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JALAN1
March 23, 2024
Question

How to setup employee contributions to 401k plan made from personal funds for previous year and going forward for bi-weekly pay.

  • March 23, 2024
  • 1 reply
  • 0 views
I am a one person S Corp business and started a 401k plan for 2023 and made contributions both through the business, and from my personal funds and not as deduction from my salary.  My bookkeeping person didn't setup the contributions in QB for the later, and as a result, my W-2 didn't include the amount contributed from the personal side and this was caught when we closed out the 401k plan for the year.  My bookkeeper got with QB payroll and got my W-2 corrected, but still hasn't setup or fixed it in QB.  I'm trying to set this up but I pay myself on a bi-weekly basis but make contributions from my personal account once a month and I only see options in set up for per pay check, as a percentage of gross pay, or per hour worked.  So I have multiple questions.  First, should I just use the per pay check option and split the contribution amount equally? ie, if I make a $1,000 contributions, show as $500 per pay check?  How do I go back and enter the contributions for 2023, and will this affect anything concerning payroll taxes paid during the year?  If I add this deduction, will it then start deducting it from my pay through payroll, so that I should stop paying this from personal funds, and if so, should it have been setup this way to start with?

1 reply

K
KimberlyS
March 23, 2024

We appreciate you posting your concern here in the forum, JALAN1.

 

Let me share information regarding setting up 401 (k) in QuickBooks Online Payroll.

 

Please know you no longer need to set up 401 (k) contribution/deduction for the previous year (2023) in the system since your W-2 was already corrected.

 

On the other hand, please know that setting up 401 (k) in QuickBooks depends on whether you'll choose per paycheck, percentage of gross, or per hours worked. If you're unsure, it would be best to consult your accountant for further guidance.

 

Here's how:

 

  1. Head to Payroll.
  2. Select Employees, then choose the employee.
  3. Click on Start or Edit from the Deductions & Contributions section.
  4. Choose + Add deduction/contribution.
  5. In the Deduction/contribution type dropdown, select Retirement Pans.
  6. Pick the applicable retirement plan under Type. You can choose a Company-only plan if you need to track a company-only contribution with no employee match.
  7. In the Description (appears on paycheck), key in the provider name or plan and then fill in the remaining fields.
  8. Under Company contribution, select the dropdown menu to choose how you want to calculate the amount if you have a company match. Complete the new fields to enter the amount or percent per paycheck and annual maximum.
  9. Select Save, then Done.

 

For more information, you can refer to this article: Set up or change a retirement plan.

 

Moreover, QuickBooks is retroactive. Hence, the supposed deduction from the previous paycheck will apply to the next paycheck after adding 401 (k), as it will automatically adjust with the deduction. Instead of your personal funds, it will deduct the amount through your payroll.

 

Furthermore, you might want to scan these resources to gain insights from your business finances like wages, taxes, and deductions: Run payroll reports.

 

Feel free to click the Reply button to notify us in the Community if you have additional questions about setting up a 401 (k) deduction or other related concerns in QuickBooks Online Payroll. We're here to help.

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