Recording QB Self-Employed Solo 401(K) Contributions

Welcome on board, @zeke29. I’ll share some insights about recording 401 K contributions in QuickBooks Self-Employed (QBSE).

Currently, the option to categorize Solo 401(k) contributions is unavailable. You can also classify it as a personal transaction.

Also, I highly recommend you reach out to your accountant about various options for recording it. This is to ensure that your records are correct. If you don't have one, use this link to locate an accountant in your area: Find an Accountant tool.

Furthermore, you can utilize this article as your reference: Categories in QuickBooks Self-Employed.

You can use our Schedule C and spending categories pages to help you manage your QuickBooks Self-Employed account. You may find instructions for recording your self-employed income and expenses, as well as drafting Schedule C, here.

If you have further concerns about categorizing transactions, you can always hit the Reply button. I’ll make sure to get back to you as soon as I can. Have a good one!

I'm trying to do something similar. Is this option still unavailable?

Thanks for joining in the thread, @vicenteborga.

Let me provide some information about recording solo 401(k) contributions in QuickBooks Self-Employed (QBSE).

Currently,  there are no specific categories in QuickBooks Self-Employed (QBSE) to track your retirement contributions or deductions. In the meantime, you can label these contributions as personal expenses. However, I still suggest consulting your accountant for the best guidance. This way, you can ensure your records are accurate and complete. If you need help finding one, you can use our accountant tool to locate a nearby professional.

For more information on categorizing transactions in QBSE, feel free to refer to this article: Categorize transactions in QuickBooks Self-Employed.

For further guidance in handling contributions in QBSE, check out this article: Self-Employed Individuals – Calculating Your Own Retirement-Plan Contribution and Deduction.

Please don't hesitate to leave a reply for any further inquiries about recording your contributions in QBSE. I'm just one post away.

Apologies, I didn't realize that this post was for QBSE. I'm using Quickbooks Online. Is this possible within QBO? Should I post my question in that forum instead?

Yes, you can, Vicente. Let me assist you in creating a journal entry in QuickBooks Online (QBO) to record your 401(k) contributions. 

To properly record your 401(k) contributions, you'll need to create a journal entry affecting the appropriate Equity account. Before doing so, it's best to consult your accountant to ensure accurate accounts are used. To do that:

1. Go to + New and select Journal entry.
2. Select an account on the first line. Enter the amount in the correct column depending on whether you debit or credit the account.
3. On the second line, select the other account you're transferring money to or from. Enter the same amount in the opposite column depending on if you entered a debit or credit on the first line.
4. Check the amounts and ensure they're balanced.
5. Enter a description in the memo section to know why the journal entry was created.
6. Select Save and Close.

Please know that the Community is open for all QuickBooks users regardless of your plans and subscriptions. You can post any queries on this forum with the appropriate product tagging so other users and accountants can interact and share their expertise.

Additionally, here's an article to help you run basic financial reports in QBO to view important details about your business: Run reports in QuickBooks Online.

Keep me updated on your future queries by reaching out to us again. Our team is always available to respond promptly to your concerns. Be safe, and have a wonderful day ahead.

Thanks. The contribution was debited from my business banking account, which is connected to QBO.

The contribution went to my Solo 401(k) with E*Trade, which is not connected to QBO. In order to create the journal entry that you mentioned, would I need to connect the E*Trade account, or am I missing something?

Thanks for coming back here in the thread, @vicenteborga. Let me give you further insights about recording your 401(k) contributions in QuickBooks Online (QBO).

To document the transfer of funds from your business banking account to your 401(k) account, you'll create a Journal Entry in your accounting records. When making the entry, it's essential to ensure that the appropriate equity account is affected. Since the contribution is a personal investment, it should recorded as a draw, not a company expense. With that, you do not need to connect your E*Trade account in QBO to create the Journal entry.

Ensure that your 401(k) contributions are recorded accurately in your Journal Entry. I suggest contacting your accountant and seeking their assistance with this matter.

On the other hand, I'll leave this article as your guidance on setting up company-paid contributions for your employees: Set up and manage company contributions. 

If you have a follow-up question about recording your 401(k) contribution in QBO, let me know by leaving a comment below. I'm more than happy to help you again. Keep safe! 

Thank you. I was able to do this.

One more question: the withdrawal was automatically imported into QBO via the connected bank account. Since I was able to create the journal entry, should I now delete the transaction that was auto-imported?

Hello there, @vicenteborga.

Let me share information about dealing with similar transactions that are manually recorded and automatically imported through online banking.

In QuickBooks Online, you can match your transactions with an existing entry instead of deleting it. This way, you can avoid having duplicate transactions that could mess up your record.

Here's how:

1. Select Transactions on the left pane.
2. Choose Bank transactions, then go to the For review tab.
3. Look for the withdrawal and click on it.
4. Select Find match, then choose the existing entry.
5. Click Save.

For more information about the process above, refer to this article: Match online bank transactions in QuickBooks Online.

Moreover, you might want to review this resource to have a guide on organizing and auditing transactions to keep your book accurate:

• Categorize and match online bank transactions in QuickBooks Online
• Reconcile an account in QuickBooks Online

Don't hesitate to inform us in the thread if you have additional questions when matching your transactions or other related concerns in QuickBooks Online. We're always here to lend a hand.

Thank you. I think we're close to a resolution here.

I followed your instructions and when I went to 'find match', it said something to the effect of there not being any matching transactions. I'm attaching a screenshot of the journal entry in case that is helpful.

Any ideas?

Warm greetings, @vicenteborga. I see you're having challenges matching your transactions in QuickBooks Online.

Before anything else, let me share a few reasons why you're unable to find a match on your bank transactions page. 

• The payees, amounts, or dates don't match.
• The transaction is older than six months.
• The payment has been reconciled.
• The record is already matched to another transaction. 
• Multiple currencies are involved, and the exchange rate has shifted significantly, making the amounts very different.

On the other hand, based on the screenshot provided, the journal entry you've created seems reversed. Please know that debit increases assets, and expense accounts decrease liability, revenue, and equity accounts. Meanwhile, credit reduces asset and expense accounts and increases liability, revenue, and equity accounts. 

I've included a screenshot for visual reference.
 

I'd still recommend consulting with your accountant, as they can provide valuable insights and help you make informed decisions. You can find a professional QuickBooks ProAdvisor if you don't have one.

Moreover, after categorizing and ensuring all transactions are matched, you can start reconciling your QuickBooks account. This will ensure that all financial records are accurate and discrepancies are resolved promptly.

You can reply to this thread anytime if you require further assistance matching your bank transactions. I'm always here to back you up, @vicenteborga. Have a good one!

Switching debits with credits fixed the issue. Thank you.

You're welcome, @vicenteborga. It's our pleasure to help.

We're glad to know that the issue has been resolved. If you have future concerns about your account, let us know. The Community is always here to assist.

Keep safe, and have a wonderful day!