QB is capping the 401k deduction at $22500/yr even though the employee is >50yo and can do up to $30k/yr in 2023. Any recommendation on how to bypass this limit?

greg140 · ‎October 01, 2023

Daniela_A · ‎October 01, 2023

I'm delighted to offer you a thorough explanation of retirement plan deductions and contributions in QuickBooks Online Payroll.

We can create a catch-up payroll item so that QuickBooks will automatically allow a higher contribution limit for your employees.

A catch-up contribution refers to an optional additional contribution made by a participant who is 50 years of age or older, surpassing the statutory limit, plan-imposed limit, or the limit set by the actual deferral percentage (ADP) test for highly compensated employees (HCEs).

To begin, let's delete the 401k deduction item so that you can create the 401k catch-up item.

Here's how:

On the left pane, choose Workers.
Hit the Employees tab then select the employee's name.
Under the employee's name, click the Edit Employee button.
In section 4, tick the Pencil icon.
Tap the trash bin icon beside the 401k item.
Click Yes to confirm.

After that, let's set up the 401k catch-up deduction item.

Here's how:

Tap Workers, then hit the Employees tab.
Choose the employee's name, then click Edit Employee under the employee's name.
In section 4, click Add a new deduction.
From the Deduction/contribution or garnishment drop-down, select Deduction/contribution.
From the Deduction/contribution drop-down, select New deduction/contribution.
From the Deduction/contribution type drop-down, select Retirement Plans.
From the Type drop-down, select 401(k) Catch-up.
Enter a description or the name of the provider for the retirement plan.
Hit $ amount or % of gross pay for the Amount per pay period, and then enter the dollar amount or percent of the deduction or contribution per paycheck for this employee.
Select OK.

Once you have set up the catch-up payroll item for one employee, you can easily assign it to other employees as well. QuickBooks will then consolidate and record all the transactions under a single deduction item.

I'm also adding this article that you can go through to learn more about 401k deductions:

Also, this link will show you how to run payroll-related reports: Run payroll reports.

Feel free to return to this Community thread if you still have other concerns about 401k and other payroll-related concerns.

View solution in original post

Daniela_A · ‎October 01, 2023

Hi there, @greg140.

I'm delighted to offer you a thorough explanation of retirement plan deductions and contributions in QuickBooks Online Payroll.

We can create a catch-up payroll item so that QuickBooks will automatically allow a higher contribution limit for your employees.

A catch-up contribution refers to an optional additional contribution made by a participant who is 50 years of age or older, surpassing the statutory limit, plan-imposed limit, or the limit set by the actual deferral percentage (ADP) test for highly compensated employees (HCEs).

To begin, let's delete the 401k deduction item so that you can create the 401k catch-up item.

Here's how:

On the left pane, choose Workers.
Hit the Employees tab then select the employee's name.
Under the employee's name, click the Edit Employee button.
In section 4, tick the Pencil icon.
Tap the trash bin icon beside the 401k item.
Click Yes to confirm.

After that, let's set up the 401k catch-up deduction item.

Here's how:

Tap Workers, then hit the Employees tab.
Choose the employee's name, then click Edit Employee under the employee's name.
In section 4, click Add a new deduction.
From the Deduction/contribution or garnishment drop-down, select Deduction/contribution.
From the Deduction/contribution drop-down, select New deduction/contribution.
From the Deduction/contribution type drop-down, select Retirement Plans.
From the Type drop-down, select 401(k) Catch-up.
Enter a description or the name of the provider for the retirement plan.
Hit $ amount or % of gross pay for the Amount per pay period, and then enter the dollar amount or percent of the deduction or contribution per paycheck for this employee.
Select OK.

Once you have set up the catch-up payroll item for one employee, you can easily assign it to other employees as well. QuickBooks will then consolidate and record all the transactions under a single deduction item.

I'm also adding this article that you can go through to learn more about 401k deductions:

Also, this link will show you how to run payroll-related reports: Run payroll reports.

Feel free to return to this Community thread if you still have other concerns about 401k and other payroll-related concerns.

greg140 · ‎October 01, 2023

Thank you!

ArielI · ‎October 01, 2023

It's good to hear that you have managed to perform the steps required, @greg140 . I'll inform them of your "thank you" message. Don't hesitate to leave us your comments below if you have other payroll-related inquiries. Have a great day!

damull16 · ‎October 02, 2023

I deleted the 401(k) Contribution. I then attempted to add the employee's "deduction/contribution" from the drop-down menu for 401(k) Catch-up. I received the following error message "The description you used for this deduction already exists. Try another."

Ethel_A · ‎October 02, 2023

Hello there, @damull16.

I'll help you edit the description of the deduction so you can add it to the employee without getting an error message in QuickBooks Online.

To avoid the error message "The description you used for this deduction already exists. Try another", you can edit the description of the deduction.

Here's how:

Go to Payroll, then Employees.
Select your employee.
From Deductions & contributions, select Start or Edit.
Click Edit ✎ next to the deduction you want to modify.
Edit the information as needed.
Hit Save, then Done.

For more information about managing employee-paid payroll deductions, you can read this article: Set up, change, or delete employee-paid payroll deductions.

I'm also adding this article about managing employee information in QuickBooks Online: Edit or change employee info in payroll.

Don't hesitate to comment below if you need further assistance managing employee information. I'm always here to help. Have a great day.

damull16 · ‎October 04, 2023

I followed the instructions:

Go to Payroll,

then Employees.

Select your employee.

From Deductions & contributions, select Start or Edit. Click Edit ✎ next to the deduction you want to modify. Edit the information as needed.

Hit Save, then Done.

I received the same error message.

FritzF · ‎October 04, 2023

Hello, damull16.

Thank you for responding and for following the instructions provided by my colleague earlier.

Currently, we have received reports from other users experiencing the same error message while editing employees' deductions/contributions. A ticket has been created and forwarded to our product engineers, who are actively working on resolving this issue as quickly as they can.

That said, I recommend reaching out to our Support team so that they can include your information in our notification list. This will assist our engineers in assessing the number of users affected. Rest assured, once the issue is resolved, you will receive an email notification.

Here's how to reach them:

In QuickBooks Online (QBO), click the Help (question mark) icon at the top right,
Select a suggested option, or type a question or topic you need help with.
Tick Contact Us and choose a way to connect with us.

To check for our Support hours, please refer to this article: QuickBooks Online Support.

To know more about other supported retirement plans in QuickBooks, consider checking out this article: Set up a retirement plan. It also includes steps on how to manage and edit them.

I also recommend visiting our website for more payroll resources you can use in the future: Self-help articles.

Please leave a comment if you have additional questions about this or anything else. I'm more than willing to assist. Take care.

BeckyMc · ‎October 17, 2023

Has anyone found a workaround for this problem? I'm having the same issue. They have only taken $15,000 in 401k deductions and now QuickBooks Online is saying they are over the limit and not allowing me to manually update the field in the edit check preview.

(I'm included in the investigation)

CSmith54 · ‎October 25, 2023

I am experiencing the same issue where QBO has stopped deducting Roth 401k for an employee who has YTD Roth contributions of $17,500 and YTD Roth Catch-up contributions of $5,000. I've had these deductions set up as separate deductions since beginning of year. Under both deductions, QBO shows the maximum limit as $22,500, but that field box is grayed out and cannot be changed. It appears QBO is combining both the Roth and Catch-up and has stopped at $22,500. However, the Catch-up limit should be an additional $7,500 for a combined limit of $30,000.

I spent three hours on the phone with QBO Support today before being informed this is a known issue that the product engineers are addressing. And I've been added to the notification list. However, I'm discouraged to see these posts from three weeks ago and that this issue has not been resolved yet. With October 31st payroll due by EOD tomorrow, what's the likelihood it will be resolved by then? If not resolved, it will cause an issue for our employee and us as the employer.

Beki · ‎March 05, 2024

This doesn't look like it has been fixed yet. Has anyone been able to work around this issue? Not looking forward to continually having to create a work around for this important function.

JamaicaA · ‎March 05, 2024

A warm welcome to the Community space, @Beki. I'm here to share some information to ensure we can update the annual maximum of an employee's 401k.

The error message you've encountered will appear if you've already added a retirement plan and then select another one with a similar type and description. In this case, you'll need to remove all the 401k under the employee's Deduction and contributions by selecting the Trash bin icon.

After that, click the Add deduction/contribution to open a new window and proceed to the instructions below:

On the Add deduction/contribution window, select the Deduction/contribution dropdown, and hit + Add deduction/contribution.
Choose the Retirement plans under the Deduction/contribution type dropdown.
Under type, select 401(k) Catch up and add a new and updated Description (appears on paycheck).
Complete the necessary fields, then Save.

Here's an article about setting up a retirement plan: Set up or change a retirement plan. It includes the employee contribution limits.

However, I recommend contacting our experts if the prompt still exists. They can perform further investigation to help you sort out this issue. Please note our operating hours so you can reach us at your convenience: Contact Payroll Support.

Visit the IRS website for more information regarding the types of retirement plans and required minimum distributions.

Let me know if you have other questions about the 401k deduction. It'll be my pleasure to assist you. Stay safe!

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QB is capping the 401k deduction at $22500/yr even though the employee is >50yo and can do up to $30k/yr in 2023. Any recommendation on how to bypass this limit?