User Query: How is that calculation entered into the Payroll Item setup for 401k Company Match?
Know What is 401k in the QuickBooks?
The 401k is the plan of retirement savings that is given by the employer to their employees. This helps employees save and invest some amount from their pays before the taxes are done.
What are the 401k retirement plans?
It is the type of a qualified plan that is started by the employer in which employees make a reduction in their salary to contribute on the pre-tax basis. This is for the employees who are eligible for this and the employers may match contributions according to their eligibility and may add the feature of profit sharing to it. This plan has a limit for an annual contribution.
The types of 401k plans and about them are of 2 types:
- Standardized- All the considered wages that compensate are subject to the payment when calculating the deferral. According to the standard, the employer and the employee both have to pay for and according to the plan.
- Non-standardized- It has no standard for the plans. In this, the employer and employee can choose not to pay for the retirement deferral.
How to set up the 401k in QuickBooks?
This is for the retirement benefits for the employee so it needs to be set up the payroll using the EZ setup. This setup adds the company contribution automatically to your retirement benefits. To set up the 401k in QuickBooks firstly, set up the payroll and the steps are as follows:-
- Open the QuickBooks software
- Then go to the menu and click on the Lists option
- From the further options, select the Payroll item list
- Then click on the Payroll Item list from the lower left side on screen
- After that, click on the New button
- You have to click on the option as EZ setup and click o the Next button to proceed
- In this setup, follow the instructions displayed on your system’s screen
- Then take care that if an employee has the income tax that is local then it is not reduced by using this retirement 401k plan
- So you have to de-select the local tax option
- Now a payroll item is created
- Click on the Edit option and verify that the payroll item has all the information of the Vendor that is important.
Now, you also have to set up a retirement plan after doing this using the Custom Setup. The process is mentioned below:-
- In QuickBooks click on the Lists
- Then, select the Payroll Item List
- Click the Payroll Item in the bottom left corner
- Now click on the new option
- Select the Custom Setup and click on the button Next
- Click o the option Company Contribution and then click on the Next button
- Type the Name for it that is different from employee deduction and then press Next button
- Select the same account in the Liability account option that you select before
- Also, choose the account in the Expense account and click on Next
- In the window of the Tax Tracking type, go with the classification that matches the plan and select the Next button for 3 times
- So, if you see that the same amount is applied to most of the employees then enter it in the field that is at top of the Limit Type
- In the lower field, you have to enter the annual limit of contribution when it is same for all the employees
- You have to click on the button named Finish for completing the setup
- Now, access the profile of employees and edit the contribution amount; if the amount of contribution is different.
How to reach us?
Above, you get the way of how to set up the retirement plan 401k in QuickBooks in an easy manner. You have to follow it accordingly and in case, have any queries got connected with the toll-free. The team is available 24/7 hours to help you by providing the best assistance according to your requirements. You can also reach them via email or do a live chat with professionals.