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fmode
January 25, 2023
Question

QBO - setting up an employee with both 401k election contributions and separate company 401k profit-sharing contribution

  • January 25, 2023
  • 1 reply
  • 0 views

Hello, I have a Subchapter S where I am the only employee. I am trying to set up payroll for 2023 so it accounts properly for W-2. I am looking to set up a 401k contribution, which is effectively withheld for me, and sent by my company. Second a profit-sharing plan that shows a company contribution which limits to 25% of my W-2 gross.

 

My question - do I do that by setting up two different contribution entries under Deductions & Contributions:

  1. 1. a Retirement Plans --> 401k deferral that is per paycheck for my personal elected contribution.
  2. 2. a Retirement Plans --> Company-only plan that is 25% of pay

Thank you!

1 reply

Nicole_N
Nicole_N
January 26, 2023

Welcome to the Community, @fmode. I appreciate you taking the time to explain that here. 

 

Yes, that is correct. You can set up a 401k contribution first, then add another for the company plan, which is 25% of pay. You may follow the steps below as your guide.

 

  1. Go to the Payroll menu, then select Employees.
  2. Select the employee.
  3. From the Deductions & Contributions, select Start or Edit. 
  4. Click +Add deduction/contribution. 
  5. From the Deduction/contribution dropdown, choose Retirement Plans.
  6. For Type, select 401k or the applicable plan. Fill out the necessary fields.

 

Once done, you can now add the second deduction. For more information about the process, check out this article: Set up a retirement plan.

 

You may want to visit this article to learn more about payroll schedules in QuickBooks Online: Set up and manage payroll schedules.

 

Should you need further assistance in setting up contributions, don't hesitate to reply below. I'd be glad to help. Have a nice day!

F
fmodeAuthor
January 26, 2023

Thank you for the quick reply. One follow-on question - since the company plan profit-sharing 401k contribution is not a W-2 event, why does it get entered as a separate deduction? It's actually a company expense, non-taxable to the employee, and not tied to employee compensation and elections thereof. Thank you!

F
fmodeAuthor
January 27, 2023

@Nicole_N I replied with a quick question, above, but I'm not sure you saw it. I'll await a response. Thanks!

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