Question

SIMPLE IRA Calculation Wrong

Forum|Forum|4 years ago
April 11, 2022
2 replies
1 view

Is anyone else aware that the calculation for employee contributions to a SIMPLE IRA are wrong?

As an example: If an employee elects to contribute 10% of their compensation the calculation does not include all of the pay types eligible by statute - specifically tips are supposed to be included but are not. It's unclear how many other pay types for the various savings plans are improperly excluded.

Intuit has been aware of this violation for almost 6 months but has refused to fix it.

Workforce Payroll

G

Giovann_G

Moderator

I'll share some information on how the Simple IRA is calculated in QuickBooks Online Payroll.

Depending on the deduction types you've set up. The pre-tax insurance premiums are deducted from the gross pay before any other taxes or deductions are calculated.

The option to change how the system calculates isn't available. If you don't have any pre-tax insurance premiums, then the IRA contribution will be deducted first.

For more details about the supported pay types and deductions, you can read this article: Add or change pay types.

I've also added this resource if you need help in setting up the Simple IRA: Retirement plan deductions/contributions.

You're always welcome to post again if you have further questions about the Simple IRA. We're here to help you.

S

sb457Author

Hello Givann - You didn't respond to my post. The issue is not related to deductions at all.

The relevant IRS regulation on SIMPLE IRA's requires that all compensation be included in the calculation to determine the contribution for a given pay period (employee and employer matching). The language in the regulation specifically uses tips as an example of the elements that make up compensation. Intuit does not include tips in its calculation.

Given that a) this affects all Intuit clients with a SIMPLE IRA and b) Intuit has known about this violation since November of 2021 and still has not resolved it, this violation meets all the criteria for a very public class-action lawsuit requiring restitution for all affected parties.

J

JJBinNC

I am having the same issue. QB's does not add the Insurance Fringe Benefit to gross wages before calculating the amount that is withheld for the SIMPLE IRA. Does anyone know how to fix this?

C

CharleneMaeF

QuickBooks Team

Thanks for reaching out to the Community, JJBinNC

Let me make it up to you by making your record is accurate.

To ensure the information in your company file is correct, I'd recommend contacting our QuickBooks Support Team. They're equipped with tools to ensure your record is accurate:

Here's how:

Go to the Help (?) icon at the top.
On the Assistant tab, click Talk to a human.
Enter your concern in the Type something field, then click the send icon.
Click I still need a human.
Select Get help from a human.
You can either select the Chat with us or Have us call you option.

For more details about managing fringe benefits, please see these resources: Fringe Benefits to Paychecks in Online Payroll.

You can bookmark the following article for future reference. It contains resources that will help you efficiently perform any processes in QuickBooks. It includes topics for payroll, banking activities, inventory, customer and supplier transactions, etc: A Self-help Guide.

Please let us know if you have additional questions or concerns. I’ll be right here to answer them for you. Wishing your business continued success.

P

peggysue-utma-co

Charlene, your humans aren't helping. That's the problem.

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