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Employer 401(k) match reducing taxable income?

furstyferret

I have recently moved to the US and started a W2 job about a month ago. I will be able to contribute to my 401(k) after 90 days, but in those first 90 days my employer provides a safe harbor % 'match' to my 401(k) each pay period. I have entered this in quicken as below:

There are two such payslips, for a total employer match into the 401(k) of $241. The tax center however is showing that this employer match is reducing my taxable income, as below:

I have not made any other 401 contributions this year, and as the only contribution made is the employer match, why is this reducing my taxable income? Is there a way to change this?

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NotACPA

Not quite enough info to analyze. Try clicking on that -$241.15 and see where it leads you.

And when you bring up the category list (CTRL-C) what tax line do you have associated with that Employer Match?

Lastly, how did the $126.92 in the paycheck become $241.15 in the report?

furstyferret

Thanks for the response. There is no option to click on the -$241.15 unfortunately.

From the category list, the '_401Contrib' which is showing on the Taxable Income YTD is under W-2:Salary or wages, self. '_401EmployerContrib', which is what I thought I had selected, has no tax line item - which is how it should be. Screenshot of those categories here:

As I mention in the first post, the $126.92 is one of two such employer match contributions, with an additional $114.23 matched on a separate payslip, for the total of $241.15 as shown there.

The issue that I can understand it here is that the 'employer match' section of the paycheck entry seems, for some reason, to be entering into the register as '_401Contrib', rather than '_401EmployerContrib'. I know this is fixable by removing that from the paycheck and doing a separate register entry into the 401 itself, but it seems odd to me that the included employer match option on a paycheck is categorising incorrectly.

For reference, below is a screenshot showing the 401(k) entry box on the paycheck in more detail:

Chris_QPW

I have been trying to reproduce this bug (and yes, it is some kind of bug), but I haven't been able to. I tried it on my wife's paycheck and even created a new paycheck with just this kind of entry and didn't see the same results.

One thing that would be interesting to see is what the paycheck looks like as a split transaction (under the hood a paycheck reminder is a split transaction). Here is how you can expose that.

Right click on the transaction in the register and select Add reminder.

Click on the Split.

And then on the split icon in this dialog:

This is how the employer match should be recorded:

furstyferret

That is exactly what I'm seeing:

I'll file a bug report for now to see if that can get anywhere!

NotACPA

@furstyferret In that most recent graphic … there should be a category name. Why'd you blank it out? Did you create an category with the name of your employer?

Also, is that report one that you customized to create? What do you get if you run the Canned "Tax Schedule" report? And if the txn are rolled up to show the summary, you can click on the DASH to the left of the total line to show the detail lines.

furstyferret

I blanked it out as it's the name of my 401(k) which includes my employer name, probably for the sake of this could have just changed the name of the account admittedly..

on the Tax Schedule report it shows the same problem:

I have, however, just as an experiment tried it with an employee contribution greater than zero, and it seems to fix the issue. So the bug appears to be when you get an employer match but with no employee contribution, it incorrectly categorise it as _401Contrib rather than _401EmployerContrib.

This is, of course, a minor bug and not one that will have any meaningful impact as within a few weeks I'll be able to make my own contributions. For now, I'll just add the employer match as a separate transaction in the 401(k) register.

NotACPA

The name in Q can be anything. It doesn't need to exactly match what the FI calls it. For example, my brokerage account at Fidelity is named, in Q, "xxx Taxable", where xxx are my initials. Wife's is "yyy Taxable"