Question

How do I set up 529 college savings plan contributions for employee?

Forum|Forum|3 years ago
March 29, 2023
1 reply
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I am using QuickBooks Enterprise and need to set up a pre-tax contribution to an employee's 529 college savings plan. I am not seeing this as an option when I try to set up the new payroll item. Help please!

QuickBooks Enterprise Suite

J

jamespaul

Hello, jemaldonado.

I'll show an overview of how we can set up the 529 savings plan in QuickBooks Desktop.

It won't outright show as an item you can select. However, we can set up the 529 savings plan as a Deduction or Company Contribution on the payroll item setup window.

Here are the full steps:

In the Add new payroll item box, select Custom Setup, then hit Next.
Select either Deduction or Company Contribution, then proceed with Next.
Enter the name. We can set it as "529 savings plan" or similar, then click Next.
Set the account tracking, then hit Next.
For the Tax tracking type, we'll want to select how this plan should be taxed and appear on tax forms.
After determining the tax tracking type, hit Next.
Check the related taxes affected by the 529 savings plan. Hit Next, then select the type of calculation.
We can select net pay for the Gross vs Net (or depending on compliance). Hit Next, then enter the rate or limit. Click on Finish afterward.

After setting the payroll item, we can add it to your employee's profile.

The settings and the tax tracking type depend on the nature of the 529 savings plan. So, it would be best if you consult a tax adviser about this.

They'll give the full details on how you would set up the 529 savings plan according to the settings on the Payroll item setup window. They'll also guide you on how you should handle your tax forms when reporting the wages.

I would also recommend checking with your state. Handling the 529 savings plan might have different tax compliance in your state.

If you need help reviewing your employee's payroll data, we can run a certain report to do this. Check this article out if you need help: Create a payroll summary report in QuickBooks.

If you'd like to set up other payroll items, or if you need help with your employee's tax information, let me know and I'll guide you through. Do you need help with certain entries or reports? Add the details to your reply. I'm here to help.