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Set up a 401(k) loan repayment item in QuickBooks Payroll

SOLVEDby QuickBooks44Updated March 07, 2023

Learn how to create a 401(k) loan repayment payroll item and add it to the employee profile in QuickBooks Desktop and QuickBooks Online.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Set up a 401(k) loan repayment

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Deductions & contributions, select Start or Edit.
  4. Select + Add deduction/Contribution.
  5. From the dropdown menu, add the following:
    1. Deduction/contribution type: Other taxable deductions
    2. Type: Loan Repayment
    3. Description: Add a deduction name, such as 401(k) Loan Repayment.
  6. Select how you want the repayment to be calculated. Then enter the amount or percent per paycheck.
  7. When finished, select Save then Done.

Step 1: Create a deduction item for a 401(k) loan repayment

  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item and select New.
  3. Select Custom Setup and select Next.
  4. Select Deduction and select Next.
  5. Enter a name for the item (like 401(k) Loan Repayment) and select Next.
  6. Select the name of your 401(k)  provider (or add it),  and enter the account number. Then select Next.
  7. In the Tax Tracking Type window, select None. Select Next twice.
  8. Under Calculate based on quantity, select Neither and select Next.
  9. Select Net pay in Gross Vs Net and select Next.
  10. Leave Default Rate and Limit fields blank. You can add the rate and limit when you add the item to the employee profile.
  11. Select Finish.

Step 2: Add the repayment payroll item to the employee profile

  1. Go to Employees, and then select Employee Center.
  2. Select your employee.
  3. Select Payroll Info, then add the 401(k) loan repayment item in the Additions, Deductions, and Company Contributions section.
  4. Enter the repayment amount per period and the limit.
  5. Select OK, when you're done.

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