10 contributions estimation
Contributions Estimation
The estimation of contributions is the simplest and most straightforward of the field estimates. It is almost as simple to determine whether the field will be selected for estimation as well. The standard items which are checked include whether the taxable wage field is flagged to be estimated, if the taxable wages are positive already and the contribution field is missing, and if there is an unusual out-of-balance condition found in a multi-family processing. The out-of-balance situation is detected within the preliminary procedures described earlier.
It is not possible to encounter an estimation failure for the contributions field. However, the taxable wage field must show a positive value in order to produce an estimate for the contributions. Otherwise this field is simply left as a zero value, and processing is forwarded to the Employment Estimation section.
The contribution amount is defined to be the taxable wage amount multiplied by the tax rate for the account. However, it may occasionally be found that a worksite, especially one which recently has been added through the ES2C screen, may be missing the tax rate field. As a safeguard for this condition, the master account tax rate is always used in the preparation of worksite contribution prorations. The successful estimation of this field is given a code of CTB1. The formulation for this estimate is:
The contributions-versus-taxable-wages ratio provides the worksite equivalent of tax rate for worksite contribution estimates. As the values are diminished, however, the effective tax rate (summed contributions divided by summed taxable wages) will vary slightly. This variation counteracts any potential cumulative effects of would-be rounding errors so that the family can remain in perfect balance.
After contribution estimation has been finished, the next step in the program is the Employment Estimation procedure, which is described the next.
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