cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Anonymous
Not applicable

Recording a SEP IRA contribution in QBs

If Im the only shareholder and employee of an s-corp and I fully fund my SEP IRA for 2017 from my business account how do I set it up and record the transaction in QB?

Solved
Best answer September 06, 2018

Best Answers
Highlighted
QuickBooks Team

Recording a SEP IRA contribution in QBs

Hello, @cecibex.

 

I'll be happy to explain how to set up IRA contributions in QuickBooks Online.

 

When setting up a deduction for a Retirement plan, the plan you select will automatically set up a company contribution item to be used if needed. Note: After-tax Roth 401(k) and 403(b) are not available as company contributions through our service because the entire contribution should be paid and reported separately through the provider, and not through the same account as the employee after-tax deduction funds. 

 

Here are the steps to set up a retirement plan deduction:

  1. Select the Gear icon at the top > Payroll Settings.
  2. Under Payroll, select Deductions / Contributions.
  3. Click Add a New Deduction/Contribution.
  4. For Category, select Retirement Plans.
  5. For Type, select the applicable retirement plan.
  6. Enter the name of the provider or plan.
  7. Click OK.

 

For more information on retirement plans, click here.

 

If you have any other questions about setting this up, please let me know. I'll be keeping an eye out for your reply

View solution in original post

56 Comments 56
Highlighted
Level 8

Recording a SEP IRA contribution in QBs

Hi sgatesx3, 

 

I'd be happy to help you record the SEP IRA contribution. 

 

First, please let me know if you're using QuickBooks Online, QuickBooks Desktop, QuickBooks Self-Employed, and if you currently have a payroll subscription. 

 

The steps will vary depending on the product in use, so I look forward to your reply. 

Highlighted
Anonymous
Not applicable

Recording a SEP IRA contribution in QBs

Alicia, I have the same question. I want to make sure the entry goes against my taxable income. I am an LLC using Quickbooks Self-Employed online.

Highlighted
Level 8

Recording a SEP IRA contribution in QBs

Hi chadbstewart,

 

Thanks so much for letting me know which product you're using.

 

The categories available in QuickBooks Self-Employed are a 1:1 match with the Schedule C categories from the IRS. According to this IRS article, retirement plan contributions for a self-employed individual are deducted from on Form 1040 and not from the Schedule C.

 

One option you have is to speak with your accountant about possibly recording this as a personal transaction. They'll be able to tell you if this would be your best course of action for this specific type of transaction. If you don't already have an accountant, I recommend looking for one in your area on the following website: https://quickbooks.intuit.com/find-an-accountant/. Once you're there, you can enter your location and click search. On this next page, you'll be able to narrow your search results by the service provided, the industry they serve, and the products they help support.

 

I also recommend voting on the following feature request to let the engineers know you'd like to see this contribution added to the program: https://selfemployed.uservoice.com/forums/242769-general/suggestions/8853736-retirement-deductions. This is where they go to find the most frequently requested features, and then they discuss the possibility of adding them in future updates.

 

Thanks so much for your time today. If there's anything else I can do to help, please don't hesitate to let me know.

 

 

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

Hi Alicia

 

I too have the same question. I'm the Sole Employee and Shareholder of Sub-S corporation. Am setting up a SEP IRA now and do not have a payroll subscription.  I want to record the contribution for 2017 taxes.  How do I record in Quickbooks desktop for MAC?  Thanks.

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

Hi Alicia,

Why would you recommend I speak to my account?    I would guess that most of the self employed reading the posts and making the request have already spoken to our accounts.   

 

The challenge many in the community are having is not understanding where a SEP or (IRA) contribution is reported and what Schedule C etc.  

We need a catergory that will identify the contribution so we don't have to explain to our account or seperate mulitple personal transactions.  if Quicken is hanging its hat on 1:1 match with Schedule C categories they are missing the importance of the request to the customers using the product.  We are having the same issue with Charitable contributions category.    

 

Business lesson 1

Listen to your customers.

Thanks for passing along to the engineering team

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

HI Alicia,

 

I have the same question. I am the only shareholder of a S-corp. I made a SEP IRA contribution last December and could not find where to categorize it. I am using QuickBooks online. Please let me know how to record it. Thanks.

 

Chiawang

Highlighted
Content Leader

Recording a SEP IRA contribution in QBs

Hello all,

 

I appreciate you reaching out to us here in the Community. I'm happy to offer a little more insight regarding SEP IRA contributions.

 

The reason we recommend speaking with your accountant is because these contributions for Self Employed individuals are reported on line 28 of Form 1040 (long form) not on the Schedule C itself.  Since it's not reported on the Schedule C, there's no category to report it to in QuickBooks Self Employed.  Rather, it will be entered when you fill out your Individual taxes, but there are some calculations that must take place when this happens.  Both where to enter the contributions to get them to report on the correct line, and what amount to report are items that you will want to check with your accountant about.

 

I wish you continued success with your business. I'm always here if you need someone to talk to about QuickBooks.

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

With a SEP IRA, both the employer and the employee can make contributions.  Your response makes perfect sense for the employees, but not for the employer.  For those of us who are both, that is the real benefit of this type of retirement plan.

 

I think most of us are asking the same question but don't get teh answer we need. 

 

For the EMPLOYER contributions, how do we track in QBO?  There is no retire plan listed as SEP IRA.  If we simply write a check to the account manager, how do we record that check in our register (specifically, what category do we use)?

 

Thanks.

Highlighted
Content Leader

Recording a SEP IRA contribution in QBs

Hey there,

 

To track your employer SEP IRA contributions, I suggest creating a new category with a name that'll help you recognize this type of contribution. I'm not sure how your company, accounts, or existing categories are currently setup so I'm unable to advise which one would be best for your business. This is where your accountant will be able to lend their advice and expertise.

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

Did you ever get an answer to this question?  I am also a sole-member/employee LLC that is taxed as an S-Corp via a 1120S.  I want to take advantage of the SEP-IRA contribution as well, but I don't know whether I should enter that as another "Other Current Liability" under my payroll liabilities for SEP-IRA contributions. 

Highlighted
Community Champion

Recording a SEP IRA contribution in QBs

Anyone that is a Subchapter S or even an LLC should not be using QBSE, period! It is designed for freelancers, not realy stand alone business enterprises. It is not even very well suited for a Sole Proprietor who is "in" business especially as their only business. Any other version of QB is a better fit.

 

Starting with basics - since QBSE is very basic - you cannot add payroll or even manually enter payroll in QBSE and for those Subchapter S sole owner sole employee you need payroll. Even if you do not pay for a payroll subscription you need the ability to create and enter proper wage and liabbility accounts. 

 

As far as how and where to enter the S-corp deductible expense for the up to 25% of your wages into your SEP IRA, I would refer you to the TurboTax support community if you don't want to or have, without resolution, discussed with your tax CPA. 

https://ttlc.intuit.com/questions/3346575

 

The QB community is geared to the bookkeeping and not the tax consequence per se. Let me repeat for emphasis from before:If your entity or business involves anything more than driving Uber or playing your guitar and singing on the weekends (or you are an LLC or higher or have employees) then QBSE is not the product for you. If you need other accounts, such as equity, or the ability to track individual assets or liabilities or inventory then QBSE is not for you. It is NOT GAAP double -entry bookkeeping. It is nothing more than a digital shoebox and a digital notepad used for a single purpose - filling out a Schedule C and that form only - and only for simple operations.

Highlighted
Community Champion

Recording a SEP IRA contribution in QBs

@tmr46062 from th eink I attached it would appear you report it on line 17 of 1120S. It is a straight up expense since it is not deducted from anything or added to gross taxable wage - thus it is not a payroll liability. You can post it per pay period as an Oher Current Liability, then pay against that however ofen you are requred to make contributions.

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

Thank you.  My research would agree it should be treated as sub-cataegory to an Employee Benefits Expense account for Corporate SEP-IRA Contributions of behalf of the member-employee.  I found this Link from the Intuit Quickbooks Community that was helpful.  If the link does not work (because you have to log-in), I am attaching a photo of the Question and Answer.  Recording SEP-IRA in Quickbooks Recording SEP-IRA in Quickbooks

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

How do I set up IRA Contributions in QuickBooks?

Highlighted
QuickBooks Team

Recording a SEP IRA contribution in QBs

Hello, @cecibex.

 

I'll be happy to explain how to set up IRA contributions in QuickBooks Online.

 

When setting up a deduction for a Retirement plan, the plan you select will automatically set up a company contribution item to be used if needed. Note: After-tax Roth 401(k) and 403(b) are not available as company contributions through our service because the entire contribution should be paid and reported separately through the provider, and not through the same account as the employee after-tax deduction funds. 

 

Here are the steps to set up a retirement plan deduction:

  1. Select the Gear icon at the top > Payroll Settings.
  2. Under Payroll, select Deductions / Contributions.
  3. Click Add a New Deduction/Contribution.
  4. For Category, select Retirement Plans.
  5. For Type, select the applicable retirement plan.
  6. Enter the name of the provider or plan.
  7. Click OK.

 

For more information on retirement plans, click here.

 

If you have any other questions about setting this up, please let me know. I'll be keeping an eye out for your reply

View solution in original post

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

Does the employers match come from the net or the gross.  The employee is coming off the net.  Why in QB is the co match coming off Gross?

Highlighted
Level 1

Recording a SEP IRA contribution in QBs

Sorry I am talking about the Roth

Highlighted
QuickBooks Team

Recording a SEP IRA contribution in QBs

Hi BR EX.

 

That's a great question, I've got some insight on why the employer portion is based off gross. 

 

Employer matches (even for Roth 401Ks) are put into traditional 401K accounts and are treated as pre-tax income. Traditional 401K plans are tax-deferred accounts, meaning you won't owe any taxes on it this year, but will have to pay taxes on it when you take the money out (likely after retirement). This is why it is being calculated this way.

 

For more information on deductions and contributions, click here.

 

Let me know if this answers your question, I want to ensure this is resolved for you. Remember, I'm just a post away.

Highlighted
Level 2

Recording a SEP IRA contribution in QBs

I'm looking for a workaround too since SEP IRA isn't available as an option in Payroll.  The contribution is subject to FICA, so it isn't as easy and just JE'ing it or doing an expense transaction. 

Highlighted
Level 2

Recording a SEP IRA contribution in QBs

Sterling, what do we do since there isn't an option to set up SEP IRA as a Contribution in Payroll? It's not an option. Somehow we have to be able to enter this transaction and also pay the FICA taxes associated with the contribution. While it is not subject to State and Federal Income Tax, it is subject to FICA. 

Highlighted
Moderator

Recording a SEP IRA contribution in QBs

Hello TQ_Miami.

 

Thanks for posting your question in the Community. I'm here to assist you with setting up SEP IRA contribution in QuickBooks Online.

 

You'll need to select the Retirement Plans category to make sure the applicable plan will show.

 

Here's how:

  1. Select the Gear icon.
  2. Select Payroll Settings.
  3. Under Payroll, select Deductions / Contributions.
  4. Click Add a New Deduction/Contribution.
  5. For Category, select Retirement Plans.
  6. For Type, select the applicable retirement plan.
  7. Enter the name of the provider plan.
  8. Click OK.

For more information about setting up Retirement plan deductions, please visit this article:

 

Retirement plan deductions

 

I want to ensure that you're able to set up the contribution correctly, so please feel free to let me know how it goes. You can reach out to the Community team by posting a comment below.
 

Highlighted
Level 2

Recording a SEP IRA contribution in QBs

AlcaeusF, 

 

Thank you. You all at QB's are missing the point of this question asked multiple times above. The SEP IRA plan does not show as an option. If you're looking at all the other posts above, your response has been posted multiple time but has never answered the question about a workaround for SEP IRA, specifically.  

 

So, we're asking for guidance on how to do this outside of Payroll and Contributions. What is the workaround? 

Highlighted
Moderator

Recording a SEP IRA contribution in QBs

Hi again, @sgatesx3.

 

I appreciate your quick response about setting up the SEP IRA contribution. I'm here to provide a workaround with recording the retirement contributions.

 

Since the SEP IRA contribution doesn't show as an option on your end, you can record the transactions manually using the Journal Entry feature. This process will allow you to record payroll transactions alternatively aside from using the regular method.

 

In choosing the accounts to use, I recommend seeking an accountant for expert advice. By reaching out to them, you'll be able to ensure you have the right accounts when entering the transactions.

 

You can follow the outlined steps in the article below depending on the situation you're in:

 

Record payroll transactions manually.

 

Don't hesitate to post a comment below if you need further assistance, as I'd be around to help. Have a good one.

Highlighted
Anonymous
Not applicable

Recording a SEP IRA contribution in QBs

You did not address a SEP-IRA. You addressed an "IRA." This is NOT the same as a SEP-IRA.

 

Please tell us how to account for a SEP-IRA in Quickbooks Online, if there is no deduction category specifically for a SEP-IRA.

Need to get in touch?

Contact us