SECURE2.0 Roth IRA

Good evening, @tracemetals.

How are you doing today? I hope all is well. 

I appreciate you reaching out about setting up SECURE 2.0 Roth SIMPLE IRA contributions in QuickBooks Desktop. Right now, this specific feature isn’t built into QuickBooks yet. 

Some of our users still track it by creating a manual after-tax deduction, but the tax reporting side would need to be handled outside of QuickBooks. If you're interested in this process, here's how you can set it up: 

1. Navigating to Lists, then Payroll Item List.
2. Choose Payroll Item, New, then Custom Setup.
3. Click on Deduction, then Next.
4. Naming the deduction (e.g., "Roth SIMPLE IRA (Manual)").
5. Link to the appropriate liability account.
6. Set Tax Tracking Type to None for after-tax deductions.
7. Complete the setup and assign the deduction to the employee profile.

For more information, check out Set up, change, or delete employee paid payroll deductions.

Please let me know if you have any additional questions or concerns. Take care!

How does this show up on their W2? Does it meet the tax guidelines?

ROTH IRA contributions can be found under box 12 in the W2 form, tracemetals.

Yes, Roth IRA contributions meet tax guidelines as they comply with SECURE 2.0 provisions. However, deductions like retirement can decrease the amounts in one or more of the boxes, which means they are subject to Federal Withholding, Social Security, and Medicare taxes.

If you need further questions, feel free to click the Reply button.

How do I set that up to know which is which? If they contribute then it will not be taxed, but if they move the employer contribution from our 401k to the Roth it will need to be taxed. How is that set up?

Roth SIMPLE IRA contribution introduced by the SECURE Act 2.0 is currently unsupported in QuickBooks Desktop Payroll, Trace. 
 

Given this limitation, I recommend consulting a tax accountant for guidance on setting this up and managing these contributions to ensure compliance with the IRS.

For more details on the supported retirement plans, refer to this article: Set up or change a retirement plan.

Feel free to revisit this thread if you have additional questions.

This is part of the SECURE 2.0 Act which is why we need the update to our payroll. When is that coming? You guys have had years to prepare for this!

I wonder if anyone had left QuickBooks Payroll over this...

This should be handled by Quickbooks online. This is a federal option under the Secure Act 2.0. Are Federal changes to employee benefits "just not supported". ???

Thanks for getting involved with this thread, nillbob.

I can certainly understand how an ability for QuickBooks to support Roth contributions for SIMPLE IRAs introduced by the SECURE Act 2.0 could be useful and have submitted a suggestion about it on your behalf.

You can also submit your own feature requests while signed in.

Here's how:
 

1. Use the Gear icon.
2. Go to Feedback.
3. Enter your product suggestions.
4. Select Next.

Your feedback's definitely valuable to Intuit. It will be reviewed by our Product Development team and considered in future updates. You can stay up-to-date with the latest news about your product by reviewing our Product Updates page.

For a full list of retirement plans you can currently set up in QuickBooks, you can review the Choose a retirement plan for my employees section of our Set up or change a retirement plan article. This resource also covers detailed information about employee contribution limits, and much more. I'm sure you'll find it useful.

Please feel welcome to send a reply if there's any questions. Have a great Monday!

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)”

• This forces reporting to Box 12 code AA instead of Box 12 code S/F

• Code AA is incorrect for SIMPLE IRAs and would mischaracterize the plan type

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:

• IRS: SECURE 2.0 Act impacts how businesses complete Forms W-2 (FS-2024-29, August 2024)

• IRS: SECURE 2.0 Act changes affect how businesses complete Forms W-2 (FS-2024-18, May 2024)

• IRS: Common errors on Form W-2 codes for retirement plans

• IRS: Form W-2 Wage and Tax Statement (see page 9 for box 12 code S instructions)

• QuickBooks Help Article: Set up or change a retirement plan

Cross posted to the following forum threads:

• https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/re-simple-ira-roth-contribut...
• https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/re-employee-roth-contributio...