How do you set up a custom 401(a) plan in Oracle Cloud HCM/Payroll when default options aren’t enough? Oracle Cloud Payroll supports 401(k), 457 and 403(b) plans out of the box. However Public Sector clients may also offer 401(a) plans. These plans are governed by different maximums that actually incorporate the Employers contribution, and these can’t be set up as one of the delivered Deferred Comp Plans.
This tutorial provides step-by-step instructions to set up a new 401(a) plan.

Step 1:
First we need to create the Employee element. For this tutorial, we’ll call the new Element: 401a Employee Contribution.
- Create new Element Classification. Access Element Classifications > Pretax Deductions
- Add a new Entry
- Name: Deferred Compensation 401a
- Description: Deferred Compensation 401a
- Start Date: 1/1/1951
- End Date: 12/31/4712
- Click OK
- Click Submit
Step 2:
- Create Element for Employee’s 401(a) contribution. Access Elements.
- Add a new Value
- Legislative Data Group = US Legislative Data Group
- Primary Classification = Pretax Deductions
- Secondary Classification = Deferred Compensation 401a
- Answer all questions presented for how your 401a Employee Element is expected to function.
Note: If you offer Deductions as both a Percentage of Earnings and a Fixed Flat Amount, you will need to create two Elements. One for the Percentage of Earnings and one for the Flat Amount.
Defaults can be set if they apply.
Second we need to create the Employer element. For this tutorial, we will call the new Employer Element: 401a Employer Contribution.
Step 3:
- Create Element for Employer’s 401(a) contribution. Access Elements.
- Add a new Value
- Legislative Data Group = US Legislative Data Group
- Primary Classification = Employer Liabilities
- Secondary Classification = Benefits Employer Paid
- Answer all questions presented for how your 401a Employer Element is expected to function.
Note: If you offer Deductions as both a Percentage of Earnings and a Fixed Flat Amount, you will need to create two Elements. One for the Percentage of Earnings and one for the Flat Amount.
Defaults can be set if they apply.
Step 4:
- Create Element Eligibility for all required Elements
- Access the base Elements created and create the Eligibility for them as of the Date 1/1/1951.
- Access the Results Elements that were created for both the Employee and Employer Elements and create the Eligibility for them as of the Date 1/1/1951.
- Costing can also be added at this time or can be added later via Costing of Elements access.
Step 5:
This is where you will define all Earnings that are totaled for the wages on which the Employee’s 401(a) contribution will be computed.
- Create Balance Feeds for Employee’s 401(a) Element Calculations.
- Access via Balance Definitions: Search for the Balance Definition that was automatically created when the Element was configured: 401a Employee Contribution Eligible Comp
- Reset the Effective-As-of-Date to be the Date of the Element: 1/1/1951 (Standard Oracle date value for new items)
- Click on the Balance Feeds Link in the left-hand menu.
- Under the ‘Balance Feed by Element’ Header, add all Result Elements that contribute to the wages on which Employee 401(a) contributions are computed.
- Save and Submit.
Step 6:
This is where you will define all Earnings that are totaled for the wages on which the Employer’s 401(a) contribution will be computed.
- Create Balance Feeds for Employer’s 401(a) Element Calculations
- Access via Balance Definitions: Search for the Balance Definition that was automatically created when the Element was configured: 401a Employer Contribution Eligible Comp
- Reset the Effective-As-of-Date to be the Date of the Element: 1/1/1951 (Standard Oracle date value for new items)
- Click on the Balance Feeds Link in the left-hand menu.
- Under the ‘Balance Feed by Element’ Header, add all Result Elements that contribute to the wages on which Employer 401(a) contributions are computed.
- Save and Submit.
Step 7:
- Designate the Employee’s 401(a) Contribution as a Pre-tax Deduction: Access the seeded Balance Definition for ‘Other Pretax’.
- Reset the Effective-As-of-Date to be the Date of the Element: 1/1/1951
- Click on the Balance Feeds Link in the left-hand menu.
- Under the ‘Balance Feed by Element’ Header, add the Result Element for the Employee’s 401(a) contribution. For our example it would be: 401a Employee Contribution Results.
- Save and Submit.
This effectively causes the Employee’s contribution to reduce Federal, Social Security and Medicare Taxes.
Step 8:
- Reset Employee’s 401a Contribution to not reduce Medicare Taxable Wages. Access the seeded Component Group Rules for the Federal Component
- Using the left-hand menu, access the area for Federal > Related Deductions > Medicare > Wage Basis Rules
- Click the Plus (+) Button to bring up the ‘Create Wage Basis Rule’ Information Box.
- Effective Start Date = 1/1/951
- Primary Classification = Pretax Deductions
- Select all secondary classifications = No
- Secondary Classification = Deferred Compensation 401a
- Subject to wage basis rule = Yes
- Submit
- Click OK for the Warning Message “Changing taxability rules will impact wages and taxation for future pay runs”.
Step 9:
- Reset Employee’s 401a Contribution to not reduce Social Security Taxable Wages: Access the seeded Component Group Rules for the Federal Component.
- Using the left-hand menu, access the area for Federal > Related Deductions > Social Security > Wage Basis Rules
- Click the Plus (+) Button to bring up the ‘Create Wage Basis Rule’ Information Box.
- Effective Start Date = 1/1/951
- Primary Classification = Pretax Deductions
- Select all secondary classifications = No
- Secondary Classification = Deferred Compensation 401a
- Subject to wage basis rule = Yes
- Submit
- Click OK for the Warning Message “Changing taxability rules will impact wages and taxation for future pay runs”.
Final Step:
Monitoring Limits – The Limits for 401a contributions are relatively high and include both the Employees and Employers contributions. A custom Report can be created to monitor the combined balances and monitor when the limits are close to being reached. Manual maintenance to manage contributions up to the limits can be done as needed. It is expected that most Employees would not reach the limit even when the Employer’s contribution are included.
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