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How to set up a 401k deduction in EasyACCT

SOLVEDby IntuitEasyACCTUpdated 1 week ago

To set up 401(k) deductions, contributions, and automatic deductions, follow the steps below. You’ll also find steps on how to set up employer match and how to process payroll. 

Here’s how to set up a 401(k) deduction in EasyACCT: 

  1. Set up the Employee Wage/Withholding tab with a withholding item.
  2. Set up the Contrib./Deductions tab to set the amount of the Employee Contribution per pay period.
    • The program will calculate the correct amount when generating a batch payroll.
    • After the Fact payroll or deleting a check requires manual calculation and adjustments.
  3. Set up the Employer Matching Contribution on the Contrib./Deductions tab.
    • The company contribution is based on the employee's contribution, not the gross pay.
    • The withholding item set for the employee should be the one you set for the employer to match.

How to set up a 401(k) contribution for employees: 

  1. Go to Write-up Processing, Update Company Files, then Employee Information
  2. Select an employee and then Edit Record.
  3. Switch to the Wage/Withholding tab. 
  4. In the first available WH field, go to the W-2 Code field.
  5. Select code 12D from the dropdown menu.
  6. Entering code 12D first will fill in the Description and automatically apply the taxability. 
  7. If the 401(k) Deduction is exempt from the State Unemployment Tax Act (SUTA), state or local taxes, enter the applicable tax codes.
  8. To indicate that this is a retirement plan on Box 13 of the W-2, enter code 2 on the main tab for W-2 Box 13 items.

To set up a new employee quickly, go to Update Company Files, Company Information, select Default Payroll Information, and apply the same changes in steps 4–6.

How to set up a 401(k) with an automatic deduction:

  1. Switch to the Contrib./Deductions tab.
  2. In the W/H Field column of the Automatic Deductions section, select the appropriate withholding item for the 401(k) Deduction from the dropdown menu.
  3. In the Periods column, enter the frequency of the employee deduction by entering the number(s) that represents the pay period you wish to make the deduction. 
    1. For example, if the deduction is from only the first and third paychecks in the month, enter 13. 
    2. If the deduction is calculated for all pay periods in the month, enter 12345.
  4. If you calculate the deduction as a percent of gross pay, enter a percentage.
    1. If the deduction is a flat amount per check, enter the amount.
  5. If there's a maximum amount to withhold, enter the amount in the Balance field.
    • This amount is reduced with each paycheck where the deduction is withheld.  
    • When the Balance is reached, the program will stop withholding for 401(k).

If you delete a check, you must adjust the balance manually.

How to set up employer match:

The company contribution is based on the employee's contribution, not the gross pay. The withholding item set for the employee should be the one that’s set for the employer to match.

  1. Above the Automatic Deductions section on the Contrib./Deductions tab, set up the Employer Matching Contribution.  
    • The company contribution must be a flat dollar amount per pay period or a percentage of the employee's contribution amount, not a percentage of the employee's gross pay.
      • If you enter both a percent amount and a flat amount, the contribution will be calculated as a percentage of the employee contribution plus the flat amount.
  2. DR ACCT - Enter the expense account you wish to assign to this company contribution and select the Arrow next to the field.
    1. Use DR/CR codes when the company contribution doesn't affect the employee's pay.
      • If this contribution affects the employee's payroll check or W-2, don’t select a DR ACCT for the contribution; use a GP code for this company contribution.
  1. CR ACCT - Enter the liability account you need to assign to this employee contribution and select the Arrow next to the field.
    • If this contribution affects the employee's payroll check or W-2, don't select a CR ACCT for the contribution; use a GP code instead.
  2. GP Field - Select the GP code used to pay the company contribution to the employee.
    • You may wish to set up a separate GP code for this company contribution.
    • If this contribution doesn't affect the employee's payroll check or W-2, don't select a GP code for the contribution. Instead, be sure to assign the appropriate DR account and CR account.
      • You can only select DR/CR or GP, not both. 
      • If you set up a GP code, select the corresponding check marks to indicate the tax treatment.
  3. Periods - Enter the frequency of the company contribution.
    1. Enter the number(s) that represents the pay period in which the contribution is made. The number of pay periods is based on months.
  4. W/H Field - Enter the corresponding WH code (1–10) on which you want the company contribution based.
    • This should match the WH field that calculates the Employee Contribution.
  5. Percent - Enter the percentage amount of the company contribution that’s based on the employee's contribution (based on the W/H field).
  6. Amount - Enter the flat amount of the company contribution.
  7. Limit - Enter the maximum amount of the company contribution.
    • For example, if you’re entering a 401(k) Employer Matching Contribution, and the company maximum Annual company contribution is $4,000.00, enter it in this field.
    • When the company contribution accumulation reaches this amount for a particular employee, the contribution ceases to calculate for the employee.
    • If the field is left blank, the Employer Matching has no limit.

How to process payroll:

Contributions/Deductions will only calculate automatically if:

  • You’re using Batch Payroll.
  • The Current Pay Period for Contrib./Deductions section in the center of the Payroll Check Computation screen has a number in the Weekly, Bi-weekly, or Semi-monthly fields.
  • All pay items you wish to include in the calculations are on the Payroll Transaction Entry screen. 
  • You manually added pay items in the Review Computed Checks screen (if so, you must manually edit the 401(k) Deduction as well).

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