calculated even if the annual deferral limit is not met.
• Organizations should work closely with plan sponsors to ensure compliance.
• Training for payroll staff is essential to handle changes effectively.