Methods for Setting Up 401K in QuickBooks Desktop & Online

Methods for Setting Up 401K in QuickBooks Desktop & Online

A 401K plan is a retirement plan for benefiting the employees. Here, a part of the employee’s earnings is contributed by the employer. Similar to this, you may have heard about Roth 401k. Both are two types of this retirement plan. The former one is the traditional plan on selecting which income tax is not charged while making the contributions. Whereas, during the Roth plan, when making the contributions, you need to pay this tax.  

Users need to set up both plans before they start using them. For setting up 401K in QuickBooks Desktop Payroll, you can choose between the automatic and manual processes. The EZ Setup and Custom Setup methods help you in performing the processes, respectively. Apart from this, if you want to set up a Roth 401K plan, then you need to look for the Employees tab. The given tab provides the details of all the employees and lets you perform the setup. 

What is a 401K Plan in QuickBooks?

In general, 401K is a plan that allows employers to submit a part of the employee’s salary. The contributed amount is stored as a saving from which the employees can benefit during their retirement. Post-retiring, this benefit can financially help such employees. Apart from this, you may also find the Roth plan. It can be understood as a type of 401K. It is set up for making tax-free withdrawals throughout the retirement period. This setup can be done in QB and then the employers can start contributing the amount.

How to Set Up 401K in QuickBooks Desktop Payroll?

Users can set up 401K in QuickBooks Desktop Payroll according to their preferences. They get an option of setting the plan either automatically or may also go with the manual method. The EZ Setup option lets you carry out the setup process automatically in the accounting software. Whereas, the manual process requires the usage of the Payroll Item List tab and launching Custom Setup. 

Option 1: Automatically via EZ Setup

The automatic setting up of 401K in QuickBooks Desktop Payroll can be processed with the help of the EZ Setup button. First, the Lists option is to be chosen. Then you need to tap on the Payroll Item List feature. Hit Payroll Item and move to New. After that, press the setup feature mentioned above and look for Next. Further, go with the prompts that come up on the page. 

Go through the directions to learn how to set up a 401K account in QuickBooks Desktop Payroll automatically:

  • Open your “QBDT Payroll” account.
  • Hit “Lists”.
  • Press the “Payroll Item List” option.
  • Find the “Payroll Item” tab.
  • Select “New”.
  • Tap on the “EZ Setup” button.
  • Opt for “Next”.
  • Keep following the instructions that appear on the window.
  • Now, your payroll item will be created.
  • You also need to make edits in the items of the payroll for confirming that the details of the vendor have been mentioned accurately.

Note: You may have made tax settings for this plan in the software. You may not change them if not needed.

After you have followed the above method properly, the retirement plan will be automatically set up.

Option 2: Manually through Custom Setup

The Custom Setup option, available in the QBDT Payroll software, lets the users perform the setup of the 401K plan manually. You need to open the accounting software and look for the Lists option. Then move ahead to the Payroll Item List button. Following this, head to the Payroll Item tab and click on New. Choose the Custom Setup feature and hit Next.

Complete the below-given steps for understanding how to set up 401K in QuickBooks Desktop Payroll manually:

  • Run “QuickBooks Desktop Payroll”.
  • Select the “Lists” tab.
  • Then go to “Payroll Item List”.
  • Tap on “Payroll Item”.
  • Press the “New” option.
  • Next, head to “Custom Setup”.
  • Push “Next”.
  • Then move to the “Deduction” button.
  • The “Next” tab is to be selected here.
  • In the field of “Enter Name for Deduction”, fill up the item’s name.
  • Click on the “Next” button.

Now, manual setting up 401k in QuickBooks’ this particular version will be completed. As the above method works on the manual process, you can customize it as per your requirements.

How to Set Up Roth 401K in QuickBooks Online?

Roth is a type of the traditional 401K plan. In QuickBooks Online, Roth 401K set up can be processed by availing the Employees button. The Payroll option is to be selected. Next, go to the Employees option and opt for the employee’s name. Visit the section of Deductions & Contributions and hit the Edit tab. Look for the section of Deductions for Benefits. Here, press Add a Deduction.

The below-shown method will describe how to set up Roth 401K in QuickBooks Online:

  • Click on the “Payroll” tab on the “QBO” window.
  • Tap on “Employees”.
  • Next, the employee’s name is to be chosen.
  • Move to the section of “Deductions & Contributions”.
  • Push the “Edit” button.
  • Then hit “Add a Deduction” in the section of “Deductions for Benefits”.
  • In the “Category” field, opt for “Retirement Plans”.
  • After that, head to the “Type” field and click on “After-tax Roth 401(k)”.
  • A description is to be provided in this step.
  • Once done, press the “Ok” button.

Give it some time and the Roth 401k plan will be set up on the QBO software. To make any changes to the values entered or selections made, you may use the Edit option.

How to Set Up a 401K Company Match in QuickBooks Desktop?

Company match refers to the percentage of the salary that is contributed by an employer. For getting its benefits, you need to know how to set up a 401K company match in QuickBooks Desktop. 

Users can set up a 401K company match by choosing the Payroll Info button. In the QBDT window, you may find the Employees option. Once you click on it, tap twice on the employee’s name. Then proceed to the Payroll Info tab. Now, head to the section of Additions, Deductions, and Company Contributions.

  • First, visit the “QBDT” application.
  • Head to the “Employees” option.
  • The employee’s name is to be clicked twice.
  • Now, click on “Payroll Info”.
  • Proceed to the section of “Additions, Deductions and Company Contributions”.
  • The 401(K) payroll is to be added in this step.
  • Fill up a particular rate for the selected employee.
  • Then hit “Ok” for setting the 401k company match.

Tip: If you want to set up more 401(K) plans for the other employees, then repeat the steps from 1-7.

Summing Up

The set up 401K in QuickBooks can be done by the employers for providing added savings to their employees. A brief discussion took place about the setup of the said plan in the blog. Simultaneous explanations for setting up 401K in QuickBooks, QBDT Payroll, Roth plan in the Online version of the software, etc., were carried out as well.

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments