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Set up a retirement plan

SOLVED•by QuickBooks•568•Updated 1 month ago

Learn how to set up a retirement plan deduction or a company contribution in QuickBooks Online Payroll or QuickBooks Desktop Payroll to track and tax it appropriately.

If you or your employee contributes to a retirement plan, set it up in QuickBooks so it'll be reported on your payroll tax forms. 

Step 1: Determine which retirement plan to set up

There are different types of retirement plans supported in QuickBooks. Determine which plan you want to set up for your employees and review its contribution limits.

To learn more about retirement plans, visit the IRS website.

For choosing a retirement plan, you can check with your plan provider for details. You can also visit the IRS website to learn more

Here are the supported retirement plans in QuickBooks:

  • 401(k) / 401(k) catch-up
  • Simple 401(k) / Simple 401(k)
  • 403(b) /403(b) catch-up
  • SARSEP / SARSEP catch-up
  • Simple IRA / Simple IRA catch-up
  • After-tax Roth 401(k)
  • After-tax Roth 403(b)

Note: After-tax Roth plans calculate on your employees' gross wages and are subject to all taxes at the time of contribution per IRS regulations.

Deferred - Taxes aren't deducted at the time the amount is withheld from an employee's paycheck. Taxes are withheld at the time the employee withdraws funds from their retirement plan.

Taxable or after-tax - These contributions are deducted from the employees payroll after the taxes have been calculated.

The IRS sets a limit on how much you can contribute to a retirement plan in a given year. The amount you and your employee can contribute depends on many factors. Check with your plan provider for details.

Step 2: Set up a retirement plan deduction or a company-match contribution item in QuickBooks

Note: Not sure which payroll service you have? Here's how to find your payroll service.
  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Deductions & contributions, select Start or Edit.
  4. Select + Add deduction/contribution.
  5. Select Retirement Plans in the Deduction/contribution type▼dropdown.
  6. For Type, select the applicable retirement plan.
    • If you need to track a company-only contribution with no employee match, choose Company-only plan.
  7. Enter the name of the provider or plan in Description (appears on paycheck).
  8. Complete the remaining fields.
  9. If you have a company match, under Company contribution, select the dropdown menu to choose how you want to calculate the amount.  Complete the new fields to enter the amount or percent per paycheck and annual maximum.
  10. Select Save then Done.

Step 1: Set up a retirement plan deduction or company match item

  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item ▼ dropdown, then New.
  3. Select Custom Setup, then Next.
  4. Select Deduction or Company Contribution, then Next.
  5. Enter the name of the deduction or company matching item, then select Next.
  6. Select the name of your retirement plan provider, or add it, and enter the account number. In the Liability account field, select the account that tracks the deduction or contribution to be paid. Select Next.
    • For company match items, in the Expense account field, select the account that you want to track the item. Select Next.
  7. In the Tax Tracking Type window, select the applicable retirement plan. Select Next twice.
  8. Under Calculate based on quantity, select Neither and select Next.
  9. Leave Default Rate and Limit fields blank. You can add the rate and limit when you add the item to the employee profile
  10. Select Finish.

Step 2: Add the items to the employee profile

  1. Go to Employees, and then select Employee Center.
  2. Select your employee.
  3. Select Payroll Info, then add the retirement plan items in the Additions, Deductions, and Company Contributions section.
  4. Enter the amount per period and the limits.
  5. Select OK, when you're done.

Step 3: Ensure the deduction or contribution shows up in the employee’s paycheck

The amounts you or your employees contribute to a retirement plan must be reported on Form W-2. So the next time you pay your employees, make sure the retirement amounts are showing in their paychecks.

Edit or remove a retirement plan item

If you need to modify the deduction or contribution item, here’s how:

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Deductions & contributions, select Start or Edit.
  4. Select Edit ✎ next to the deduction/contribution you want to modify, then make your updates. Or select the Trash bin icon if you want to remove it.
  5. When finished, select Save, then Done.

 Modify the payroll item

  1. Go to Lists, then select Payroll Item List.
  2. Right-click the item and select Edit Payroll Item.
  3. Change the info as needed on each window.
  4. Select Finish.

Remove the payroll item

  1. Select Employees menu,  then Employee Center.
  2. Select your employee. 
  3. Select Payroll Info.
  4. In the Additions, Deductions and Company Contributions section, select the amount (if there's any), and the item name, then press Delete on your keyboard.
  5. Select OK when done.

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