I am looking for guidance on how to handle the following issue in QBO Payroll:
- I have an employee that contributes to two separate retirement plans in his paycheck:
1) a Simple IRA with Company matching
2) a traditional IRA (rolled over from a previous employer) that has no Company matching
Each of this retirement plans has separate (& different) annual contribution limits and it is my understanding the the annual contribution limits between the two plans are NOT cumulative:
1) Simple IRA - $13,500 annual contribution limit
2) traditional IRA - $6,000 annual contribution limit
Currently, both are set up in QBO Payroll as deductions in his paycheck. HOWEVER, we have run into the following problem:
- When the previous accountant set up the deduction for the traditional IRA, there was no option available to select for traditional IRA, so she instead selected the option for Simple IRA. Therefore, QBO Payroll currently is classifying BOTH of the IRA deductions as Simple IRA deductions. This is an issue because it messes with the contribution limits. QBO Payroll is currently taking the sum of the two deductions and capping the sum out at $13,500. This is artificially limiting the contributions that the employee is able to make. I am now trying to figure out how to remedy this such that the employee is able to contribute the maximum for each of the two plans before the end of the year.
Any advice on the best way to handle? Can QBO Payroll add a selection for traditional IRA? Can I somehow change the contribution limits in QBO (they are currently automatically added by the system)?
This is not the kind of experience I want you to experience, @sarahc2223.
Thanks for elaborating on the situation here in the Community. You're in the right information that the annual contribution limits for Simple IRA and Traditional IRA are not cumulative.
As of now, adding a selection for traditional IRA in QuickBooks Online Payroll is unavailable. Also, regarding the annual contribution limits, there isn't a way to adjust it in the system. And yes, this is automatically added to your account.