freundpriority1
Level 1

Simple IRA employee contribution

I can't find anywhere how to set up a deduction.  I have an employee who wants to contribute more into the simple IRA that the company already contributes to. 

Any suggestions where to look

Thanks,

Angelyn_T
QuickBooks Team

Employees and payroll

Hi there, @freundpriority1.

 

I'd be glad to help set up a deduction item for Simple IRA in QuickBooks Desktop (QBDT).

 

There are two ways to set up a payroll item for retirement benefits.

 

  • EZ Setup (uses standard settings; recommended for most users)
  • Custom Setup (allows editing of settings; recommended for experts)

To set up the item through the EZ Setup.

 

  1. Click on the Lists menu.
  2. Select Payroll Item List.
  3. At the lower left of the Payroll Item List, click Payroll Item, and click New.
  4. Select EZ Setup and click Next.
  5. Follow the onscreen instructions.
  6. After you create a payroll item, edit the payroll item to make sure all necessary vendor information has been entered. 

To set up the item through the Custom Setup, you may check and follow the detailed instructions in this article: Set up a payroll item for retirement benefits (401(K), Simple IRA, etc.).

 

On the other hand, if you need further assistance with the process, you may get in touch with our QuickBooks Support Team. For the support's contact information, you may check it here: Contact the QuickBooks Desktop Customer Support Team.

 

Please feel free to add a post/comment below if you have any other questions about setting up Simple IRA employee contribution in QuickBooks. I'll be always here happy to help you!

matoje
Level 1

Employees and payroll

I used the EZ-Setup method when creating an employee contributed SIMPLE IRA deduction.  I noticed during this EZ-Setup wizard that the Taxes section only has Federal Withholding, Local Withholding and LST checked.  State (Pennsylvania) withholding is not checked as a default.  When I ran payroll I found that the state withholding amount isn't a true calculation for our state (3.07%) when using the adjusted gross income.  Why isn't State withholding checked in the EZ-setup wizard under taxes?  I don't want to change the QB default settings unless instructed.

Ryan_M
Moderator

Employees and payroll

Hi @matoje,

 

Thanks for joining the thread. I'm here to ensure your payroll calculations are accurate and without errors. 

 

The first thing I suggest is to update your QuickBooks Desktop to the latest version. Right after that, you can update your payroll tax table as well. 

 

If you were in the process of creating the paycheck stated above, you have the option to revert it. 

 

Here's how:

 

  1. In the Enter Payroll Information window, right-click on the employee name in question.
  2. Choose Revert Paycheck.

Additional troubleshooting steps are in this article: QuickBooks Desktop calculates wages and/or payroll taxes incorrectly

 

I also suggest you visit this article: How QuickBooks calculates payroll taxes. It has tables for the calculation methods, as well as a short description of what you can expect to see on your employee's paychecks.

 

In case you have clarifications or other concerns, feel free to comment below. I'll be sure to get back to you. 

Deba2
Level 1

Employees and payroll

I am having the same issue with a PA employee and their Simple IRA contributions.  What was your resolution, should the PA Withholding item be checked?  I am having issue due to the fact that in PA Wages (box 16 on W2), it is including the amount that was contributed to the Simple IRA instead of considering it as pre-tax deduction.

Mich_S
QuickBooks Team

Employees and payroll

I can think of multiple reasons why you're having this issue on the W2 form, @Deba2. Let me explain it further.

 

The employee record is either corrupted, or the taxes were probably not tracked properly, which is why the Simple IRA contribution appears in box 16 on the W2 form. I suggest using the Verify and Rebuild Utility tool to fix any problems with data integrity on your company file.

 

If the issue continues, check the tax tracking data and confirm that the item category is accurate as it has an impact on taxes and forms. Here's how:

 

  1. Open the List menu.
  2. Click on Payroll Item List.
  3. Select and open the deduction that you're working on.
  4. Do right-click and hit Edit Payroll Item.
  5. Click on Next twice.
  6. Go to the Tracking type window. Ensure you're using the right type.
  7. If not, choose the right classification that matches your plan type.
  8. Hit Next.
  9. Confirm the setup, then hit Next until you get the Finish button.

 

Learn more on how to keep track and manage payroll transactions in QBDT. See the link below for more details.

 

 

You can always reply to the thread in case you need more help with payroll or QuickBooks. It's our pleasure to be of help.

Deba2
Level 1

Employees and payroll

Thanks for your input.  I did find a PA Tax bulletin 2008-1 that stated that in PA - IRA contributions made by an employee regardless of whether the contributions were made through a payroll deduction or a salary reduction agreement may not be excluded or deducted from income for PA personal income tax purposes. 

 

Researching further and it appears that PA does not tax distributions (after 59 1/2) from IRA accounts because income was taxed before being put in the Simple IRA on the state level.