Balloon Payment Multiplier

The balloon payment multiplier is used to determine how taxes are applied to the balloon payment. It affects only the calculation of taxes.

How it works

For payment plans containing a balloon payment, AptaFund calculates the number of pay periods between the balloon date and the end of the payment plan, including the periods in which the balloon payment and payment plan end date fall. It then calculates taxes as if the balloon payment were really multiple paychecks.

For example, if you have three pay periods between the balloon pay date and the end of the payment plan, AptaFund would calculate and display a balloon payment multiplier of 3.

The balloon payment multiplier isn't used to multiply deductions. AptaFund looks to Deduction Assignment to see how many of the pay periods in the balloon payment are included within the start and stop dates of the deduction.

• Fixed deductions will then be applied for the balloon payment pay periods that fall within the start and stop dates of the deduction.

• Percentage deductions with start and stop dates are not affected by the multiplier. The gross amount of the balloon payment is used to calculate percentage deductions.

• Withholdings, such as federal taxes, are also not affected by the multiplier.

Overriding the default balloon payment multiplier

Once you enter the end date for a payment plan with a balloon, the system calculates the number of pay periods between the balloon date and the end of the payment plan and displays that number in the Balloon Payment Multiplier field. You can change the default value as needed.

The default number is the highest allowable value for the multiplier, and the minimum allowable value is 1.0.

One situation where you might want to reduce the default value is when the last pay period covered by the payment plan is only a partial pay period. For example, if the third pay period in a balloon is really half a period and the 2.5 periods fall within the start & stop dates of the deduction, you could change the multiplier to 2.5.

Setting the multiplier to 1.0 will cause the taxes to be taken out of the entire balloon payment amount.

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