Why does my employer 401K Match accumulate in my Planning-Tax Center; _401K contrib??
This is a difficult question to ask. I will explain what has happened.
Here I am showing the "Tax Schedule Report" found in the Planning-Tax Center. It shows my correct employee contribution on June 21 (Yellow), but does NOT report my employer match, which was good. I would not expect to see it reported here since it is not reducing my taxable income.
On July 7 (green) I stopped contributing to the 401K (tax deferred account) and began contributing to a ROTH 401K account (no longer realizing the income as tax deferred). Hence, the employee contribution stopped being reported. My problem is why all of a sudden now is the employer contribution showing up (the $549.05 in green)? It was not there ever before, as it shouldn't be. The bigger problem is it is accumulating in the Planning - Tax Center, but only starting on July 7.
Here is my paycheck entry for June 21: Key point is the $549.05 is not reported on June 21 in the above report
Next is the July 7 Paycheck entry. Notice the employee contribution is now 0. The Employer Match is the same, and I now am contributing to the Roth 401K. My problem, stated here again is the that this $549.05 is being reported in the report, and hence also accumulating in the Planning - Tax Center. It should NOT be accumulating like the report indicates. This is should not be reducing my taxable income, as the tax center is indicating.
Best Answer
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Yes, delete the entire $0.00 pre-tax deduction to the 401k (employee & match). Then schedule a deposit reminder to the 401k for the match.
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Answers
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This recent post discussing problems with employer match contributions when your contributions are Roth may shed some light on your issue:
Quicken user since Q1999. Currently using QW2017.
Questions? Check out the Quicken Windows FAQ list1 -
The employer match can be either, pre-tax to you your old account or post-tax to your Roth. In your case, which is it? Either way will require a workaround because as mentioned, Quicken does not handle the Roth option correctly yet.
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Quicken does not have a Roth 401(k) solution, yet. Has anyone tried to substitute a Roth IRA account for a Roth 401(k) account? (The account can still be named Roth 401(k) but the account type would be a Roth IRA.)
I tried testing that some time back and from what I can remember it seemed like a reasonable workaround with regard to Paycheck Reminders, the Tax Reports (but a bit clunky) and Tax Planner.
Just wanting to know if anyone else has tried doing this and what the results for them were as well as what issues they might have encountered do this.
Quicken Classic Premier (US) Subscription: R60.15 on Windows 11 Home
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I haven't tried it using a paycheck but I'm pretty sure you will run into an IRA contribution limit roadblock. At least I did when testing the Tax Planner a while back with manual contributions into an IRA account.
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@markus1957 - Yeah, that could be an issue when substituting an IRA account for a 401(k) account. But I don't know how much of an issue that would be if substituting a Roth IRA for a Roth 401(k) account since contributions to both are after-tax dollars.
However, I think perhaps either one of these options might play out a bit differently in Lifetime Planner…not sure though because Lifetime Planner is so out of date for many things so I'm not if the program is sophisticated enough to capture and report the data correctly.
BTW, I came across this interesting recent (11/19/2024) Fidelity article regarding this Roth IRA vs Roth 401(k) subject: . It talks about the contribution limits as well as other pros/cons of each.
One thing that really caught my eye is something that I'd hadn't heard of before:
It's important to note that currently employer contributions and matches can only be made to pre-tax accounts. So if you are contributing to a Roth 401(k), your employer would have to make its matching contribution on a pre-tax basis. Once the contributions are fully vested and if your plan allows, you could move them to a Roth account later, though you might have to pay income taxes on the amount rolled over.
So, maybe this explains why @jdschachte is seeing the employer match still showing as a pre-tax 401(k) contribution and not a post-tax Roth 401(k) contribution?
Quicken Classic Premier (US) Subscription: R60.15 on Windows 11 Home
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@markus1957 My company match goes into my original Pretax standard 401K acct. The problem I am having is, only now is the company match showing up in my tax planner, (Accumulating towards my MAX contribution for the year). Company match should NOT count towards your annual max.
So you are also correct in your next post (fidelity quote), the company match must go into the standard 401K/pre-tax acct (non roth), as it is not income to me until I distribute the funds.
I don't know why Quicken would have a problem navigating the company match. It worked fine when I was contributing to a pretax 401K. The "company match" feature tracked properly into the account 401K acct, but did not accumulate in the tax planner (which was correct), since it was not counting towards my MAX for the year.
Only after I changed my employee contribution to a ROTH 401K, did the company match begin to accumulate in the tax planner center, also the Tax Schedule report I showed in original post.
@Boatnmaniac BTW, I have my ROTH 401K set up as a Roth IRA. I have not hit a limit… yet anyway. I am at $9.8K YTD. I am however concerned now… What is the limit?
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I have my ROTH 401K set up as a Roth IRA. I have not hit a limit… yet anyway. I am at $9.8K YTD. I am however concerned now… What is the limit?
That Fidelity article shows that the 2024 Roth IRA limit is $7K or 8K (depending on your age). So it would appear that in Quicken you are over that limit already. I'm not sure if Quicken might be smart enough to know how to manage that in Tax Planner….that is, to assess a 6% tax penalty on the excess contributions as well as on the returns earned on that excess amount.
But you are not exceeding the actual legal limit for a Roth 401(k) which is $23K or $30.5K so you will not actually incur that 6% tax penalty. Even if you were exceeding the limit, you could easily avoid getting penalized by withdrawing the excess (including returns earned on that excess amount) before you file your 2024 tax return.
Quicken Classic Premier (US) Subscription: R60.15 on Windows 11 Home
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After playing around with this for a while I'm going to call the OP issue a BUG in the paycheck module. If the paycheck honored a Zero in the Employee Contribution field this would be a non-issue.
I call it a bug because if you enter 0.01 as the Employee Contribution and another value for the Employer Match, the 0.01 is entered in the Tax Impact register. If a zero is entered, then the Employer match gets picked up in the Tax Impact register. Quicken is not allowing 0.00 to be a valid entry for the Employee Contribution. When an employer match is present, Quicken should honor the zero as the employee contribution and move on.
The workaround for now would be to create a scheduled income reminder that deposits the employer match into the pre-tax 401k account on the same frequency as your paycheck. That should keep the cash flow and tax planner projections happy.
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Thanks, Here is hoping Quicken does not do anything with those Limits… So far so good, but I will certainly keep an eye on it. Those limits change every year, so it is likely not something programmed into Quicken.
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@markus1957
Thank you for confirming you see it as a bug, I do too. So for the work around, you are suggesting to remove the employer match from the paycheck, and handle it separately? Yes I think that would work. And I should be able to continue using the IRA ROTH account for employee deposit, provided the limit doesn't pose an issue.
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Yes, delete the entire $0.00 pre-tax deduction to the 401k (employee & match). Then schedule a deposit reminder to the 401k for the match.
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