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Camilob
June 7, 2023
Question

Retirement plan contribution limits: 50+ Catch-up contributions

  • June 7, 2023
  • 1 reply
  • 0 views

How does Quickbooks handles the 50+ Catch-Up Contributions?

 

My understanding is as follows:

1. The employee MUST have two payroll items: 401(k) item AND a 50+ Catch-up contribution item.

2. The Catch-up contribution will ONLY activate when the employee hits the 401(k) limit 

 

Could you confirm if my understanding is correct, please? I've been reading different blog posts about the topic, but it's not yet clear how the system works. Your help is greatly appreciated!

 

My recap about the post I've read is below:

 

Blog 1 (2018): Admin needs to delete the 401k deduction item for the employee so that they can create the 401k catch-up item. [This method differs from the more updated post]

Link blog 1: https://quickbooks.intuit.com/learn-support/en-us/install/how-do-you-change-the-annual-maximum-on-the-401k-deduction-from/00/192210

 

Blog 2 (2020): The 50 year+ old employee MUST have an additional payroll item. The admin should set up 401(k) Catch-up item for the additional $7.5

 

Link blog 2: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/when-the-is-intuit-going-to-allow-people-over-50-to-contribute/00/474238#:~:text=For%20employees%20over%2050%20years,are%20two%20different%20payroll%20items.

 

Blog 3 (2023):  The employee MUST have both payroll items (aligned with post 2). The recommendation is not to edit or delete the prior 401(k) item. The Catch up contribution item will activate when the employee hits the 401(k) limit on the traditional deduction.

 

Link blog 3: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/i-set-up-401k-catch-up-deduction-in-employee-profile-for-2500/00/953503

1 reply

A
Archie_B
June 7, 2023

Hello, Camilob.

 

I appreciate your time and effort in sharing these details to ensure that your employees' 401k catch-up contributions are handled correctly. I have some information that will help clear up any confusion.

 

When adding the 401(k) Catch-up, make sure not to edit or delete the previous 401(k). This is the basis on which QuickBooks Online Payroll will calculate the catch-up. Keep in mind that the system will calculate it once you reached the 401(k) limit. 

 

Also, the IRS sets a limit on how much you can contribute to a retirement plan in a given year. The amount you and your employee can contribute depends on many factors.

 

Here's an article that will show the employee contribution limits for 2023 and 2022: Understand retirement plan contribution limits.

 

I've also included a link to the IRS's 401(k) Resource Guide - Plan Participants - General Distribution Rules for more information.

 

Feel free to return to this Community thread if you still have other concerns about 401k and other payroll-related concerns.

C
CamilobAuthor
June 7, 2023

Thanks but I need more help.

 

When we tried to add the 50+ CUC benefit for a specific individual we got a message that said:

“You cannot select regular and catch-up contributions of the same type.” (See screenshot.)

 

It sounds like for people who are eligible (ie 50 years old), we need to:

  1. Unenroll from the traditional 401(k) benefit (although we don’t delete the benefit from the system)
  2. Enroll them in the 50+ CUC benefit

 

Now the employee’s contributions will continue until he hits the 50+ CUC limit.

 

Are we missing anything?

 

 

 

    JenoP
    JenoP
    June 7, 2023

    Thanks for sharing a screenshot of the error message, Camilob.

     

    You are not missing anything. The error message indicates that a similar payroll item has already been added in the same employee. Although, the information in your screenshot does not show an existing 401k catch-up item. 

     

    There are also times that too much cached or other browser issues can cause errors or unexpected results when working in QBO. Allow me to share the steps to sort out some of the most common browser-related issues in the program.

     

    Let's start by switching or using other browsers like Google Chrome, Mozilla, Microsoft Edge, or Safari. They are all compatible with QBO and can help us isolate the issue. Use these keyboard shortcuts on how to do that:

     

    • Ctrl + Shift + N for Google Chrome
    • Ctrl + Shift + P for Firefox
    • Control + Option +P if you're using Safari
    • Ctrl + Shift + P for Microsoft Edge

     

    After logging back in, set up the catch-up contribution once again. If you're able to it, follow the steps in this article on how to clear cached or delete internet files; Clear Cache and Cookies to Fix Issues When Using QuickBooks Online.

     

    Just in case you are still getting the same error, I would recommend reaching out to our payroll support team. They can take a closer look at this and make sure that you're able to set up the catch up item successfully. Here's an article to get their contact details: Contact Payroll Support.

     

    We also have more articles to share in case you need more payroll-related information from us:

     

     

    The Community is always here if you need anything else. 

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