Function LIMIT:
Purpose:
The reason for this page is to provide an overview on how to configure limit for pension plan using the 'LIMIT' functionality in payroll.
Overview:
In the US pension plan require annual limit to be set up as legal requirement. The best practice for this plan is to constant in T511P (see below for wiki link on this functionality), but if this setting cannot be used in your system it is also possible to use the LIMIT functionality, which will be detailed in this page.
IMG:
This limit are set at payroll level, in the IMG (transaction SPRO)
Path: Payroll->Payroll US->Deductions-->Limits on deductions
The first step is to make sure processing class 41 is assigned to the wage type that will be used for these limits. In earlier releases processing class 77 was used, then it was replaced by processing class 41. So to make sure it is converted to 41 report RPCLIMIT has been provided.
Then define the rule in which the limit will be calculated in the payroll schema. And assigned it to your required schema (nodes 'define rules for limits' and 'Set limit modifier)
Wage type classes Table V_T51DT:
To be able to create combined limit for different plan a wage type class need to be created so that every required plan for which the annual limit must be set can be bundle together.
For example:
Pension plan 401k has an annual limit of 17.500,00 USD. Employee can be enrolled in several 401k type pension plans, such as standard 401k and Roth, thus their contribution should be combined so that the addition of both contribution does not exceed 17500 annually.
To do this in this LIMIT function a wage type class need to be set up under which the 2 wage types assigned to these 2 plans will be configured. Once the wage type class is created, select the wage type and click on 'Wage type classification'. There enter the wage type assigned to the required plans, the validity dates and the priority of the wage type and if it has to be taken into account for arrears processing. 
Then the limit for the wage type class has to be assigned. Click on 'Wage type class limit', and create the required entry. This limit will then be applied at all wage type assigned at the previous step. 
In the next node (Maintain wage types for limits), the processing class for limit must be set as well as the required accumulations settings.
Also this step is not mandatory for pensions plan IRS regulated as previously explained, there is an automated process delivered via plan settings and table T511P, which is the best practice and SAP recommended solution for these plans. see note below and related Wiki links.
