Set up 401k in QuickBooks Desktop

Set up 401k in QuickBooks Desktop
  • December 25, 2023

What is 401k in QuickBooks Desktop?

A 401k is an employer-sponsored retirement savings plan. This helps employees to save and spend a portion of their paycheck before levying taxes. Taxes will not be collected until the money is withdrawn from the budget.

With a 401k plan, you can easily decide how you should invest your assets. Some plans offer a portfolio of mutual funds consisting of investments in stocks, bonds, and the money market.

Target-date funds tend to be the most popular option, a combination of stocks and bonds that gradually become more conservative as you retire.

Moreover, the 401k plan also consists of plenty of restrictions and caveats so it is recommended you get in touch with QuickBooks technical support toll-free helpline number.

What are the Different types of 401k retirement plans?

This is the sort of professional plan that the employer launches with which employees reduce their salaries to contribute on a pre-tax basis. It is for employees who are eligible for this, and depending on their eligibility, employers may match contributions and can add the benefit-sharing feature to it.

There are Two Different Types and These are:

  1. Standardized: All considered wages that compensate are subject to payment when the deferral is determined. Depending on the norm, both the employer and the employee have to pay for the plan accordingly.
  2. Non-Standardized: The proposals have no norm. In this, the employer and the employee may choose not to pay for the deferral of retirement.

Who has Access to a 401k?

Both types of 401(k)s are made for employees and are generally offered by their employers. Some smaller businesses are unable to afford official retirement plans, so it is up to their employees to find one themselves.

If you are employed by a company offering a 401(k), there are certain requirements such as vesting (time required in the company) that may arise before you can receive benefits. Once all the requirements are met then employees are allowed to elect a plan and start contributing.

Steps to set up 401k in QuickBooks Desktop

This plan is generally for the retirement benefits for the employee but it is necessary to set up to avail of the retirement benefits. To do 401k setup, you need to do payroll setup and it can be done by two methods including EZ and custom setup. 401k setup automatically adds the company contribution to employee retirement benefits.

1. Method One: EZ Setup

  • Initially, open QuickBooks software.
  • Next, select the menu and then click on the lists option.
  • After that select and click on the option named Payroll Item List.
  • Then hit on New button.
  • Now click on the EZ setup option and hit the Next button to further proceed.
  • Perform the on-screen instructions.
  • Then take care that if an employee has the local income tax then use this 401k. retirement program would not minimize it.
  • So you have to de-select the choice for local tax.
  • Now it generates a payroll item.
  • Click the Edit button, and verify that the payroll element has all of the Vendor's important details.

2. Method Two: Custom Setup

You can also set up a 401k using Custom Setup to acquire retirement benefits. You need to follow steps:

  • The very first step is to open the Lists with QuickBooks.
  • Select and click on the Payroll Item List that you can find in the bottom left corner.
  • Next, hit the New option.
  • After that, Select the Custom Setup option and then the hit Next button.
  • Now click on the Company Contribution option and then hit the Next button to proceed further.
  • Type the name and then click the Next button.
  • After that select the same account from the option named Liability account.
  • Also, select the account from the Expense account and hit the Next button.
  • Go with the classification matching the program in the Tax Tracking form window, and click the Next button for 3 times.
  • So, if you see that the same sum is applied to most workers, insert it at the top of the Limit Type area.
  • Since this plan offers a limited annual contribution then enter it accordingly if it is the same for all employees.
  • Then hit on the option named Finish to complete the setup.
  • Finally, you are eligible to access the employees’ profile and accordingly, you can make changes in the contribution account in case you find the contribution is different.

With QuickBooks Desktop Payroll, you can get a Guideline 401(k) plan

Employee retirement plans offer significant advantages to your workforce. Through our collaboration with Guideline, we present you with the opportunity to access budget-friendly, seamlessly integrated 401(k) plans via QuickBooks Desktop Payroll.

Tailored to suit your business and team requirements, you can opt for a plan that aligns with your needs and easily establish it using QuickBooks. Once the setup is complete and you execute payroll incorporating the fresh contributions, all the relevant information and contributions will be effortlessly transmitted to Guideline. This streamlined process ensures there are no additional steps required on your part.

Step 1: Verify or Add Employee and Business Info

Before choosing a 401(k) plan, it's essential to ensure that the following information, which is necessary for utilizing the Guideline 401(k) service, is included in your employees' profiles within QuickBooks. Please provide this information to ensure seamless use of the Guideline 401(k) service.

  • First and last name
  • Social Security Number
  • Hire date
  • Birth date
  • Employment status 
  • Pay rate / Salary
  • Email address

Verify your QuickBooks business information as well

  • Business legal name and address
  • Federal Employer Identification Number (EIN)
  • Entity type (Corporation, Sole Proprietor, etc.)
  • First and last name, as well as email address, of the Principal Officer
  • Username and password for the business bank account, or routing and account numbers
  • Total number of pay schedules utilized for employee payments
  • The current count of active employees on the payroll

Step 2: Buy and set up a Guideline 401(k) plan

After you have added and gathered the necessary information, you are ready to buy a plan.

  • Access your QuickBooks company file as the Primary Administrator.
  • Navigate to the Employees section, then click on the Payroll Center.
  • Choose the Employee Benefits tab.
  • Locate the 401(k) plan card and click on Learn More.
  • It might be necessary to log in to your Intuit account to view the available plans.
  • Click on the Build your plan button. This action will direct you to the Guideline website, where you will input your business details and select the most suitable 401(k) plan for your team and company.
  • Proceed by following the prompts provided on the screen to configure your plan. Certain forms will already contain information from QuickBooks. If any details are inaccurate or missing, you can rectify them by closing the website and making corrections within QuickBooks.

How Do get in touch?

For many reasons, 401k plans proved common with employees. The tax deferment is high on the list of factors. These include the improved portability of this program, contributions matching employers, and greater flexibility associated with investment self-direction.

However, 401k programs are subject to various and specific rules, regulations, and criteria for tax qualification. So it is suggested you connect with QuickBooks technical support toll-free helpline number, they guide you on all requirements related to 401k. You can also set it up by yourself with the help of the above-mentioned steps. You can also get in touch with the technical team by dropping an email or doing a live chat with professionals.

Frequently Asked Questions

QuickBooks Basic, Standard, Enhanced, and Assisted Payroll users can use the Intuit 401(k) employee benefits plan. Before you get started with this, there might be several questions that arise in your mind. Let’s check out here:

What kind of account is 401k in QuickBooks Desktop?

A 401(k) is a retirement savings account/plan which is sponsored by an employer in any organization. Before taxes are taken out, it helps employers to save and spend a piece of their paycheck. Taxes are not paid until the money from the account is removed.

What exactly is the guideline for a 401k plan?

The Guidance is an all-inclusive 401(k) and full-stack strategy that automates the management of growing business plans and compliance with them.

How do we set up a Roth 401k in QuickBooks Desktop?

The setup of a Roth 401 (k) is pretty easy. Here’s how:

  1.  Initially, select Employees.
  2. Next, choose the desired employee’s name.
  3. Now, in the section of Contributions & Deductions, pick the Edit option.
  4. After that, go to the Benefits section in the Deduction.
  5. Then choose the option to Add a Deduction.
  6. Choose the Retirement plan as per the category and After-tax Roth 401 (k) as a type.
  7. Once done then enter the appropriate description.
  8. And finally, press OK.

Can you do 401K through QuickBooks?

Employee retirement plans provide valuable advantages for your workforce. Through our collaboration with Guideline, we bring you the opportunity to access cost-effective, comprehensively integrated 401(k) plans within QuickBooks Desktop Payroll. You have the flexibility to choose a plan that aligns with your business and team requirements and seamlessly establish it using QuickBooks.

How do I set up an employee 401K?

  • Generate a 401(k) plan document: Draft a plan document that adheres to IRS Code regulations and delineates the specifics of your retirement plan.
  • Establish a trust for plan asset management: Create a trust to oversee and safeguard the assets within the plan.
  • Manage records of employee contributions and 401(k) values: Maintain accurate records of employee contributions and the value of assets held within the 401(k) plan.
  • Furnish information to plan participants: Supply pertinent details to participants of the plan, ensuring they are well informed about its workings and benefits.

Why not use a payroll provider for 401k?

Plans from payroll providers are typically not cost-effective. The company and participants may find them easier to set up, but they are more costly. Generally, payroll providers do not provide enough diversified funds in their plans to allow participants to reach their goals.

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