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V
vthornton
December 31, 2024
Question

401k company match and catchup for employees 50 and over

  • December 31, 2024
  • 1 reply
  • 15 views

How can I get the system to allow the catchup contribution as well as a company contribution for an employees end of the year check?

1 reply

J
JamaicaAQuickBooks Team
QuickBooks Team
December 31, 2024

Establish a catch-up retirement payroll item first, then add a company-match contribution, vthornton. I can assist you through the process to ensure correct tracking of your employee’s plan and accurate tax computation.

 

You can start by determining the retirement plan you wish to set up for your employees and review its contribution limits. Below are the ones that QuickBooks supports:

 

  • 401(k) / 401(k) catch-up
  • Simple 401(k) / Simple 401(k) catch-up
  • 403(b) /403(b) catch-up
  • SARSEP / SARSEP catch-up
  • Simple IRA / Simple IRA catch-up
  • After-tax Roth 401(k)
  • After-tax Roth 403(b)
  • Company-only plan

 

After identifying the plan, proceed with the following steps to add a retirement plan deduction or a company-match contribution item to your employee’s profile:

 

  1. Go to the Payroll menu on the left panel, then Employees.
  2. Locate their name to open their profile.
  3. Scroll down to the Deductions & contributions, and select Start or Edit.
  4. A new window will appear when you click + Add deduction/contribution.
  5. Choose Retirement Plans in the Deduction/contribution type▼dropdown.
  6. For Type, determine the applicable retirement plan.
  7. Enter the provider or plan name in the Description (appears on the paycheck) field.
  8. Complete the remaining fields.
  9. Since you have a company match, select the dropdown menu to choose how to calculate the amount under the Company contribution. Fill in the new fields to enter the amount or percent per paycheck and annual maximum.
  10. Click Save, then Done.

 

Please know that the Form W-2 reports contributions you and your workers made towards a retirement plan. Therefore, ensure that the amounts are reflected in their paychecks on their next pay.

 

Furthermore, check out Step 3 in this article to track the contributions: Set up or change a retirement plan. It provides guidance in modifying or eliminating a deduction or contribution item.

 

Lastly, you can generate, print, and customize payroll reports to know your business standing and financial health.

 

Letting workers save for retirement through payroll allows them to accumulate additional funds for their future. Add any clarification about the process below so I can help you further. Happy holidays!

O
oaklandsmile
January 25, 2025

Please help, quickbooks online payroll does not allow both 401K catch up retirement plan and 401K match by employer. When you try to add both, you get an error message:  "Your employee cannot have 401(k) Catch-up and 401(k). If you would like to add 401(k), please delete 401(k) Catch-up."  Please suggest the right way to do this so employees over 50 and also get company match.  Thanks

 
I
Ivan_GModerator
Moderator
January 25, 2025

I'll explain why you're receiving an error when adding two 401(k) plans and share how you can appropriately handle this situation below, oaklandsmile.
 
Please know that you can only select one deduction from your 401(k) plan for your workers in QuickBooks Online (QBO) Payroll. That's why you're encountering the error you've mentioned when adding a Catch-up contribution.
 
To address this situation, you'll have to determine which type of retirement contribution you'll have to use for your employees. If unsure, you can check with the IRS or tax expert to ensure you've set up the accurate plan for them.

If you need to use the Catch-up, you'll have to delete the regular 401(k) and add the 401(k) Catch-up to your employee's profile. The year-to-date amount of the removed 401(k) item remains in your records. Its balance will be applied to the new (Catch-up) plan you generate.

 

Refer to these steps to proceed:

 

  1. Go to the Payroll menu, then Employees.
  2. Choose the employee from the list.
  3. Scroll down to the Deductions and contributions section and click Edit.
  4. Tick the designated Trash Bin icon for the 401(k) retirement plan.
  5. Confirm the action by hitting Delete.

 

After that, generate the 401(k) catch-up retirement contribution:

 

  1. Click the + Add deduction/contribution option.
  2. Choose + Add deduction/contribution from the Deduction/contribution dropdown.
  3. From the Deduction/contribution type, select Retirement plans.
  4. Pick 401(k) Catch-up as its Type.
  5. Add a Description and complete the rest of the page accordingly.
  6. Once done, hit Save.

 

Deleting the regular 401(k) and adding the 401(k) Catch-up item to your 50+ employees allows them to contribute to the plan while still receiving the company match. For more information about managing retirement contributions, check out this link: Set up or change a retirement plan.

 

I'm also adding these articles that can help you gather more insights about the Catch-up plan and running payroll reports in QuickBooks:

 

 

Finally, if you're using QBO Payroll Core, you might want to explore our Payroll Premium and Elite offerings. Both subscriptions have advanced features that could be helpful for your business needs.

 

You can always reply to this thread if you have further queries about handling worker's 401(k) in QBO Payroll. We're always delighted to help.

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