Payroll - 401(k) maximum limits

Increasing the 401(k) limit in QuickBooks Online(QBO) is currently unavailable, Skeefer. Let's discuss some steps and alternatives you can consider to get you going with your QuickBooks task.

The standard maximum limit for 401(k) contributions is $23,500 for employees under 50 years old, and $31,000 for those aged 50 and above. For insights on the updated employee contribution limits, you can check out this page: Understand retirement plan contribution limits.

To enable your employee to contribute the maximum of $34,750, you'll have to create two 401(k) forms. Here's how:

1. Navigate to the Employees from the Payroll tab.

2. Then, select the employee's name.

3. After that, click Edit on the Deductions & contributions section.

4. Choose Add deduction/contribution.

5. Fill in the necessary information depending on your plan. Then, click Save.

6. Repeat the following steps to create another 401k form.

Please keep in mind that you should monitor this closely. If your employee reaches the desired contribution of $34,750, you'll need to remove the 401(k) deduction by processing a payroll adjustment. Here’s how to do it:

1. Click Run payroll in the Employees' page.

2. Select a pay schedule.

3. In the Actions column, choose Edit paycheck.

4. In the Employee deductions section, set the 401k company contribution to zero. This will ensure that QuickBooks stops calculating this deduction.

It's best to consult a tax advisor. This way, they can provide you other ways to get around the situation and bypass the maximum limit for 401k in QBO.

Additionally, if you need guidance on completing year-end tasks, feel free to read this article: Year-end guide for QuickBooks Online.

For more advanced payroll processing experience, consider upgrading to QuickBooks Payroll. Its time-tracking functionalities and accelerated direct deposit options are tailored to elevate your business operations.

My primary focus is to offer support to ensure you can manage 401k contributions for your employee. Utilize the comment section below so I can respond promptly. Good day.