Overview
Thera's Benefits and Deductions module lets you configure pre-tax and post-tax payroll deductions for each employee, covering retirement savings plans (401(k), Roth 401(k), 403(b), Simple IRA, 457), health savings accounts (HSA, FSA Medical, FSA Dependent Care), Section 125 insurance benefits, and any custom garnishments or miscellaneous after-tax items. Deductions are applied automatically to every payroll run for the applicable period, keeping your books accurate and your employees' contributions on schedule.
ℹ️ Deductions entered in Thera reduce the employee's taxable wages (for pretax items) or are withheld after tax is calculated (for post-tax items). Selecting the correct deduction type is important for accurate W-2 reporting.
Navigating to Benefits & Deductions
From the Thera sidebar, click US Payroll.
In the sub-navigation that appears, click Benefits.
The Benefits and Deductions page loads. Scroll down past the retirement plan
integrations section to reach the Deductions panel.
The Deductions panel shows three cards:
Employee Deductions: individual deductions assigned directly to a specific employee.
Company Deductions: reusable deduction templates you create once and apply to multiple employees.
Garnishments: court-ordered wage withholdings sent directly to a creditor.
Understanding Deduction Types
Thera organises all deduction types into two groups inside the Manage Deductions
screen
Pre-Tax Deductions
These are deducted from the employee's gross wages before federal income tax (and, in most cases, Social Security and Medicare taxes) are calculated. Common pre-tax deductions in Thera include:
401(k): Traditional pre-tax retirement savings plan. Contributions reduce the employee's taxable income for the year. 2025 employee contribution limit: $23,500 ($31,000 if aged 50+).
HSA (Health Savings Account: Pre-tax savings for qualified medical expenses. Only available to employees enrolled in a High-Deductible Health Plan (HDHP).
FSA Medical: Flexible Spending Account for out-of-pocket medical costs. Use-it-or-lose-it each year.
FSA Dependent Care: Pre-tax account for eligible childcare and dependent care expenses.
Section 125 plans (125 Medical, 125 Vision, 125 Cancer, 125 Critical Illness, 125 Hospital, 125 Life, 125 Medical Other): Cafeteria plan benefits paid with pre-tax dollars under IRS Section 125.
403(b): Pre-tax retirement plan for non-profit and educational institution employees.
457: Deferred compensation retirement plan for government and certain non-profit employees.
Simple IRA: Simplified employee pension plan for small businesses. Both employee and employer contributions are pre-tax.
Post-Tax Deductions
These are deducted after taxes have been calculated. They do not reduce taxable income but may offer tax-free growth or withdrawals.
Roth 401(k): After-tax contributions with tax-free qualified withdrawals in retirement.
Roth 403(b): After-tax retirement plan with tax-free growth, for non-profit employees.
Miscellaneous: After-tax deduction used for garnishments and other custom withholdings that do not fall into any standard category.
💡 Tip: If you are unsure whether a benefit should be pre-tax or post-tax, consult your benefits provider or a payroll tax adviser. Mis-categorising deductions will affect W-2 box amounts and may require corrections.
Step-by-Step: Adding an Employee Deduction
Step-by-Step: Adding an Employee Deduction
Use Employee Deductions when you need to assign a deduction directly to one specific employee. For example, enrolling a single employee in a Simple IRA.
Step 1: Open Manage Deductions
Navigate to US Payroll → Benefits.
Under the Deductions section, click Manage on the Employee Deductions card.
The Manage Deductions screen opens, showing all available deduction types split into Pre-Tax and Post-Tax groups.
Step 2: Select a Deduction Type
Browse the deduction tiles. Click Show more at the bottom of each group to reveal additional types (e.g. Simple IRA, 457, 403(b), Section 125 variants).
Click the tile for the deduction you want to add. For example, Simple IRA.
Thera opens a list of employees who already have this deduction, plus an Add employee deduction button in the top-right corner.
Step 3: Add the Employee
Click + Add employee deduction.
An "Add Employee to [Deduction Type]" modal appears.
In the Select Employee dropdown, choose the employee from the list.
Step 4: Configure the Deduction Details
Once you select the employee, additional fields appear:
Name: A label for this deduction record (e.g. "Simple IRA - Charles"). Used internally.
Period: How often the deduction is applied. Select Per Payroll to deduct on every pay run, or choose a different interval if applicable.
Employee Contribution: The dollar amount (or percentage of wages) deducted from the employee's pay each period. Click the $ ▾ toggle to switch between a fixed dollar amount and a percentage of gross wages.
Company Contribution: The additional amount your company contributes on top of the employee's deduction each pay period. This is an employer cost, not withheld from the employee's wages. Common for Simple IRA (up to 3% employer match) and 401(k) plans.
Effective Start Date: Required. The first pay period this deduction takes effect. Defaults to today's date.
Effective End Date: Optional. Leave blank for ongoing deductions. Enter a date if the deduction should stop after a specific pay period (e.g. a temporary garnishment).
Step 5: Save
Review all fields.
Click Save.
The employee now appears on the deduction's roster. The deduction will be included in every payroll run from the Effective Start Date onward.
ℹ️ Changes to deductions take effect from the next payroll run. If a payroll is already in progress, check whether you need to manually adjust that run or wait for the next cycle.
Connecting a 401(k) Provider
Connecting a 401(k) Provider
Thera integrates directly with Human Interest, a 401(k) provider for small and medium businesses. Connecting your plan automates the contribution sync between Thera payroll and your 401(k) provider.
On the Benefits and Deductions page, scroll to the Retirement Plans section at the top.
Click Connect on the Human Interest card.
Follow the OAuth authorisation flow to link your Human Interest account.
Once connected, contribution data flows automatically between platforms on each payroll run.
If you already have an existing 401(k) or retirement plan set up outside Thera, click the "Add existing plan" link (top-right of the Retirement Plans section) to reference it for record-keeping purposes without using the automated sync.
Using Company Deductions
Using Company Deductions
Company Deductions are reusable deduction templates. You configure the default
contribution amounts once, then apply the template to as many employees as needed.
When you apply a Company Deduction to an individual employee, you can override the defaults for that person.
Go to US Payroll → Benefits and click Create on the Company Deductions card.
Choose the deduction type, set default amounts, and save the template.
Navigate to Employee Deductions → Manage, select the relevant deduction type, and click + Add employee deduction.
Select the employee and, if needed, override the default contribution amounts for that individual.
Managing Garnishments
Managing Garnishments
A garnishment is a court-ordered withholding that sends a portion of an employee's wages directly to a creditor (e.g. child support, tax levy, student loan default).
Garnishments appear under the Miscellaneous post-tax deduction type or can be. managed via the dedicated Garnishments card.
Go to US Payroll → Benefits and click Manage on the Garnishments card.
Click + Add employee deduction, select the employee, and enter the court-ordered amount.
Set the Effective Start Date and, if the order has an expiry, the Effective End Date.
Save. Thera will withhold the specified amount from every payroll run and record it as a liability.
⚠ Keep a copy of the court order on file. Thera will not independently verify garnishment amounts. It is the employer's responsibility to comply with the order and remit withheld funds to the appropriate agency.
Frequently Asked Questions
Can I set a deduction as a percentage of wages instead of a fixed dollar amount?
Yes. On the Add Employee deduction modal, click the $ ▾ dropdown next to the contribution field and select % Percent. Thera will calculate the dollar amount each payroll run based on the employee's gross wages for that period.
When will the deduction first appear on the employee's pay stub?
The deduction will appear on the first payroll run whose pay period includes or follows the Effective Start Date you set. If a payroll run has already been submitted for the current period, the deduction will start from the next run.
How do I stop a deduction?
Edit the deduction record and enter an Effective End Date. Alternatively, delete the record entirely from the employee's deduction list if it should never have been applied.
What is the difference between Employee Contribution and Company Contribution?
Employee Contribution is deducted from the employee's wages. Tt reduces their take-home pay.
Company Contribution is an additional amount paid by the employer on top of the employee's wages. It is an employer expense and does not reduce the employee's pay. For a Simple IRA, for example, the employee might contribute $200 per pay period while the employer matches 3% of salary as a Company Contribution.
Does Thera enforce annual IRS contribution limits?
Thera does not automatically cap contributions at IRS annual limits. You are responsible for monitoring that employee and employer contributions do not exceed statutory limits (e.g. $23,500 for 401(k) employee deferrals in 2025). Consider setting an Effective End Date to pause contributions once a limit is reached, or use your 401(k) provider's built-in limit-tracking if you are using the Human Interest integration.
Need more help? Contact Thera Support via the chat icon in the bottom-right corner of the screen or send an email to [email protected]