Accounting for Employee after-tax 401k contribution (This is NOT related to Roth 401k)

I'm here to help and guide you on how to set up the 401k contribution, John346.

You can create a deduction or company match retirement payroll item in QuickBooks Desktop (QBDT) Payroll and add it to the worker's profile. Before we begin, I recommend consulting with a tax adviser or an accountant to determine the best setup process and tax tracking type to ensure the accuracy of your payroll data.

When you have the information, proceed to the steps below to enter the payroll item. Here's how:

1. Go to the Employees menu at the top bar and select Payroll Item List.
2. Click the Payroll Item drop-down at the bottom of the screen and choose New.
3. In the Add new payroll item window, tick the radio button for Custom Setup and tap the Next button to continue.
4. Mark the Deduction or Company Contribution radio button and press Next.
5. Type the name of the retirement item in the field box and then click Next.
6. Key in the name of your retirement plan provider, or add it, and enter the account number.
7. In the Liability account field, choose the account that tracks the deduction or contribution to be paid and tap the Next button. For company match items, select the account that you want to track the item(Expense account field) and click Next.
8. In the Tax Tracking Type window, pick the applicable retirement plan from the drop-down and tap Next twice.
9. Under Calculate based on quantity, select Neither and Next.
10. Leave Default Rate and Limit fields blank and then click the Finish button.

After setting up everything, add the item to the employee's profile. Let me walk you through the process:

1. Navigate to the Employees menu at the top bar and choose the Employee Center.
2. From the list, double-click on the worker's name to see more details. employee.
3. Go to the Payroll Info menu on the left panel and add the newly created retirement plan item in the Additions, Deductions, and Company Contributions section.
4. Enter the amount per period and the limits.
5. Press OK.

Here's an article that provides in-depth information on the various types of retirement plans supported by QuickBooks, as well as instructions on how to add one: Set up a retirement plan.

For tips and resources related to payroll, you can also go to the payroll hub. There are also topics about taxes, managing your employees' information, and processing payroll, to name a few.

If there's anything else you need, or you have other questions about managing payroll and 401K transactions, tap the Reply button and enter your comments in the field box. I'm always ready to help. Have a great day and stay safe.

I have the same issue.  the answer didn't answer which Tax tracking type... because there isn't one to choose. I have been using Other.  At this level it functions like a Roth contribution but it doesn't affect the 401k deferral limit.

Hi there, @Steph105. 

I appreciate you for performing the steps provided by my colleague above and I also understand how challenging on your end to set up the employee after-tax 401 (K) contribution. Allow me to share insights and direct you to the best possible help.

Whenever you set up an employee 401k contribution, you can choose the 401k tax tracking type. Take note that after selecting a tax tracking type it can affect the following line on some Federal forms like 940, 941, 944, and W2. On the other hand, you can also choose a None tax tracking type to manually affect the following payroll tax items.

However, I recommend reaching out to your accountant before or while performing this to ensure the accuracy of the details entered and to avoid affecting your book when the time you close them.

Additionally, you can read this article to learn how to use liability adjustment to correct employee's year-to-date or quarter-to-date payroll info: Adjust payroll liabilities in QuickBooks Desktop Payroll.

If you have additional questions about entering your employee's contribution, don't hesitate to add a comment to this post. I'll be willing to lend a hand. Keep safe.