How do I get the employer match portion of my 401k contribution to not show up in my budget?

I realize there is already a post with this question, but the answer doesn't work for me, and the thread has been closed.

The solution given was to add the hidden category "_401EmployerContrib", but when I did this, something strange happened to my budget. The amounts of the Employer Contributions to my 401(k) pushed my overall budget down, not up. If it's in the "Income" category, I would expect it to (a) increase my income by the amount I enter so that (b) when the employer match is transferred to my Quicken 401(k) account, the amounts cancel out.

Instead, my budget went negative. I can't figure out how to make this work so I have the correct picture when I'm planning my monthly budget. I wonder if I have something else set up incorrectly?

Best Answer

  • KG
    KG Member ✭✭
    Accepted Answer
    Terry, thanks for the detail. I do, in fact, have my paycheck set up in exactly that way. But, here's the thing: I figured out my problem, and it wasn't really about the employer match. I'm writing what I did in case it helps someone else, or for when I can't remember how I fixed this two years from now but need to!

    I noticed that when I added the hidden "_401EmployerContrib" to my budget, it showed up in a separate category "Income" and not "Personal Income", which is the Quicken default category. Now, I've been using Quicken for nearly 20 years, and in the early years, I know I did some "clever" things that turned out to be not so clever over time. My guess is that I created this "Income" category long ago (or could it be that "Income" was once a Quicken default that was migrated over to "Personal Income" along the way? I've no idea, and I'm not interested enough to research it), and I probably used it for tracking paychecks, and as a result certain hidden categories like this one ended up in that custom category and not where Quicken was expecting them to be, in "Personal Income".

    When I followed the advice in another thread that discussed odd things happening to budgets related to categories, I read Quicken Sarah's advice to remove all subcategories from the user's custom "Income" category. (Interesting that the other user ALSO had a custom "Income" category that was messing her up...) After I did that, adding "_401EmployerContrib" to my budget worked perfectly! It made the correct amount show up in income so I could then increase the budgeted amount of the 401(k) transfer by the same amount, and my budget zeroed out just as expected.

    So, problem solved, but nothing at all to do with paycheck set up. Instead, this was a "custom category" issue.

    Thanks for your thoughts, which made me keep digging.

Answers

  • Terry Locke
    Terry Locke Member ✭✭✭
    @KG Here is the thing and I had a lot of issues recently with starting a new 401K and had a similar issue to yours. Not using Quicken's built in "Paycheck" feature causes all sorts of problems when you are trying to capture the Employer Contribution to your 401k. Paycheck has a field for "Employer Match" for your 401k. Paycheck knows that the Employer Match is simply a transfer directly to your 401K and therefore it never hits your budget and never shows up in your gross or net pay. If at all possible you should set up your "Paycheck" in your checking account or the account where your paycheck is deposited and that will fix the problem.
  • KG
    KG Member ✭✭
    Thanks, Terry, but I DO have my paycheck set up through Quicken, always have. In the past, my employer only put matching funds in my 401(k) account at the end of the year, so in Quicken I just entered an unaffiliated "deposit" into the 401(k) account set up in Quicken. Now, my employer is doing it every check, so I thought I'd use that part of the paycheck set up. It would work just dandy, except that it messes up my budget. I noticed that the amount I had budgeted for the "transfer to 401(k)" was negative for several months, and then realized it was because the amount of the EMPLOYER matching was showing up in the transfer as well. Of course, I can't increase the amount I've budgeted without a corresponding "income" entry, otherwise every month I'm "in the red" with my budget. The problem is I can't see how to get Quicken to add this amount in as a positive to counteract the transfer to 401(k).

    I thought I had found the answer, which was to add hidden category "_401EmployerContrib" to my budget, but when I do that, while I see the amount added in Income, somehow it makes my overall budget go negative that same amount, as if, even though it's in "Income," it's counted as an expense.

    What I'll end up doing is removing the employer matching entry in each twice-monthly paycheck and just doing what I used to do, only multiple times: Adding a stand-alone "deposit" of funds to my 401(k) account in Quicken, and just not tracking that as am employer matching contribution. I can't figure out any other way around the way this is messing up my budget.
  • Terry Locke
    Terry Locke Member ✭✭✭
    edited September 2020
    @KG

    If you use the built in "Paycheck" transaction you should have set it up selecting the 'Gross Amount' (not the 'Net Amount') and then set up the detailed splits like your taxes, FICA etc. and set up your "Pre-Tax Deduction" by clicking the "Add Pre-Tax Deduction" then selecting "401(k)/403(b)/457" and completing the information such as the estimated amounts for you and your employer and the target 401k account. That way when you go to enter your paycheck there will be a field in that split transaction that is the "Employer Match". In my Paycheck it is a yellow field. If you did not set up your paycheck as a 'Gross Amount' or you did not set up the appropriate Pre-Tax Deduction then you will not have that field.

    According to Quicken Support, that is the only way to make this work and avoid any issues like you are having with your budget. Note that I too tried to set up a hidden category "_401EmployerContrib" in order to overcome an issue and it royally screwed up my accounts. This was suggested by someone in this forum and I found that only created more issues.

    You may want to revisit how you set up your paycheck and maybe set up an new one that has that field in it.

    To set up a new paycheck, click the Planning tab, then click the Tax Center button if it isn't already open. Click Add Paycheck, then enter the information Quicken requests. Make sure to select "Gross Amount" option at the first screen as "Net Amount" is the default setting.

    If you did set up your Paycheck as a 'Gross Amount' and don't have that 'Employer Match' in your split then try adding a "Pre-Tax Deduction" and see if you can add a 401k pre-tax deduction. If it is grayed out then you will probably have to enter a new paycheck and delete the old.

    Have a look at the attached screen shot below that shows one of my paychecks to see what it looks like to have the 'Employer Match' in the spits. I highlighted it with a red oval.
  • KG
    KG Member ✭✭
    Accepted Answer
    Terry, thanks for the detail. I do, in fact, have my paycheck set up in exactly that way. But, here's the thing: I figured out my problem, and it wasn't really about the employer match. I'm writing what I did in case it helps someone else, or for when I can't remember how I fixed this two years from now but need to!

    I noticed that when I added the hidden "_401EmployerContrib" to my budget, it showed up in a separate category "Income" and not "Personal Income", which is the Quicken default category. Now, I've been using Quicken for nearly 20 years, and in the early years, I know I did some "clever" things that turned out to be not so clever over time. My guess is that I created this "Income" category long ago (or could it be that "Income" was once a Quicken default that was migrated over to "Personal Income" along the way? I've no idea, and I'm not interested enough to research it), and I probably used it for tracking paychecks, and as a result certain hidden categories like this one ended up in that custom category and not where Quicken was expecting them to be, in "Personal Income".

    When I followed the advice in another thread that discussed odd things happening to budgets related to categories, I read Quicken Sarah's advice to remove all subcategories from the user's custom "Income" category. (Interesting that the other user ALSO had a custom "Income" category that was messing her up...) After I did that, adding "_401EmployerContrib" to my budget worked perfectly! It made the correct amount show up in income so I could then increase the budgeted amount of the 401(k) transfer by the same amount, and my budget zeroed out just as expected.

    So, problem solved, but nothing at all to do with paycheck set up. Instead, this was a "custom category" issue.

    Thanks for your thoughts, which made me keep digging.
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