I think it may help to separate what the IRS allows from what QuickBooks currently supports, because those are clearly getting conflated in this thread.
The IRS has already issued guidance confirming that Roth SIMPLE IRA and Roth SEP IRA employee salary deferrals are (not required but only) permitted under SECURE 2.0, and -- critically -- has also explained how they should be reported on Form W-2.
In FS-2024-18 (May 2024) and FS-2024-29 (August 2024), the IRS states that Roth-type employee deferrals to:
- SIMPLE IRA are reported in Box 12 using code S
- SEP IRA are reported in Box 12 using code F
These Roth deferrals are included in taxable wages (Boxes 1, 3, and 5), which is how they differ from traditional pre-tax contributions. There is no separate Box 12 code that distinguishes Roth vs. traditional for SIMPLE or SEP plans. Instead, being included in box 1 wages is the differentiator. The issue here does not appear to be IRS rules; it appears to be a lack of implementation and support within QuickBooks Online.
For QBO users specifically, there are currently two imperfect workarounds, neither of which produces a fully correct W-2:
Option 1: “Other after-tax deduction”
- Employees → Edit payroll items
- New payroll item → Deductions & contributions → Other deduction → Other after-tax deduction
- Description includes “Roth SIMPLE” or "Roth SEP"
- This reports the amount in Box 14 instead of Box 12 code S/F
Option 2: “After-tax Roth 401(k)”
Between the two, Box 14 would seem less wrong than using Box 12 code AA. Showing both S/F and AA codes in box 12 in the same year could make it appear that the employer changed plan types mid-year, which may invite unnecessary questions even if not automatically disallowed.
Until QuickBooks adds native support for Roth-type after-tax SIMPLE or SEP IRA contributions, a reasonable interim approach may be:
- Use Other after-tax deduction (Box 14) during the year
- Revisit payroll setup 30–60 days before W-2 filing
- If QuickBooks adds proper support by then, request a payroll correction
- If not, leave Box 14 reporting rather than miscode Box 12
For those using QuickBooks Desktop Payroll, W-2 edits are more flexible. In QuickBooks Online Payroll, Box 12 editing is limited and may not allow correction to codes S or F even if the IRS guidance is clear.
In short:
The IRS has spoken. The gap here is QuickBooks product support and guidance and NOT tax law.
Relevant sources:
Cross posted to the following forum threads:
