Roth 401(k) setup Enterprise

Hello there, Dorothy.

You can customize payroll deductions, such as Roth 401(k), to apply only to regular payroll items while excluding bonuses. 

Here’s how you can do it:
 

1. Go to Employees, then select Employee Center.
2. Choose the employee you want to add the Roth 401(k) deduction to.
3. Click Payroll Info and add a new item under Additions, Deductions, and Company Contributions.
4. Set up the Roth 401(k) by following the on-screen steps.
5. Once done, hit OK.

During payroll processing, you can view the Open Paycheck Detail to ensure that the bonus is excluded from the calculation.

If you have follow-up questions, don’t hesitate to click the Reply button below.

I have set up each employee with the Roth 401(k) deduction and set their % of deduction as well as added the % contribution from the employer.  I also have the Bonsu set up as a Bonus for Compensation.  I do not, however, find anywhere that I can tell it not to include the bonus compensation.  What am I not understanding?  Thank you.

Hey there, @dorothysh. 

Thanks for checking back with us. 

You're correct with your thinking. In QuickBooks Desktop Enterprise, there isn’t a setting to exclude bonus pay from a percentage-based Roth 401(k) calculation. Retirement deductions apply to all retirement-eligible wages, including bonuses, which is why you’re not seeing anywhere to deselect the bonus.

You can see more information here: Pay Employee Bonuses.

That said, there is a workaround that most of our users have done in the past. Such as, run the bonuses as a separate paycheck and manually adjust or remove the Roth 401(k) amount. Here's how: 

1. Go to Employees and select Pay Employees.
2. Choose Unscheduled Payroll.
3. Click on the employee and enter the bonus amount.
4. Open the paycheck detail.
5. Locate the Roth 401(k) deduction and remove or adjust the amount for that check.
6. Review the paycheck, then Save & Close.
    

This allows the regular payroll to calculate the Roth 401(k) normally, while keeping it off the bonus check.

Another option our customers have used, if the retirement plan allows it, is to use a flat dollar amount instead of a percentage. Here's how:

1. Go to Lists ▸ Payroll Item List.
2. Double-click the Roth 401(k) payroll item.
3. Edit the item and change the calculation to a flat dollar amount instead of a percentage.
4. Assign the flat amount to the employee’s payroll profile.
   Save the changes.
    

With a flat amount, QuickBooks will deduct the same dollar value per paycheck and won’t automatically increase the deduction when bonuses are paid.

That should do the trick. Please don't hesitate to let me know if you have any additional questions or concerns. Take care!