Add Paycheck Post-Tax Deduction: 401(k) ROTH

Currently, the PAYCHECK feature only allows for Pre-Tax 401(k) contribution, and associated Employer Match.

Proposal: Include a Post-Tax 401(k) [ROTH] and associated Employer Match deduction

I have a Roth 401(k) but have to create Custom Post-Tax Deduction entries to correctly reflect this transaction. Roth 401(k) plans have been available for years. Why hasn't Quicken kept up and added this feature to their program?
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Comments

  • NotACPA
    NotACPA SuperUser ✭✭✭✭
    edited March 2020
    I don't understand your request.  Why can't you add your post-tax Roth 401k deduction into the Paycheck Wizard in the same manner as other post-tax deductions?
    Only, in this case, it would be shown as a transfer to the Roth 401k account.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • qw_u$er
    qw_u$er Member ✭✭
    To answer your question, you simply cannot add a post-tax Roth 401(k) deduction into the Paycheck Wizard in the *same manner* as other post-tax deductions.

    To add a Post-Tax 401(k), it needs to be done as a custom entry using the "Other After-Tax Deduction" feature -- not a problem. The *problem* however is that there is no way to enter the corresponding [Roth] Employer Match as is the case if entering a Pre-Tax 401(k).

    This is precisely my reason for recommending this program enhancement ... the ability to enter a Post-Tax 401(k) and associated Employer match in the *same manner* as other Post-Tax Deductions is not available.

    You have made my point: What you say I should be able to do, the program does not allow.

    Wish I post send screen shots.
  • J_Mike
    J_Mike SuperUser ✭✭✭✭✭
    I have no hands on experience with Roth 401(k) plans but have done some reading and have puzzled over how best to track in Quicken - during both the contribution and distribution phases.

    The employee contributions are made post-tax and grow tax-free.
    Distributions are tax free.

    Th employer matching contributions are pre-tax and growth is tax-deferred.
    Distributions are taxable as ordinary income - sane as a traditional 401(k).

    One article suggested that employers actually maintain two accounts for employees - one account (Roth 401(k)) for the tax free funds and one account (traditional 401(k)) for the tax deferred funds.

    This suggests - should one do the same in Quicken; i.e., maintain two separate accounts???
    Looking ahead - distributions will be a mix of tax-free and taxable income - how managed in QWin>

    Food for thought.
    ---------------------------------
    As to recording the contributions to a Roth 401(k) in QWin;
    I would record the employee contribution as a transfer in the Other After-Tax Deductions.
    I would record the employer match in the Add Pre-Tax Deduction > 401(k)..... dialog (the employee Contribution would be left as $0 in this dialog.. This is he same as an employer match to a traditional 401(k).
    One other change - the Transfers In tax attribute should be cleared for the Roth account - under Account Details.
    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

  • J_Mike
    J_Mike SuperUser ✭✭✭✭✭
    One more thought on Distrutions from a Roth 401(k) - perhaps the Tax-free and the taxable  distributions are handled completely separate from each other???

    If so, this would support the approach of maintaining two separate accounts in QWin.
    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

  • qw_u$er
    qw_u$er Member ✭✭
    J_Mike, thanks for the tip. Your response prompted me to do some research and I discovered that I incorrectly presumed the Employee Match would be Roth. They are not. Although I have a Roth 401(k), the Employer Match goes into a Traditional 401(k).

    **
    Employer Matches
    If an employer matches a traditional 401(k) plan contribution, it is standard for it to match one for a Roth 401(k). Unlike the employee's contribution, however, the employer's contribution is placed into a traditional 401(k) plan, and it is taxable upon withdrawal. The employee's contribution goes into a Roth 401(k).
    **

    All this said, although it would be nice for QWin to offer a dedicated Post-Tax 401(k) entry, it is not required...

    For those with a Roth 401(k), when using the Paycheck Wizard, users will have to set up BOTH a Pre- and Post-Tax 401(k). The purpose of the Pre-Tax portion will be used to make the appropriate (Pre-Tax) Employer Match and the Pos-Tax (using the "Other After-Tax Deduction" feature) will be used for the employee's Roth contribution.

    Hope this helps anyone with 401(k) Roths.

    Invest wisely!
  • J_Mike
    J_Mike SuperUser ✭✭✭✭✭
    Thanks for the additional info.

    This confirms that a participant in a Roth 401k plan should set up two separate accounts for tracking in Quicken;
    A Rich 401k account for the employee contributions,
    A traditional 401k account for the employer match.

    Upon reaching retirement, distributions from the two accounts will be completely separate events - each governed by the respective rules for Roth and Traditional accounts.

    Majes sense!!
    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

  • weiand
    weiand Member
    J_Mike, a follow up question. Once I set up one Roth 401K account for employee contribution and a tradiction 401K account for employer match, what is a good automatic way to manage quicken download from my 401K account transactions from 401K account web site? The web site records all the transactions with one 401k account.