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conceptionschildrensresale
July 25, 2022
Question

401k retirement plan contributions and deductions

  • July 25, 2022
  • 1 reply
  • 0 views

So I just setup ADP 401k Simple Retirement plans for my 2 employees.  I've setup the deductions on their paychecks already and their 1st paycheck had the deductions and company contributions come out just fine. 

 

I go to look on the Profit&Loss and the company contributions show up under for payroll expenses as "Company Contributions Retirement"  I go to the Balance Sheet and both the contributions and deductions are there under Payroll Liabilities. 

 

I just made a payment to ADP to pay those contributions and deductions and it shows up in my checking account so I assigned those 2 payments of $100 to "Expenses" for Payroll and it again shows up in the P&L.  Should I move those 2 ADP payments over to Payroll Liabilities or do they stay right there in Expenses on the P&L?

 

Here are pictures for references:

1st pic is the Profit&Loss showing the company contributions as well as those 2 ADP payments of $100

2nd pic is the Balance Sheet showing the Payroll Liabilities for contributions and deductions

1 reply

Rubielyn_J
Rubielyn_J
July 25, 2022

Thanks for the detailed information about your concern, @conceptionschildrensresale. 

 

A 401(k) is a qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post or pre-tax basis. 

 

Let's ensure you match the ones you record on the payroll side. If not, you can simply exclude them. To do this, here's how:

 

  1. Go to Bookkeeping, and choose Transactions.
  2. Select Banking (Take me there).
  3. Click the For Review tab.
  4. Choose the checkbox of the transactions to exclude.
  5. Click Exclude.

 

I'm also adding this article that includes the instructions and details on setting up benefits using both EZ and Custom Setup in QuickBooks Desktop: Set up a payroll item for retirement benefits (401(K), Simple IRA, etc.).

 

Feel at ease to comment down below if you have other questions about 401k retirement plan contributions and deductions. I'll be around to lend a helping hand. Stay safe!

C
conceptionschildrensresaleAuthor
July 25, 2022

No, I don't want to exclude any transactions, because then my books will be off and I won't be able to reconcile my business checking.

R
Rea_M
July 26, 2022

Hello there, @conceptionschildrensresale.

 

I can see the urgency of getting your issue resolved. Let me route you to the best support who can help you in categorizing your 401K retirement plan contributions and deductions in QuickBooks Online (QBO) to keep your financial data accurate.

 

Yes, you're correct that excluding any of your transactions may cause your books to be off-balanced, and it'll be harder for you to reconcile your business checking account. With this, to help you choose the appropriate accounts for your 401K (ADP) payments, I would encourage you to consult your accountant. They can provide expert advice and direction tailored to your business needs.

 

In case you already have an accountant, and then you want to add them to your QBO account, here's how:

 

  1. Sign in to QuickBooks Online as a primary admin.
  2. Go to Settings or Gear ⚙ icon and select Manage users.
  3. Select the Accounting firms tab.
  4. Click Invite.
  5. Enter your accountant's info and select Save.

 

Once everything is all set, I would encourage you to reconcile your accounts every month. Doing so will help you monitor your income and expense transactions and detect any possible errors accordingly. For the step-by-step guide, please see this article: Reconcile an account in QuickBooks Online.

 

You may also want to visit one of our Help pages as your reference in managing your QuickBooks account and your business's growth and transactions using QBO: QuickBooks Help and Support. It includes QuickBooks Help articles, Community discussions, and video tutorials, to name a few.

 

If there's anything else you need, or you have other questions about managing payroll and 401K transactions in QBO, I'm always ready to help. Take care, and I wish you continued success, @conceptionschildrensresale.

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