Overview

This article covers how to set up retirement plan and catchup deductions.

Details

Supported retirement plans

The following retirement plan deductions/contributions are supported:

  • 401(k): conventional retirement plan for businesses
  • SIMPLE 401(k): Savings Incentive Match Plans for Employees 401(k)
  • 403(b): conventional retirement plan for public schools and certain 501(c)(3) organizations
  • SARSEP: Salary Reduction Simplified Employee Pension
  • SIMPLE IRA: Savings Incentive Match Plans for Employees IRA
  • Roth 401(k): taxable retirement plan for businesses
  • Roth 403(b): taxable retirement plan for public schools and certain 501(c)(3) organizations

Each of these plans can be set up with a "catchup" provision to allow higher deductions for qualifying older employees. Note that the SIMPLE 401(k) and SIMPLE IRA plans differ primarily in the areas of employee eligibility, loan provisions, and company contribution limits.

The 401(k), SIMPLE 401(k), 403(b), SARSEP, and 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 Amounts withdrawn from these plans after retirement are subject to income taxes.

The Roth 401(k) and Roth 403(b) plans are fully taxable when processed through payroll. Amounts withdrawn from these plans after retirement are exempt from income taxes.

Detailed information on each of these plans is available on the Types of Retirement Plans page on the IRS website.

Payments to retirement plan providers

At this time, Intuit payroll services do not send employee withdrawn funds or company contributions to retirement plan providers. This must be handled by the employer. However, Intuit's Payment Network can be used to send these funds and other deduction types, such as health care plans.

In addition, Intuit payroll services offer sufficient reports, with a breakdown by employee, to help determine what amount(s) to send.

Retirement plans not supported

Any type of retirement plan not shown on the list above currently isn't supported by Intuit Online Payroll, QuickBooks Online Payroll, or Intuit Full Service Payroll. In particular, we don't support SEP retirement plans (although we do support SARSEP plans).

Annual deduction and company contribution limits, and W-2 reporting

Deduction Limits
See article Deferred compensation limits for more information.

There are 2 limits for each type of retirement plan supported. 1 limit is used for employees under 50. And 1 limit is used for employees 50 years of age and over (includes employees turning 50 in the same calendar year).

Important!

  • After-tax Roth deduction limits are not supported. When setting up these deductions, be sure to manually enter the limit. If the employee is eligible for the catch-up limit, enter this amount as the annual limit. If a limit is not set, they may contribute past the limit resulting in the need for payroll corrections.
  • Under IRS guidelines, if you are using both a 401(k) and Roth 401(k) deduction item in the same calendar year for an individual employee the combined deduction of both items cannot exceed the annual 401(k) limit in a given year. If an employee switches from a traditional 401(k) to a Roth or vice-versa the limit will need to entered and monitored manually so that the total combined deduction does not go over the limit, this can be done by taking the annual limit and subtracting what was already deducted under the previously used 401(k) item; Then simply add that figure to the limit of the new item. That modified limit will need to be removed (or modified in the case of a Roth 401(k)) at the start of the next calendar year to avoid having the deduction stop prematurely.
  • Under IRS guidelines, SEP-IRA  plans do not need to be reported on the employee's W-2, however their W-2 must have box 13 for returement plans checked. To have this done, please contact customer support before the end of the current year in the 4th quarter. For more information on SEP-IRA plans, please see the IRS Website: https://www.irs.gov/retirement-plans/operating-a-sep

Annual Maximums for Company Contributions
For company contribution limits, refer to IRS Retirement Topics - Contribution Limits or your plan sponsor. Below, are a few Company contributions rules from the IRS site:

  • 401(k) and Profit-Sharing Plan Contribution Limits: The annual additions paid to a participant's account cannot exceed the lesser of: 100% of the participant's compensation, or $52,000 ($57,500 including catch-up contributions) for 2014 ($53,000, or $59,000 including catch-up contributions for 2015).
  • Simple IRA: The employer is generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. This requirement does not apply if the employer makes nonelective contributions instead.

Set up a retirement plan deduction and company contribution

When setting up a deduction for a Retirement plan, the plan you select will automatically set up a company contribution item to be used if needed. Note: After-tax Roth 401(k) and 403(b) are not available as company contributions through our service because the entire contribution should be paid and reported separately through the provider, and not through the same account as the employee after-tax deduction funds.

For more information, see IRS Retirement Plans FAQs on Designated Roth Accounts.

Intuit Online Payroll/Intuit Online Payroll for Accountants

  1. Go to Setup.
  2. Under Payroll, select Deductions / Contributions.
  3. Click Add a New Deduction/Contribution.
  4. For Category, select Retirement Plans.
  5. For Type, select the applicable retirement plan.
  6. Enter the name of the provider or plan to name the payroll deduction/contribution item.
  7. Click OK.
  8. If you export to your accounting software, be sure to map this item in your export settings.

Intuit Online Full Service Payroll

Contact Payroll Support for assistance.

QuickBooks Online Payroll/QuickBooks Online Full Service Payroll

  1. Select the Gear icon at the top > Payroll Settings.
  2. Under Payroll, select Deductions / Contributions.
  3. Click Add a New Deduction/Contribution.
  4. For Category, select Retirement Plans.
  5. For Type, select the applicable retirement plan.
  6. Enter the name of the provider or plan.
  7. Click OK.

Assign a retirement plan deduction or contribution to an employee

Intuit Online Payroll/Intuit Online Payroll for Accountants

  1. Go to Employees.
  2. Select the employee's name.
  3. Click Edit in the Deductions & Contributions section.
  4. Select Add new deduction or contribution.
  5. Select the deduction/contribution.
  6. Enter the amount per period under the Employee Deduction and/or Company Contribution.
  7. Click Save.
  8. Click OK.

Intuit Online Full Service Payroll

Contact Payroll Support for assistance.

QuickBooks Online Payroll/QuickBooks Online Full Service Payroll

  1. Select Workers from the left menu > Employees.
  2. Select the employee's name.
  3. Click the pencil icon in the Pay section. Scroll down on the deductions section and click the pencil icon.
  4. Select Retirement Plans under Deduction/Contribution type and select the type of Retirement plan
  5. Enter the name of the provider and the amounts per pay period.
  6. Click Done.

Remove a retirement plan deduction for an employee

Intuit Online Payroll/Intuit Online for Accountants

  1. Go to Employees.
  2. Select the employee's name.
  3. Click Edit in the Deductions & Contributions section.
  4. Click the trash can icon to the right of the deduction to remove.
  5. Click Confirm to complete removal of the deduction.

Intuit Online Full Service Payroll

Contact Payroll Support for Assistance

QuickBooks Online Payroll/QuickBooks Online Full Service Payroll

  1. Select Workers from the left menu > Employees.
  2. Select the employee's name.
  3. Click the pencil icon beside Pay.
  4. Scroll down to the deduction section and click the trash can icon.
  5. On the confirmation, click OK.

Note: Removing a deduction does not delete previously deducted amounts from the employee's paycheck records.

Related Articles

Deferred compensation limits
IFSP/QBFSP: Manually check the W-2 retirement plan box