Hi there, Clare.
I am here to give insights on setting up your Roth 401k employer contribution in QuickBooks Online (QBO).
A Roth 401(k) is similar to a traditional 401(k) but with a significant difference in how contributions and earnings are taxed. Contributions to a Roth 401(k) are made with after-tax dollars, meaning you'll pay income taxes on the money you put in. The advantage of a Roth 401(k) plan is that when you make withdrawals in retirement, they are entirely tax-free, including any interest, capital gains, or dividends. Roth 401(k) plans are typically more beneficial for higher-income earners or those who expect to be in a higher tax bracket in retirement.
IRS requires that the Company contribution must be set up as a traditional 401(k), not as a Roth 401(k). You can learn more about this by reading IR's Article 4530.
Furthermore, I'm adding this article if you need more details about creating a company contribution or retirement plan deduction in QBO: Set up or change a retirement plan.
Let me if you have other questions about setting up the Roth 401k in QBO by leaving a comment. I'll be here to assist you at any time.
