Simple IRA - return contribution to employee

Thank you for providing more details about your concern regarding the returned contribution, JPTBrenda. I've got your back in finding the right method to return the employee's contribution and resolve the payroll liabilities that are past due.

First, let's adjust your payroll liabilities to clear the balance in the liability account.  I’ll guide you through the process.

1. Go to Employees, then Payroll Taxes and Liabilities. 
2. Select Adjust Payroll Liabilities.
3. In the Date and Effective Date fields, choose the last paycheck date of the affected month or quarter.
4. In the Adjustment is for: section, click Employee Adjustment to correct your employee’s YTD info. Then select the employee's name. Do this even if the item being adjusted is company-paid.
5. Under the Item Name column, determine the payroll item you want to adjust.
6. Enter the Amount of the adjustment. 
   • If the item is under-withheld, enter a positive amount to increase. 
   • If the item is over-withheld, enter a negative amount to decrease.
7. Enter the amount under the Income Subject to Tax column if you need to make a wage base adjustment.
8. Under Memo, enter a note about the adjustment for reference. 
9. Specify the Accounts Affected, then OK.
   • Select Do not affect accounts to leave balances unchanged for the liability and expense accounts. The adjustment will only change the year-to-date amounts on your payroll reports.
   • Select Affect liability and expense accounts if you want the transaction to reflect in the liability and expense accounts.
10. Click OK to close the Affect Accounts window, then OK to save the changes.

After that, reimburse the employee by doing the following:

1. Go to Employees, and select Manage Payroll Items.
2. Click New Payroll Item.
3. Choose Custom Setup, then select Next to designate Addition, then Next.
4. Enter the name of the Reimbursement item, then select Next.
5. Assign an expense account to track this item.
   1. Select an expense account to track travel or mileage amounts. 
   2. If this will be an advance to the employee, choose an asset account.
6. Set the Tax Tracking type to None. Then select Next.
7. Under Taxes, none should be selected. Select Next.
8. For amounts paid per mile/kilometer, select the Based on Quantity checkbox. Then select Next.
9. Choose to calculate on Net Pay. Then select Next.
10. Enter a Default Rate. Then select Finish.

Next, proceed to Step 3: Run payroll with a reimbursement amount on this article to pay him back: Reimburse your employee in QuickBooks Payroll.

I also suggest consulting an accounting professional to confirm the appropriate accounts and/or taxes involved.

Additionally, if you're interested in changing or removing the payroll items, refer to this material: Set up and manage payroll items for your insurance benefit plan.

I'm just a few clicks away if you need support with employee reimbursements. I’ll be here to assist you with any other payroll tasks as well. It’s always a pleasure to help you again.