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Set up state retirement plans in QuickBooks Payroll

by Intuit•45• Updated 1 month ago

Learn about states that require employers to offer retirement plans to their employees.  And find out how to get a retirement plan to meet your needs and set it up in QuickBooks Online Payroll and QuickBooks Desktop Payroll.

While some states mandate employer retirement plans (See Step 1 and Step 2), retirement plan reporting is available for all states (See Step 3 and Step 4).

Step 1: Understand states with mandated retirement programs

The following states mandate that employers either offer a traditional retirement program, or enroll in a state-sponsored retirement program.  If your business is required to offer retirement, you can set up the plan and get the reports in QuickBooks.  You’ll need to pay the retirement premiums and upload the reports to your state agency.

Name of plan: CalSavers

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks 
  • Send your payroll details to the agency after each pay period

Who it applies to

  • Effective 6/30/2022, all businesses with 5 or more employees (Full-time or part-time) if at least one is 18 or older
  • Deadlines are based on your average number of employees throughout the prior calendar year

What if the deadline is missed

  • Initial notice to comply
  • If you fail to comply after 90 days, $250 per eligible employee penalty
  • If you fail to comply after 180 days, an additional penalty of $500 per eligible employee

Find out more at the CalSavers website.

Name of plan: Colorado SecureSavings Program

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • First, register your business and set up your employees on the agency website
  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks 
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • Employers who are not already providing a qualified retirement plan
  • Employers with 50 or more employees must register by 3/15/2023
  • Employers with 15-49 employees must register by 5/15/2023
  • Employers with 5 to 14 employees must register by 6/30/2023

What if the deadline is missed

  • If you fail to comply for one year after the due date for enrollment, a penalty of $100 per eligible employee will be assessed.

Find out more at the Colorado Secure Savings website.

Name of plan: MyCTSavings

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • Any business that employed five or more employees in Connecticut on October 1st of the previous calendar year, and;
  • It paid at least five employees $5000 or more in taxable wages in the previous calendar year, and;
  • It does not currently provide a qualified, employer-sponsored retirement savings plan
  • Deadlines to enroll vary based on total amount of employees for a business

What if the deadline is missed

  • If a business falls out of compliance and fails to register, an investigation could occur and there may be penalties

Find out more at the MyCTSavings website.

Name of plan: Delaware EARNS

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • All businesses with five (5) or more employees (Full-time or part-time) who were established before 7/1 of the previous calendar year and don’t offer an existing retirement plan
  • The deadline to register is October 15, 2024

What if the deadline is missed

  • The state may assess penalties up to $250 per eligible employee annually

Find out more at the Delaware EARNS website.

Name of plan: Illinois Secure Choice

What is it?

  • Basic Roth IRA
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period

Who it applies to

  • State law requires every Illinois employer with 5 or more employees to offer their own retirement program or use the Illinois Secure Choice program

What if the deadline is missed

  • If you don’t follow the Illinois Secure Choice Savings Program Act, you’ll be subject to fines and penalties as described in 820 ILCS 80/85. Enforcement for non-compliant employers with 25 or more employees will begin in 2022.

Find out more at the IL Secure Choice website.

Name of plan: MeritSaves

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • Your business is registered to conduct business in the state of Maine
  • You have at least five W-2 employees
  • You have been in business for two or more years; and
  • You don’t currently offer a qualified retirement savings program to your employees
  • Deadlines to enroll vary based on the total amount of employees for a business

What if the deadline is missed

  • If a business falls out of compliance and fails to register, an investigation could occur and there may be penalties

Find out more at the MERIT website.

Name of plan: MarylandSaves

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • First, register your business and set up your employees on the agency website
  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks 
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • Employers who are not already providing a qualified retirement plan
  • If you're running a business in Maryland and have at least one employee on payroll, you need to comply with the state's requirements. This applies to all businesses that use an automated payroll system and have been in operation for at least two years

Find out more at the MarylandSaves website

Name of plan: CORE Plan for Nonprofits

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period

Who it applies to

  • Eligible small non profit organizations that choose to adopt the plan
  • Employers must be non profit organizations, with less than 20 total employees

What if the deadline is missed

  • There are no failure to enroll penalties for this program

Find out more at the CORE Plan website.

Name of plan: RetireReady NJ

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • All businesses with 25 or more employees (Full-time or part-time) who have been in business for two or more years and don’t offer an existing retirement plan
  • Registration deadline:
    • September 15, 2024 for employers with 40 or more employees
    • November 15, 2024 for employers with 25-39 employees
  • Deadlines to enroll vary based on the total amount of employees for a business

What if the deadline is missed

  • Failure to register may result in a fine of up to $500 per eligible employee
  • Failure to submit contributions may result in additional financial penalties

Find out more at the RetireReady NJ website.

Name of plan: Oregon Saves

What is it?

  • Basic Roth IRA
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • The law requires all Oregon employers to use OregonSaves if they don't offer a traditional retirement plan for their employees.

What if the deadline is missed

  • Employers that are out of compliance may be subject to enforcement action, including penalties and fines.

Find out more at the OR Saves website

Name of plan: RetirePath Virginia

What is it?

  • Basic Roth IRA retirement plan
  • Contributions to a Roth IRA are made with after-tax money and grow tax-free
  • Qualified withdrawals are also tax-free

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • All businesses with 25 or more employees (Full-time or part-time) who have been in business for 2 or more years and don’t offer an existing retirement plan
  • For businesses eligible in 2024, the RetirePath registration deadline is October 30, 2024.
  • The registration deadline has passed for employers eligible in 2023. To stay in compliance, eligible employers should sign up as soon as possible.

What if the deadline is missed

  •  The state may assess penalties up to $200 per eligible employee annually

Find out more at the RetirePath Virginia website.

Name of plan: WA Retirement Marketplace

What is it?

  • Various retirement plans are offered through an agency sponsored retirement marketplace
  • Contributions are made either pre-tax or after-tax, depending on the solution your business chooses.

How it works

  • If your employees don’t opt out, you’ll deduct a certain percentage from their paychecks
  • Send your payroll details to the agency after each pay period (integration available for QuickBooks Online users)

Who it applies to

  • Any small business looking for low-cost retirement plans as offered through the agency marketplace.

What if the deadline is missed

  • There is no deadline as this is not mandated for employers, but simply an offering to help small businesses provide retirement options for their employees

Find out more at the WA Retirement Marketplace.

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Step 2: Get a retirement plan

You can choose a traditional retirement plan or the plans offered by your state. 

The state Savers plans aren’t traditional plans as defined by the IRS, so they’re after-tax deductions and don’t report on your employees’ W-2s. The state plans are subject to the same deferral limits as regular retirement plans.

If you use QuickBooks Online Payroll, check out affordable 401(k) plans on the benefits tab in QuickBooks Online. 

Your employees can contribute to more than one retirement plan at a time.  Keep in mind that contribution limits are cumulative for all plans your employee contributes to. 

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Step 3: Set up and track your retirement plan in QuickBooks

Once you select your retirement plan, you’ll need to set up the payroll items in QuickBooks. 

Note: Not sure which payroll service you have? Here's how to find your payroll service.
  1. Go to Payroll, then select Employees (Take me there).
  2. Select your employee.
  3. From Deductions & contributions, select Start or Edit.
  4. Select + Add deduction/contribution.
  5. From the dropdown menu, select:
    • Deduction or contribution type: Other taxable deductions
    • Type: Other after tax deductions
  6. Add a Description (use these exact names so the item appears on the state-mandated report):
    • California: CALSAV
    • Colorado: COLSAV
    • Connecticut: CONSAV
    • Delaware: DELSAV
    • Maine: MAISAV
    • Illinois: ILLSAV
    • Maryland: MARSAV
    • Massachusetts: MASSAV
    • New Jersey: NEJSAV
    • Oregon: ORESAV
    • Virginia: VIRSAV
    • Washington: WASSAV
  7. Choose how you'd want to deduct the amount: Flat amount or percentage of gross. Then enter the amount or percentage.
  8. You can also add an Annual maximum(Optional).
  9. When finished, select Save then Done.

Step 1: Add a new payroll item

  1. Go to Lists and select Payroll Item List.
  2. Select Payroll Item, then select New.
  3. Select Custom setup, then select Next.
  4. Select Deduction, then Next. 
  5. Enter the name as follows so this shows up on your State Retirement Plan report:
    • USPS state abbreviation + SAV (ex: NYSAV, TXSAV)
    • The following states have mandated retirement plans:
      • California: CAL CASAV
      • Colorado: COSAV
      • Connecticut:  CTSAV
      • Delaware: DESAV
      • Illinois: ILSAV
      • Maine: MESAV
      • Maryland: MDSAV
      • Massachusetts:  MASAV
      • New Jersey: NJSAV
      • Oregon: ORSAV
      • Virginia: VASAV
      • Washington:  WASAV
  6. Select Next. 
  7. Choose or enter the agency for your retirement plan, enter your account number, and choose a liability account for tracking  (optional). Then select Next. 
  8. Select Next on the next 4 windows (don’t change anything). 
  9. Then select Finish, then OK. 

Step 2: Add the retirement item to your employees

  1. Select Employees, then Employee Center. 
  2. Open your first employee.
  3. Select Payroll Info. 
  4. From Additions, Deductions and Company Contributions, in the item name column select the dropdown. 
  5. Select your retirement item. 
  6. Enter an amount or percentage.
  7. Select OK. 
  8. Repeat steps 2–7 for each employee participating in the plan.

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Step 4: Get a state retirement report in QuickBooks so you can pay your retirement premiums

You’ll need to pay the premiums and file these reports with your state agency. Report tracking has been added to QuickBooks Desktop and QuickBooks Online for all states listed above.

  1. Go to Reports (Take me there).
  2. Select Employees & Payroll, then State Mandated Retirement.
  1. Go to Reports, then select Employees & Payroll.
  2. Scroll down to State Retirement Plans.
  3. Adjust the Date Range as needed, then select your state from the dropdown. 
  4. You can export the report into an Excel file.
    1. Select Excel. 
    2. Then select Create New Worksheet or Update Existing Worksheet.
    3. Select Export and Save to your desired location.
  5. Open the Excel report and verify the info is correct.

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