Safe Harbor 401k ER Match

Thank you!

Our match is doubling when paid out. How can we link the employer contribution to the payroll liability when recording the payment transaction?

I can help you with setting up your employer contribution and payroll liability, @tracy1016.

You’ll just have to link the employer contribution to the payroll liability by setting it up correctly. 

Let me show you how:

1. Go to the Lists menu and choose Payroll Item List.
2. Click the Payroll Item button and then New.
3. Select Custom Setup and click Next.
4. Select Company Contribution and click Next.
5. Enter a name for the contribution and click Next. Do not use the same name entered for the employee deduction.
6. In the Liability account drop-down list, select the same liability account that you chose earlier.
7. Select an expense account from the Expense account drop-down list, and click Next.
8. In the Tax Tracking Type window, select the tax tracking-type classification that matches your plan-type and click Next three times.
9. Provide all the necessary information
10. Click Finish to complete the payroll item setup for the company contribution.

For detailed guidance, check this article: Set up a payroll item for retirement benefits (401(K), Simple IRA, etc.).

You can also refer to the following article to help you use a liability adjustment to correct employees’ year-to-date (YTD) or quarter-to-date (QTD) payroll info: Adjust payroll liabilities in QuickBooks Desktop.

I'm always here if you need further help with your account. Take care and have a great rest of the day!

Hello, I have the same scenario as mentioned above. Do I put 3.5% in the box that's highlighted in the example? Also, what do I enter in the limit type box or do I leave that blank?

Hello Angela Griffith,

Thanks for reaching out to the QuickBooks Community! It would be best to verify that information with your accountant. The example mentioned above does show which box it should go into, but we cannot share how much goes in there. If you don't have an accountant, no worries! We offer a ProAdvisor service. Simply enter your zip code and connect with experts within your area. Many offer a free consultation as well!

• Find an Accountant

Let me know if there is anything else I can do for you. I will be around. Take care for now. 

How do you do this for Quickbooks online?

Thanks for checking in the Community space, kkbarnard.

If you need to set up a retirement plan deduction or a company contribution in QuickBooks Online Payroll to track and tax it appropriately, there are different types of retirement plans supported in QuickBooks. QuickBooks provides different types of retirement plans. You'll have to make sure to determine which plan you want to set up for your employees and review its contribution limits.

To choose a retirement plan, you can check out with your plan provider for details or visit the IRS website to learn more. Currently, these are the supported retirement plans in QuickBooks:

• 401(k) / 401(k) catch-up
• Simple 401(k) / Simple 401(k)
• 403(b) /403(b) catch-up
• SARSEP / SARSEP catch-up
• Simple IRA / Simple IRA catch-up
• After-tax Roth 401(k)
• After-tax Roth 403(b)

Just identify which plan you want to set up for your employees and review its contribution limits. To learn more about retirement plans, visit the IRS website. Once done, here's how to set up a retirement plan deduction or a company-match contribution item:

1. Go to Payroll, then Employees.
2. Select your employee. Then from Deductions & contributions, click Start or Edit.
3. Tap + Add deduction/contribution.
4. Choose Retirement Plans in the Deduction/contribution type▼dropdown.
5. For Type, select the applicable retirement plan. If you need to track a company-only contribution with no employee match, choose Company-only plan.
6. Enter the name of the provider or plan in Description (appears on paycheck).
7. Complete the remaining fields. If you have a company match, under Company contribution, select the dropdown menu to choose how you want to calculate the amount. Complete the new fields to enter the amount or percent per paycheck and annual maximum.
8. Press Save then Done.

To know more information on when a retirement plan is tax-deferred or taxable, go through this article for more information: Set Up or Change a Retirement Plan. Additionally, a contribution to a retirement plan can take the form of either after-tax or deferred compensation. Tax laws impose a limit on the annual contributions that both employees and employers can make. For more details, read this reference: Understand retirement plan contribution limits.

Generating reports to track data is a breeze. To do so, feel free to browse this guide for the instructions: Run payroll reports.

We always aim to serve you best. I'm always ready to deliver further assistance in navigating payroll to achieve your goals. Have a good day ahead!

Please help!  have this same problem but how do I actually out the tiered match in? Does it go in the Employee's section. The 3% is fine but where do I put the $.50 per dollar match on the  other 2%?

I appreciate you for bumping into this thread, Jvholland. 

With a safe harbor basic match, the company matches 100% on the first 3% of deferred compensation, plus a 50% match on the next 2% of deferred compensation. Allow me to go into detail about this matter.

To address your concern, you'll have to manually calculate and enter the $.50 per dollar match when you create a paycheck. However, I still suggest consulting your accountant for advice on how to properly handle this matter so your report will reflect accurate data.

1. Go to the Employees menu.
2. Select Pay Employees, pick a schedule, 
3. Choose the employees you want to pay.
4. You can enter hours using the grid, or if you are using timesheets, you’ll see all their hours for this pay period already entered. 
5. Click Open Paycheck Detail, and manually add the 50% match on the next 2% of deferred compensation to your total 401(k) contribution.
6. Select Save & Next to go to the next employee, or select Save & Close to go back to the Enter Payroll Information window.
7. Hit Continue and verify the amounts for each employee.
8. Select Create Paychecks to complete the process.

In addition, you can check out this article to learn how to run, print, and customize payroll reports in QuickBooks Desktop Payroll: Run payroll reports

If you have further concerns about managing your payroll in QuickBooks Desktop, feel free to come back here in the Community. We're here to assist you 24/7.

Hello ~ 

I use QB Desktop with enhanced payroll and we have a 401k with a safe harbor match. The deferrals and match calculate on the gross earnings of the employee, but our 401k states it needs to be calculated on the adjusted gross earnings (compensation after pre-tax health, dental, vision, etc). Is there a way in QB to change how the is done so that it aligns with our 401k plan?

Appreciate any guidance,

Sue 

Hello there, @readytoretire.

QuickBooks calculates 401(k) deferrals and the safe harbor match based on the employees' gross earnings in QuickBooks Desktop (QBDT). To ensure that you can properly calculate the 401k contributions, you can follow these steps to modify the payroll item.

Here's how:

1. Go to Lists, then select Payroll Item List.
2. Right-click the item and select Edit Payroll Item.
3. Change the info as needed on each window.
4. Click Finish when done.

You can check this article for more information on setting up 401K: Set up Roth 401(k) and Roth 403(b), and Roth 457(b) plans.

Additionally, you can check this article to learn more about customizing payroll reports in QuickBooks Desktop, feel free to check out this article: Customize payroll and employee reports.

If you have any questions about the 401k calculation in QBDT, let me know in the comment section below. I'm always here to provide further help. Have a wonderful day!

I appreciate the instructions and articles. The article does mention that the Roth 401k deferral can be set up to calculate on either gross pay or net pay. However, what I am trying to accomplish is to set up our 401k and Roth 401k deferrals and our Company match to calculate on the adjusted gross pay per the payroll summary (instead of gross pay or net pay) and I am not seeing a setting or option to do this either in the set up or edit mode. Am I missing something or is it just not something this software has the capacity to do?  Thanks

Thanks for replying to the thread, readytoretire.

I am here to share some information regarding the deferral contribution to 401k.

For the 401k deferrals, calculating the adjusted gross pay per the payroll summary is not possible here in QuickBooks Desktop Payroll. We can only do it per paycheck.

For you to be able, to correct your tax liabilities affected by incorrect payroll items, what you can do in QBDT is to pick a new Custom Setup to allow them to edit all of the settings. Then from there, the 401k deferral will be done but this will be calculated per paycheck. 

Then to properly correct it, you can make payroll liability adjustments. Make sure to contact your accountant, for this to keep their books accurate, then please follow the steps through this article:

• Fix a payroll item with incorrect tax tracking type in QuickBooks Desktop Payroll.

Come back to this post if you have other concerns and follow-up questions about the excess employee contribution and excess salary deferral in QBO.

To clarify, we are and want to continue to do the deferrals and match per paycheck. I referenced the payroll summary to define what pay we want to calculate the deferral and match (gross pay vs adjusted gross pay vs net pay). Currently, each paycheck with a 401k deferral/match is calculating it based on the gross income, so if an employee has a gross income of 1,000 and a 3% deferral and match, their deferral/match is $30. We provide pre-tax health, dental and vision, so if those deductions are $100, their adjusted gross income is $900.  I would like to set up the deferral and match to calculate based on the $900, so the deferral/match would then be $27. Our 401k Safe Harbor plan, like many, defines compensation as the taxable wage and so those pre-tax deductions are not part of the compensation that the deferral and match should be calculated on. Again, appreciate any guidance on this issue.  Thanks.

Hello there, readytoretire.

We appreciate you for coming back to add clarification about your concern regarding setting up the deferral and match in QuickBooks Desktop. Let me provide steps on how you can achieve your goal within the program.

To start with, please know that setting up the deferral and match to calculate based on the adjusted gross income is currently unavailable. QuickBooks calculates the Additions, Deductions, and Company Contributions based on the taxable income or total gross pay.

For now, you have to leave the Default Rate and Limit fields blank when setting up the item. Then, I recommend manually entering the desired deferral/match rate and limit on the employee's profile.

Here's how:

1. Go to the Employees menu at the top, and then select Employee Center.
2. Select your employee.
3. Choose Payroll Info and add the retirement plan items in the Additions, Deductions, and Company Contributions section.
4. Enter the amount per period and the limits.
5. Click OK, when you're done.

In case you need steps on how you can create a report to quickly view your payroll totals, including employee taxes and contributions, you can read this article: Create a payroll summary report in QuickBooks.

Always remember that our doors are always open for whatever assistance you need. Post a reply below. Take care, readytoretire.