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Timing for Deferred Compensation & Defined Contribution Limits & Annual Compensation Limits
Hi all,
I’m interested in hearing how other Oracle EBS HRMS/Payroll customers handle the timing of the mandatory payroll patches delivered in December, specifically as it relates to updated deferred compensation (401K, 403B, etc.) contribution limits for the upcoming calendar year. At our organization, we complete a preliminary payroll prior to our payroll run to allow for our payroll teams to perform balancing and validation, and resolution before payroll is finalized. Because of this, mandatory payroll patches that affect payroll calculations must be applied before preliminary payroll begins.
The challenge is that the patches containing the updated IRS contribution limits is typically released around 12/15. This leaves a very limited window to apply, test, and validate the patch before the first payroll cycle of 2027. While our organization does not have employees who earn enough to reach the annual contribution limit in the first pay period, we have experienced situations where a retroactive payment or bonus was processed in the first pay period of the year and caused an employee to reach the annual limit, so this is now a scenario we're accounting for. Delaying the patch to