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Bbenoit
February 11, 2020
Question

401K company match calculation

  • February 11, 2020
  • 1 reply
  • 0 views

The 401K company match calculation should be based on medicare wages (which would be after pre-tax health insurance items).  How is this done in Quickbooks?

1 reply

Jen_D
Jen_D
February 11, 2020

Glad to see you here, @Bbenoit,

 

Setting up a 401(k) Match in QuickBooks Desktop is simple. This item is considered a company contribution on a business perspective and doesn't affect employee's Net Pay.

 

Here's how to set it up:

 

  1. Go to the Lists menu and select Payroll Item List.
  2. Right-click anywhere and press New.
  3. Choose Custom Setup then press Next.
  4. Use Company Contribution and then proceed to the next page.
  5. Pick a Liability and Expense Accounts before clicking Next.
  6. From the Tax Tracking Type page, use the tax tracking-type classification that matches your plan-type. For example, 401(k) Co. Match and click Next twice.
  7. On the Calculate Based on Quantity page, select Calculate this item based on hours.
  8. (Optional) Add a Default Rate and Limit.
  9. Hit Finish when done.

See this article to learn more about creating the payroll item and how it works: Set up Roth 401(k) and Roth 403(b), and Roth 457(b) plans.

 

If you have any questions about this, let me know in the comment section below. I'm always here to provide further help and insights. Have a wonderful day!

M
MichaelDi930
February 13, 2020

I'm trying to make a journal entry for payroll item from an outside payroll service.

Employer pays half the health ins premium of employees.

What is the journal entry to make for that transaction, as the full amount of ins would be a liability, correct?

 

Payroll service has the ins included with gross wages before all taxes and other deductions are withheld before net wages.

What am I missing ? I seem to be needing a debit entry for the employer pd portion of health ins

example:

Health Ins payable                                   $2000.00

What acct??                    $2000.00

Thank you.

Michael

S
ShiellaGraceA
February 13, 2020

Hello @MichaelDi930,

 

You'll want to credit the bank account used for tracking your payroll liabilities and debit the account used to track company contribution.

 

In your example, debit $ 2,000.00 to your payroll expense account (or your company contribution account). Then, credit the other to your checking or bank account. Please see this article for more information about recording payroll transactions manually.

 

Feel free to also visit our page about the commonly used articles to get started with Payroll for future reference.

 

Thanks for swinging by the Community today and don't hesitate to post if you have other questions. Take care and success to your business.

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