If your employees have enough wages, they can put their entire paycheck toward their retirement contribution. If they don’t, you can create a retirement paycheck-only if they’ll contribute to retirement with personal money to cover the full retirement contribution.Â
Step 2. Set up a retirement offset deduction item
You only have to do this step if your employee doesn’t have enough wage and will use personal money to cover the full retirement contribution.Â
- Go to Lists, then Payroll Item List.
- Select Payroll Item â–Ľ dropdown, then New.
- Select Custom Setup, then Next.
- Select Deduction, then Next.
- Enter the name of the deduction item such as 401(k) Retirement Offset.
- In the Agency for employee-paid liability window, select the account you want to use to track the item.
- Select Next.
- Select None from the Tax tracking type â–Ľ dropdown, then select Next three times.
- Select net pay in the Gross vs. net window, then Next.
- Select Finish.
Step 3. Create and run your employee’s paycheck
If an employee has enough wages to cover the full retirement contribution.
- Create and run payroll.
- In the Enter Payroll Information window, select Open Paycheck Detail.
- In the Earnings Item section, select the Earning item, Rate and Hours (for hourly employees).Â
- In the Other Payroll Items section, select the Retirement plan deduction item, created in Step 1.
- Adjust Retirement Deduction item’s amount until the Net amount is $0.00
- Select Save & Close, then Create Paychecks.Â
- Select Send Payroll Data (if applicable).
If your employees don't have enough wage and will contribute to retirement with personal money, they can write a check back with the amount they want to go to the retirement plan. Then, you need to create a retirement paycheck-only.
- Create a retirement paycheck-only.
- In the Enter Payroll Information window, select Open Paycheck Detail.
- Clear all the items in the Earnings section.Â
- In the Other Payroll Items section, select the Retirement plan deduction item, created in Step 1, and the amount they’ll contribute.
- On the next line, in the Other Payroll Items section, select the Retirement OFFSET Item, created in Step 2, then enter retirement amount as POSITIVE in the Rate column.
NOTE: You’ll be prompted with the message "Deductions are normally entered as a negative number, are you sure you want to have a positive number?" Select Yes. - Select Save & Close, then Create Paychecks.Â
- Select Send Payroll Data (if applicable).