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H
hburgnm
July 14, 2020
Question

When I run payroll, the Simple IRA employee deduction calculates incorrectly. Rather than being a percentage of gross pay, it's factoring in pre-tax deductions first.

  • July 14, 2020
  • 1 reply
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    1 reply

    C
    Catherine_B
    July 14, 2020

    We can verify the Simple IRA setup, hburgnm.

     

    SIMPLE IRA plans are tax-deferred. This means that deducted amounts are exempt from federal and state income tax withholding when processed through payroll. However, they're still subject to social security and Medicare taxes. Amounts withdrawn from these plans after retirement are subject to income taxes.

     

    To review the setup to an employee, you can follow these steps:

    1. Select the Workers or Payroll menu, then select Employees.
    2. Click the employee's name.
    3. Select the pencil icon in the Pay section. Scroll down on the deductions section. Then select the pencil icon for Simple IRA. 
    4. Review if Retirement Plans is selected under the Deduction/Contribution type.

    Then, we can sign out and sign back in to refresh QuickBooks. After that, recreate the paycheck to see if Simple IRA is correctly calculated. You can also click this link for more details about retirement plan deductions and contributions in QuickBooks Online Payroll.

     

    To ensure we address your concern on time, check out our support hours, and on how to get in touch with us so we can help you further.

     

    I'll be here if you have other questions. You take care and have a great day!

    D
    DI7
    November 12, 2020

    A follow-up to this question.  Our employee contribution is percentage based so the amount is different depending on the "hierarchy" of deductions (SIM, Med, dental, etc).  Is there a way for the SIMple IRA amount be calculated first prior to other deductions in order to maximize the pre-tax benefit to employees?  ie.  Can the SIMple contribution be taken out first?

    J
    jamespaul
    November 13, 2020

    Hello, DI7.

     

    I have information on how SIMPLE IRA is calculated in QuickBooks Online Payroll. 

     

    It depends on the deduction types you've already setup. Pre-tax insurance premiums are taken out first from the gross pay before other taxes and deductions are calculated. We're unable to change how the SIMPLE IRA is calculate in QuickBooks Online Payroll. However, if you don't have any pre-tax insurance premiums, then the IRA contribution will be taken out first. 

     

    This article explains more how to add or change pay types and deductions in QuickBooks Online Payroll: Add or change pay types.

     

    You can also check this article if you need help setting up your SIMPLE IRA deduction: Retirement plan deductions/contributions.

     

    If you'd like to know the year-to-date payroll amounts of your employees, you can run a variety of reports. Check this article for more details: Run payroll reports.

     

    Please check out our other help content for guides in managing your employees, and running payroll. 

     

    I'm still here if you have other questions regarding your payroll service. Just post your questions here, I'll respond as soon as possible. 

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