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szadro
Level 1

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

I set up my covid related sick leave and paid leave payroll items per Quick Books instructions. I realized now that the 401K deferrals and contributions are not being taken out of the employees compensation for paid sick leave. How do I get QB's to generate the 401K? The account type is set up as an other expense which I think removes it from the wages category. Doesn't it need to be in wages in order to pick up the 401K?

9 Comments
ZackE
QuickBooks Team

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

Hi there, szadro.
 

In QuickBooks Desktop (QBDT), there's two ways to set up payroll items for retirement benefits. I recommend using EZ Setup.


Here's how it works:

  1. In your top menu bar, go to Lists, then Payroll Item List.
  2. Click Payroll item.
  3. Choose New.
  4. Pick EZ Setup and hit Next.
  5. Follow the onscreen instructions. If you have an employee who has local income tax that's not reduced by retirement benefits such as 401(k), you'll need to deselect their local tax item in your Taxes window.


Once you've created an item, edit it to assure all necessary vendor information's been entered:

  1. Go to Lists, then Payroll Item List.
  2. Right-click the item and choose Edit Payroll Item.
  3. Make any required changes.
  4. Press Next until you can select Finish.


Be sure not to adjust or change any preset tax settings while editing it.
 

You can also use our Custom Setup process to create payroll items in QBDT.
 

If you're using QuickBooks Online (QBO), you'll need to set up a retirement plan deduction and company contribution, then assign one or both of them to the appropriate employee.
 

As for account types, our articles about paying employees in relation to COVID-19 say an Other Expense type must be used if you're using QBDT. Setting it up this way helps track eligible wages to use towards tax credits. In the event you're using QBO, you don't need to create an expense account to pay workers paid leave.
 

You'll be able to find more information about how to pay employees under the Family First Coronavirus Response Act in our following resources:

 

Please feel welcome in posting a reply if there's any additional questions. I'll be here to help. Have a wonderful day!

szadro
Level 1

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

Zack,

My 401K accounts are already set up in QB's. We are not a new user. My question concerns the accounts added this year to track covid related sick leave. Quickbooks instructions for creating those accounts has it as an "other payroll expense", not in "wages". So when we pay a person sick leave using that account, it doesn't add the company 401K contribution or the employees 401K deferral to the 401K liability account. Attached are the instructions i used to set up the National Paid Leave and FMLA accounts this year specifically related to Covid time off so it can be tracked to get reimbursed by IRS. Can you think of a better way to set up the account so it's tracked but still ties in with the 401K. The 401K is added as a percentage of the gross wage and works fine on payroll when the normal hours are entered, but isn't working when sick leave wages are entered.

Candice C
QuickBooks Team

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

Good morning, @szadro

 

Thanks for reaching back out to the Community and adding some extra clarification on this issue with the 401k. 

 

I can see how tying the 401k and the other accounts together would be beneficial for you. The best way to set this up in your QuickBooks Desktop (QBDT) account would be by using the PDF that you provided me within your post. However, I do recommend consulting with your accountant to see if there's a better way to set this up. They'll be able to give you the accounting advice you need for your business. 

 

If you don't have an accountant, don't sweat it. Check out this link to find one near you. 

 

For future reference, here's a guide that can be helpful for you and your business: How to track paid leave and sick time for the coronavirus.

 

It's my priority that you're able to get a better understanding of the setup and how these accounts work in your account. Should you need any further assistance, just let me know. I'm only a post away if you need me. Have a wonderful Wednesday! 

szadro
Level 1

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

We just decided to manually enter the 401K contributions and referrals in the paycheck for each employee during the sick leave. Thanks for you help.

Jessie05
Level 1

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

Candice-

I am an accountant, I am I here with the same question!  I know how to calculate the 401K pay.

However, I think the question is why isn't the software working the way it should.

 

We are following the Quickbooks instructions. HOwever, by setting up the COVID pay as an "other payroll item" it isn't calculating the 401K numbers. 

 

Do you have a better way to use your system other than contacting an accountant who is probably not a IT expert, and will just tell the client to do it manually?

This isn't an accounting question, it is a software question.

MadelynC
QuickBooks Team

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

I appreciate you for joining this thread, @Jessie05.


Since you’ve set up this item base on QuickBooks instructions, and yet 401K numbers isn’t calculating. It would be best to contact our Payroll Support team for further assistance. They can take a look at your account to determine the cause that prevents the system from calculating.


If you’re using QuickBooks Desktop, here’s how to reach out to our support:

 

  1. Go to the Help menu.
  2. Click QuickBooks Desktop Help F1.
  3. Select Contact Us.
  4. Enter “401K numbers isn't calculating. ”
  5. Select either Start messaging or Get a callback.

 

Otherwise, follow these steps below:

 

  1. On the QB Assistant window, type Talk to a human.
  2. Select or type, I still need a human.
  3. Type it again until you see a shortcut to connect with my human's option.
  4. Click the Contact us link and select how you want to reach them.

 

I’ve added these resources for additional information about paid leave and sick time for the coronavirus. It also includes instructions to correct a payroll item set up when it isn’t calculating correctly on a paycheck.


If you have other payroll concerns, please let us know. We’ll always here to lend a hand. Keep safe.

Janet3
Level 1

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

QBDT will only calculate the 401K contributions for NPL if you have NPL above the 401K lines in the employee setup window. If you list NPL below those lines, it will not calculate. 

Janet3
Level 1

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

All,

 

This is going to sound ridiculous, but the only way to get QBDT to automatically calculate 401K contributions (and company match) on NPL is if NPL is listed in the employee setup window above the lines for the 401K contributions and match.  If you have it listed below those lines, it does not auto-calculate. 

Jakal
Level 2

How can I get QB's to include 401K deferrals in covid related sick leave compensation?

Janet 3, Thank you thank you for actually answering the question and not referring everyone to instructions that don't accomplish the issue at hand or trying to pawn them off to an accountant. I have not tried your solution yet but I am going to on this payroll. I was just going to manually adjust each paycheck that had it. Unfortunately, that is after a year of using it without realizing that it was failing me in calculating 401k amounts and now I need to fix the problems it created.

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