Is Dependent Care FSA similar to a Retirement Plan?

Hello, Saphire605.

Let me share some insight between the Dependent Care FSA and Retirement Plan. Understanding the differences between Dependent Care FSA and Retirement Plan can benefit anyone who wants to plan their finances well. 
 

A Dependent Care FSA (Flexible Spending Account) in QuickBooks Desktop is a pre-tax benefit account that allows employees to set aside a portion of their earnings to cover eligible dependent care expenses. This can include expenses related to the care of children, disabled dependents, or elderly family members.

With QuickBooks Desktop, you can set up and manage Dependent Care FSAs for your employees. This typically involves creating a new account for the FSA, setting up employee payroll deductions, and configuring employer contributions or matching.

Employees can save money on eligible dependent care expenses using pre-tax dollars and a Dependent Care FSA in QuickBooks Desktop. This can provide tax advantages for both the employee and the employer.

On the other hand, A retirement plan in QuickBooks Desktop refers to a financial account or program set up by a business to help employees save for retirement. QuickBooks Desktop provides features to track and manage employee retirement plans, including setting up payroll deductions and employer contributions and tracking retirement plan expenses. There are different types of retirement plans, such as 401(k)s, IRAs, and pensions. These plans offer various tax benefits and investment options to help you accumulate wealth over time and ensure a comfortable retirement. 

To set up a retirement plan in QuickBooks Desktop, you would need to create a new account for the retirement plan, set up payroll items for employee deductions and employer contributions, and configure the appropriate payroll settings. You can also generate reports to track retirement plan expenses and contributions.

Check out the following articles for an overview of the deductions and contributions available in the Desktop version. You'll also find detailed instructions on entering the payroll item and steps to assign it to your employees.

• Set up payroll items
• Apply S Corp Medical at year-end for corporate officers

Keep me posted if you have other questions about handling your FSA Health & Dependent Care and Retirement Plan in QuickBooks. I'll be around to help you. Stay safe, and take care!

How would the employer contribution be set up?  As an expense check?

Hello there, @Saphire605. Let me share details of how to set up employer contributions for Dependent Care FSA (Flexible Spending Account) in QuickBooks Desktop (QBDT).

To address your query, the method of recording employer contributions will depend on the company's preferences. If your company offers FSA contributions to employees as an incentive or benefit and wants the amount reported on employees' W-2 forms, it would be advisable to consult with an accountant regarding the taxability of this item.

Now, let me guide you through the steps to set up FSA contributions in QBDT:

Step 1: Create an FSA deduction item.
 

1. In your QBDT file, go to the Lists menu, then select Payroll Item List.
2. Select Payroll Item, then click on New.
3. Click on Custom Setup, then select Next.
4. Select Deduction, then click on Next.
5. Enter a name for the item (like FSA) and select Next.
6. If you want to print a check from QuickBooks to pay your FSA provider, select the provider name (or add it), and the account number.
7. If you want to use a specific liability or expense account to track your FSA, select them here. Then select Next.
8. Set the Tax Tracking Type to either Dependent Care FSA or Med Care Flex Spend and select Next.
9. For California employees, see the note below.  Otherwise, don’t make any changes. Select Next.
   • Note: FSAs aren’t pre-tax in CA. Clear all CA taxes: Withholding, Unemployment, Disability, and Employment Training Tax.
10. Select Next twice. You don’t need to do anything on the next two windows. Once ready, click on Finish.

Step 2: Add the item to your employees.
 

1. In your QBDT file, go to the Employee menu, then select Employee Center.
2. Locate and select your employee.
3. Select Payroll Info, then add the FSA deduction item in the Additions, Deductions, and Company Contributions section.
4. Once done, click on OK.

For detailed information, kindly visit: Set up a Flexible Spending Account (FSA) payroll item in QuickBooks Payroll.
 

Additionally, you may want to use this year-end checklist to prepare your tax forms in QBDT: Year-end checklist for QuickBooks Desktop Payroll.
 

I'm here to assist you further with your payroll, running reports, or any other inquiries you may have. Just drop your reply below, and I'll be glad to assist you.

That's a deduction from the employee payroll check.

How would we account for the employer paid portion?

Would it be set up as a contribution on the employee payroll check or as an expense check?

Hello there, @Saphire605. Let me answer your question.

The Employer-paid portion should be set up as a contribution on the employee payroll check. Then, the amount will automatically posted on the account selected.

Additionally, the articles below will help you verify your current payroll setup and correct payroll info:

• Run Payroll Checkup in QuickBooks Desktop.
• Adjust payroll liabilities in QuickBooks Desktop Payroll.

Thank you for coming back here, @Saphire605. Your presence means a lot to us. Please click the reply button below if you have additional questions about the QBDT payroll. We'll be willing to lend a hand.