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rcpcnh
Level 1

Why are 401K catch up contributions deducted from net pay instead of gross pay?

 
1 Comment
IntuitLily
Moderator

Why are 401K catch up contributions deducted from net pay instead of gross pay?

It's nice to see you in the Community, @rcpcnh.

 

I'm here to provide clarification on why the 401(k) is deducted from the net pay. 

 

This catch up contribution is taxable for SS, Med, and FUTA. Thus, the reason why this is deducted from the net pay instead of the employee's gross. The pay types and deductions can only be taken from the gross pay if they are non-taxable. 

 

If you need to know how this plan is reported on federal forms, you can check this helpful guide: Supported pay types and deductions explained.

 

I'll include this helpful overview of the 401(k) retirement plan for more information: 401(k) Plan Overview.

 

In case you need to change a payroll deduction item in QuickBooks, you may refer to this article: Change or delete a payroll deduction item.

 

I'm here if you have other questions or concerns. I'd be delighted to help. Take care and have a good one. 

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