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J
Jon H
March 11, 2023
Question

Reducing retirement plan liabilities

  • March 11, 2023
  • 1 reply
  • 0 views

I recently signed up for Gusto to manage my payroll as I converted to an S-Corp (I'm the only employee).  Gusto is creating a payable associated with my solo 401k contributions.  I then manually set up a transfer from my business bank account to the plan's custodian and record an expense for the contribution.  The cash balances match in my bank account and quickbooks online, but the liability is not decreasing with the payments.  Is there a better way to enter these transactions or link the expense to the payable account so that it decreases the liability?  If I'm doing it correctly already, how do I correctly reduce the payable?  Thanks!

1 reply

LieraMarie_A
LieraMarie_A
March 11, 2023

Hi there, @Jon H.

 

To clarify, did you enter an expense to record the liability payment? To reduce the payable, you'll have to debit liability and credit the bank account you used to pay it. I suggest reviewing the expense transaction you created. Then, select the appropriate liability account. However, ensure to consult an accountant to ensure everything is accounted properly. You may visit our Find-A-ProAdvisor site to search for certified professionals.

 

Follow these steps to edit the entry:

 

  1. Go to the Gear icon and then Chart of Accounts.
  2. Find the bank account used for payroll liabilities and click View register.
  3. Find the transaction and select it.
  4. Click Edit.
  5. In the Category details section, make sure the appropriate liability account is entered.
  6. Click Save and close.

 

Additionally, here are payroll taxes-related articles for additional reference and guide:

 

 

If you have any other additional payroll concerns, please add them below. I'll be sure to help.

J
Jon HAuthor
March 11, 2023

Gusto creates the liability during payroll.  I manually enter the expense when I transfer the funds to the solo 401k custodian.  Is there a way to link the expense to the liability to avoid having to debit the liability?

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