How do I set up 529 college savings plan contributions for employee?

Hello, jemaldonado.

I'll show an overview of how we can set up the 529 savings plan in QuickBooks Desktop. 

It won't outright show as an item you can select. However, we can set up the 529 savings plan as a Deduction or Company Contribution on the payroll item setup window.  

Here are the full steps: 

1. In the Add new payroll item box, select Custom Setup, then hit Next.
2. Select either Deduction or Company Contribution, then proceed with Next.
3. Enter the name. We can set it as "529 savings plan" or similar, then click Next.
4. Set the account tracking, then hit Next.
5. For the Tax tracking type, we'll want to select how this plan should be taxed and appear on tax forms.
6. After determining the tax tracking type, hit Next.
7. Check the related taxes affected by the 529 savings plan. Hit Next, then select the type of calculation.
8. We can select net pay for the Gross vs Net (or depending on compliance). Hit Next, then enter the rate or limit. Click on Finish afterward.

After setting the payroll item, we can add it to your employee's profile. 

The settings and the tax tracking type depend on the nature of the 529 savings plan. So, it would be best if you consult a tax adviser about this. 

They'll give the full details on how you would set up the 529 savings plan according to the settings on the Payroll item setup window. They'll also guide you on how you should handle your tax forms when reporting the wages. 

I would also recommend checking with your state. Handling the 529 savings plan might have different tax compliance in your state.

If you need help reviewing your employee's payroll data, we can run a certain report to do this. Check this article out if you need help: Create a payroll summary report in QuickBooks.

If you'd like to set up other payroll items, or if you need help with your employee's tax information, let me know and I'll guide you through. Do you need help with certain entries or reports? Add the details to your reply. I'm here to help. 

Thank you!

You're welcome! 

Let me know if you have more questions. I'm here to help. 

I don't have a "Custom Setup" options.  This is what I have. 

Hello there, adagility. I'm here to help set up a new payroll deduction item in your QuickBooks Online (QBO).

Please note the steps mentioned above are for QuickBooks Desktop. QuickBooks Online handles payroll items differently. Here's how to set up a new payroll item in QBO:

1. Go to Payroll, then Employees.
2. Click Edit payroll items.
3. Select the New Payroll item, and choose Deduction & Contribution.
4. Choose Other deductions in the Deduction/contribution type dropdown.
5. Under Type, select Other after tax deductions.
6. Add a Description. This is the deduction or plan name that will appear on paychecks.
7. Select Create and click Assign employees where you apply this deduction.
8. Select how your deduction is calculated and enter the amount or percentage.
9. Click Save, then Done.

For more details, refer to this article on how to add deductions that your employees need to pay each payday in QuickBooks Online Payroll: Set up, change, or delete employee-paid payroll deductions.

Additionally, you can visit this article on how to change your employee's info: Edit or change employee info in QBO payroll.

Feel free to reply if you have more questions about setting up payroll items in QBO. I'll be here to help. Have a great day.

I also have a question about this.  I am able to set up the 529 deduction for employee contributions.  However I cannot figure out how to set it up so the contributions are coming from the employer.  Do you have any guidance? 

Thanks for choosing QuickBooks to manage your business, @goodloeprovisions. I'll provide the necessary steps to help you set up 529 deduction contributions from the employer.

To set up a 529 contribution, here's how:

1. Navigate to Lists, then choose Payroll Item List.
2. From there, click on the Payroll Item dropdown, then New.
3. Choose Custom Setup and click Next.
4. Select Company Contribution and proceed by clicking Next.
5. Input a name for the item (529 contributions) and continue by selecting Next.
6. Specify the name of the agency that will receive the liability payment (or add a new one) and provide the account number. Choose the liability and expense account where you wish to track this item and click Next.
7. In the Tax Tracking Type window, select the specific contribution item and proceed by clicking Next twice.
8. For the Calculate based on quantity option, select Neither and then click Next.
9. In the Gross vs. net select gross pay.
10. Leave the Default rate and limit fields empty, as you can set the rate and limit when adding the item to an employee's profile.
11. Finish the process by clicking Finish.
    
    

     

However, if you're referring to QuickBooks Online, you can follow the steps below:

1. Go to Payroll, then Employees.
2. Choose your employee.
3. Under Deductions & contributions, pick Start or Edit.
4. Select + Add Deduction/contribution.
5. Choose the following:
   • Deduction/contribution type: choose the appropriate contribution type.
   • Type: select the specific contribution item.
   • Description: enter the name of the contribution or plan provider.
6. In the Company contribution section, determine how the contribution will be calculated and input either the amount or percentage per paycheck.
7. If you wish to set an annual maximum for company contributions, enter the value in the Annual Max field.
8. Finally, click Save.

These company contribution items will appear under the Other Pay/Contributions section on pay stubs.

I recommend consulting with your accounting professional for this one. Your accountant can review your books and advise the best way to record the transfer based on your business needs.

Moreover, I'll be sharing this article to help you learn how to edit or remove a contribution item in QuickBooks: Set up and manage company contributions.

Furthermore, you might find it beneficial to refer to this article, which explains the process of running payroll in QuickBooks:

• Create and run your payroll
• Create a payroll summary report in QuickBooks.

Don't hesitate to let me know if you have additional questions about setting up 529 contributions in QuickBooks. I'm always here to help. Take care always, @goodloeprovisions.