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D
ding2
January 27, 2025
Question

How to add solo 401k employee, employer and after tax contribution on payroll?

  • January 27, 2025
  • 1 reply
  • 0 views

I'm self-employed and using QuickBooks online.

We are planning to use Mega Backdoor Roth strategy with Solo 401K. Our plan allows ROTH contributions for both Employee and Employer. Also, it allows After Tax contribution in accordance with Mega Backdoor ROTH strategy. All 3 types of contributions need to be made through monthly Payroll.

How do we set this up in QuickBooks Online Payroll setup?

Appreciate any assistance on this.

 

1 reply

J
Jessavell_A
January 27, 2025

You've come to the right place for assistance, @ding2. You can set up 401(k) contributions through the Employees section in the Payroll menu. I'll guide you through the process.

 

You can add those three types of contributions, however, you'll need to create two different items for this. Here's how to set it up:

 

1. Click on Payroll in the left menu. Then, select Employees.

2. Choose an employee from the list.

3. Click on Edit in the Deductions & Contributions section.

4. Click + Add deduction/contribution.

5. Select Retirement Plans for the Deduction/contribution type and 401(k) for the Type.

6. Enter other necessary details, including the Employee deduction and Company contribution.

7. Click Save.

8. Repeat steps 4 to 7, but choose After-tax Roth 401(k) for the Type. Then, enter the necessary details and click Save again.

 

To learn more about setting up retirement plan, feel free to read this article: Set up or change a retirement plan.

 

Additionally, run payroll reports in QBO to have the necessary details about your employees' deductions and contributions, which will streamline your tax filing.

 

Once done, you might want to Explore QuickBooks Payroll to help optimizing your payroll processes within the program. Our specialists are available to provide valuable insights and techniques for managing payroll-related activities effectively in the program.

 

Please don't hesitate to circle back in this thread whenever you need additional guidance setting up 401(k) contributions in QBO. I'll be happy to assist you further.

D
ding2Author
January 27, 2025

Thanks for quick response. 

To clarify - there are 3 types of contributions we are working with 

Category 1 - Employee Contribution - can be pre tax of ROTH (after tax)

Category 2 - Employer Contribution - can be pre tax or ROTH (after tax)

Category 3 - In addition to above 2, third kind of contribution is "After Tax" but it is not ROTH. It's just called After Tax contribution which can be converted to ROTH as a separate task but that conversion will happen after payroll.

The question is specific to this third category of After Tax contribution through payroll. Is there a Standard category for this type? Or can we create a Custom category and add it to the Payroll along with first 2 category? 

 

 

H
Heide DC
January 27, 2025

Thank you for the additional information you provided, ding2. I'll share some details when adding payroll contributions.

 

For the third category you want to set up, we currently do not have a dedicated tax tracking type available. Additionally, there is no option to create a custom contribution category.

 

As a workaround, you can select from the types listed under Health insurance or Retirement Plans, as these contributions have after-tax options.

 

Also, it's best to consult your accountant to provide professional advice to determine the most effective way to add your payroll contributions using QuickBooks.

 

Moreover, you can visit this article to monitor your contributions or deductions by generating reports within the program: Run payroll reports in QuickBooks.

 

Every contribution counts, and we ensure to guide you as far as we can. You can reply to this thread if you require further help regarding payroll contributions through QuickBooks.

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