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Level 1

401k employer contributions - 3% calculation

When following these instructions to set up an employer's contribution for 3% top-heavy contribs to a 401k plan-

If we use the % method as mentioned in step 6 below - does 'gross pay' include the amounts that we are adding to an employee's payroll check for Excess Group Term Life Insurance > $50,000? Or does QBO Payroll not include this item in the calculation because it is not paid to the employee? 

Thanks in advance-


QuickBooks Online Payroll

  1. Select Workers, then select Employees.
  2. Select the employee's name.
  3. Select the edit (pencil) icon beside Pay.
  4. Select the edit (pencil) icon in the Deduction section to add a new item.
  5. Select Deduction/contribution on the drop-down. Select the next drop-down. Then select the Contribution type. Provide the description you want to appear on the check.
  6. On the drop-down, select $ amount or % of gross pay. Enter the amount or percentage rate.
  7. If you want to specify an annual maximum amount for company contributions, enter the amount in the Annual Max field.
  8. Select Ok.
3 Comments 3
QuickBooks Team

401k employer contributions - 3% calculation

Thanks for sharing the details with me, @LindaColeman.


QuickBooks Online (QBO) will calculate the contribution. However, the employer contribution will not show up in your employees’ paycheck. This is only visible to the employer side when setting up a company contribution.


To learn more about 401k contribution, you can check out this link for additional guidance: 401(k) Plan Overview. Also, to be guided in tracking your company contribution, you can run your payroll reports for reference.


In addition to this, you might want to check this link for future guidance in inviting your employees’ to view their pay stubs online: Invite your employees to QuickBooks Workforce to see pay stubs, W-2s and more.


Keep me updated if you have any other concerns or questions managing your employees' paycheck or with your account. I’ll be around to help. Have a great day ahead and take care!

Level 1

401k employer contributions - 3% calculation

Thank you for your response. @JasroV.   However, what I am asking is does QBO include a Group Term Life addition when it is calculating a 3% non-elective 401k contribution?


Sample A per payroll run in QBO: 

If gross wages paid to an employee for a payroll run is $1,000.00 and there is also a Group Term Life over $50,000 added onto each payroll stub of $15.00.

Is the 3% non-elective employer 401k contribution for the pay period calculated

like this (1,000 + 15) * 3.0% = $30.45?


like this (1,000 * 3.0%) = $30.00?

Thank you.

QuickBooks Team

401k employer contributions - 3% calculation

Look no further, @LindaColeman.


401k contribution consists of employee-paid and employer-paid portions. The employer will not be included in your employee's gross wage as it is added on top of the paycheck paid. The employer portion is exclusive to the employee's gross wage calculation in QBO.


For your reference, please see this article: Retirement plan deductions/contributions.


Also, QuickBooks Online offers several payroll reports that you can pull up to access your business and employee information. To get started, see our Payroll reports page.


Feel free to post here again if you have further concerns in managing payroll items in QBO. I'll be around to help you. Have a good one. 

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