401K employer matching

If I have $200 taken out of my check once a month for my 401K, my employer matches that. That would total $4800 (12x$200 twice). If my total income were $100000 the taxable income would be $100000-$2400. Quicken in it's tax summary>adjustments to income section, takes my contribution amount and adds the employers contribution together. So the result would be $100000-$4800=net taxable income, which is wrong! This makes my estimated tax due/refund amount incorrect, because my projected taxable income is always incorrect. Contributions from employer are not deducted from gross income it is just matched and deposited in your 401k account. This is has happening with me for years in Quicken. Is there a work around for this that I'm not seeing?

Best Answer

  • JoeJoe
    Accepted Answer
    I've been continuously working with the issue over the past few days and found the problems.
    1. I did check the "Edit Account Details" dialog box and changed them to have nothing.
    2. When I was out of work 10 yrs ago I had an IRA acct, apparently that is treated differently than a 401k acct. So the investment acct was an IRA. I moved all those transactions to my new 401k and, voila, everything is right!! Minus transactions in the wage summary(401k contributions), and no transactions in the a "adjustments to income" dialog area. Thank you for your help and responses.
    I feel a weight off my shoulders since I put up with this for many years and never really had the time to focus and try to find a fix.

Answers

  • jtemplinjtemplin Member ✭✭✭
    Are you using a split transaction to separate out the different contribution types? See https://www.quicken.com/support/how-do-i-track-my-employers-401k-matching-contribution-if-i-havent-set-my-paycheck
  • JoeJoe Member
    edited May 18
    I set it up as a paycheck input.

    It sets it up as pre tax deductions. Medical, 401k, etc.
    It also sets up "employer match" in the paycheck transaction dialogue field. If I put a $0.00, that would solve the problem, but I'll be short funds in my 401k account. 
  • JoeJoe Member
    Paycheck set up:


    Pre-Tax Deductions

    Name                                                      Category    Amount

    Medical Insurance...

    Employee Contribution Transfer               [401k]         $100



    Employer Match                                                         $100 

    Best I can do. Won't let me copy and paste.
  • NotACPANotACPA SuperUser ✭✭✭✭✭
    $200 is withheld from your paycheck once a month ... but how many times a month are you paid?
    I'm thinking that you may need 2 paycheck transactions.  One with the $200 transfer to the 401k account ... and 1 without.
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • JoeJoe Member
    It really doesn't matter how many times a month I get paid. It's just an example with fictional numbers. The point is, Quicken treats 401k employer match as income, and it should not. It should really do nothing with it except to put it in the 401k account for investing. I solved the problem by putting 0.00 in the employer match field and just go to the 401k account and enter it manually. That's a bug in Quicken that hasn't been fixed.
  • volvogirlvolvogirl SuperUser ✭✭✭✭
    You need 2 lines in the paycheck entry for the employer match.  One as a positive to go to another category instead of income.  Not sure what to call it. 

    Then a line to transfer it to your 401K account just like your own contribution.  So the 2 lines will offset each other.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    From C. D. Bales:
    I've been trying to reproduce your problem and I have been unable to do so.

    I created a New Quicken file with nothing but a checking account and a 401k account. In that New Quicken file, I created a paycheck transaction with a $1000 gross salary and a 401k pre-tax deduction of $100 for the employee with a $50 employer match. I entered one of those paycheck transactions into the checking account.

    I've looked at the Tax Planner and in Reports > Tax Schedule and Reports > Tax Summary and Reports > Banking > Transaction: everywhere I look I see the $1000 gross salary reported as a positive number, the $100 employee contribution reported as a negative number, and no $50 employee contribution shown (or included in any other amount) anywhere.

    "Quicken in it's tax summary>adjustments to income section ....".

    The Adjustments section of my Tax Planner shows nothing for the 401k Paycheck. I do see the $1000 Salary and the $-100 employee contribution (no employer contribution) in the Wages section of the Tax Planner.

    [Q2019 R18.16]

    Quicken user since Q1999. Currently using QW2017.
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  • JoeJoe Member
    edited May 21
    What is your total taxable income in the tax planner. It should be $1000-$100=$900.

    In my Adjustment to Income section of tax planner, it shows the employer match as an allowable IRA deduction. I just made a ridiculous entry of $5000 as an employer match on 1 of my pay checks, and the adjustment section was increased by $5000!
  • JoeJoe Member
    So I set up a new Quicken Test File, with only a checking and 401k acct, then created a paycheck transaction with a 401k and standard deductions(Fed, state taxes,etc) Everything worked the way it was suppose to. Employer match NOT in the  "adjustments in the tax planning" section, negative amounts(my 401k contributions) in the wage section of tax planner, and my 401k and employer contributions in the 401k account. Great!!
    Back to my original Quicken File. I created a new paycheck transaction. Entered it in my checking register, NO GOOD, all the future employer matching 401k contributions were added to the adjustment section of the tax planner as an added deduction, which is wrong, and no negative amounts in the wage section. So there is some weird thing going on in my file that I've been working with for a few years. I appreciate your help in trying to work this out.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    From C. D. Bales;
    "What is your total taxable income in the tax planner. It should be $1000-$100=$900."

    Basically, yes, it's $900, year to date.

    But the tax planner plans for the whole year, so it also includes all the future 2019 paycheck Reminders making the total for 2019, $7200. [The first paycheck reminder was for May 2019 with paycheck frequency Monthly, making a total of 8 paychecks for 2019 - one already Entered, 7 still Reminders]

    My Tax Schedule report (which does not take Reminders into account) shows $900 for my 2019 W-2 income - representing the only paycheck transaction that has been Entered.

    "In my Adjustment to Income section of tax planner, it shows the employer match as an allowable IRA deduction."

    As I noted earlier, I have nothing in my "adjustments to income section" of the tax planner. 

    What is the tax line item assigned to _401Contrib in your Category List? Mine is "W-2:Salary or wages; self".

    What is the tax line item assigned to _401EmployerContrib in your Category List? Mine is blank - no tax line item assigned.

    [You may need to check the "Show hidden categories" box in the Category List to see the investment categories.]

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • JoeJoe Member
    My tax lines that you mention are the same as yours. Your contradicting what you state above in the adjustments to income section of tax planner. In the "adjustments to income section in the tax planner", the employer match should not be an allowable IRA deduction. It is not counted as income so no deduction is needed, it should just be placed in the 401k account for investing. Taxes are paid on it when it is taken out of the 401k. In my test Quicken file I have nothing in "adjustments to income section".
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    From C. D. Bales:
    "Your contradicting what you state above in the adjustments to income section of tax planner. In the "adjustments to income section in the tax planner", the employer match should not be an allowable IRA deduction."

    Nonsense.

    I did not contradict anything I said - I quoted what you said. I never said the employer match should be an allowable IRA deduction, nor that it was treated that way in my New test Quicken file. 

    I also stated clearly that my Tax Planner "adjustments to income" showed NOTHING (that means NO adjustments). Hard to make it clearer than that.

    Read my reply again, and look for the quote marks that indicate I was quoting what you previously posted.

    If you are unwilling to read the comments you get here for comprehension, you're going to make it much more difficult to get useful help.

    To expand on the fact that my Tax Planner "adjustments to income" showed nothing: While the Tax Planner "adjustments to income" display does have a line for "Allowable IRA Deduction"; in my Tax Planner that line has a value of $0.00 (which should have been clear when I said, my "adjustments to income" show "nothing")

    And when I click on the "View tax form line items used here" link for "Allowable IRA Deductions", there is NO link to any 401k contribution ... the only tax line items listed are for ... IRA contributions (self and spouse) - which is exactly what you should expect. So there is no logical way for a 401k contribution to be included in "Allowable IRA Deductions" unless your 401k contributions are being assigned to an IRA contribution tax line item - which you deny is happening.

    It you are seeing values in the "Allowable IRA Deduction" box, you should start by looking for transactions that are assigned to any of the tax line items which that deduction uses. See the Banking > Transactions report, and Customize it to display "Tax Item".

    I have demonstrated that Quicken does not produce the results you're reporting. And you have confirmed that yourself when you tried to re-create your problem in a New Quicken file - and failed. I believe Quicken is operating correctly; and that there is probably something wrong with your data.

    I believe the burden is on you to provide evidence that someone else can use to reproduce your problem ... and to make sure you read the responses you get carefully.

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • JoeJoe Member
    If you read my response earlier, I said there was something weird going on in my file. Go back and read it. I appreciate your help. Nothing can be done unless I start a new file.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    From C. D. Bales:
    "If you read my response earlier, I said there was something weird going on in my file. Go back and read it."

    No need, I know what you said - I did not (do not) consider that conclusive.

    But you did not say this before, "Nothing can be done unless I start a new file."

    Not sure how you arrived at that conclusion; "something weird going on" could be pretty much anything - something fixable, or something not fixable.

    I continued posting because I did not (and do not) think you've exhausted all the possible means of discovering (and possibly correcting) what might be going wrong in your file.

    But, if you are contented with your situation and no longer want any assistance, I will be happy to oblige you (with apologies for having already sent an additional suggestion, sent before I read your most recent response
    - you are certainly free to ignore that additional suggestion).

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    From C. D. Bales:
    Something else you could look at: open the 401k account "Edit Account Details" dialog, click the Tax Schedule button, and note whether there is a tax line shown in the "Transfers in" box. 

    I believe both the Transfers in and Transfers out boxes should be blank.

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • JoeJoe Member
    Accepted Answer
    I've been continuously working with the issue over the past few days and found the problems.
    1. I did check the "Edit Account Details" dialog box and changed them to have nothing.
    2. When I was out of work 10 yrs ago I had an IRA acct, apparently that is treated differently than a 401k acct. So the investment acct was an IRA. I moved all those transactions to my new 401k and, voila, everything is right!! Minus transactions in the wage summary(401k contributions), and no transactions in the a "adjustments to income" dialog area. Thank you for your help and responses.
    I feel a weight off my shoulders since I put up with this for many years and never really had the time to focus and try to find a fix.
This discussion has been closed.