Deduct 401(k) loan repayment from employee paycheck
If an employee has taken out a loan against their 401(k) account, you can set up a deduction for the repayment amount on their paycheck. This article explains how to do that.
You have an active Intuit Payroll service subscription.
You can deduct the 401(k) loan repayment.
To create a deduction payroll item for a 401(k) loan repayment:
- Choose Lists > Payroll Item List. Click the Payroll Item button and select New.
- Click Payroll to enter the Payroll Center. Click Setup and Maintain > View/Edit Payroll Items.
Choose Custom Setup and click Next
Choose Deduction and click Next.
Enter a name for the item (for example, 401K Loan Repayment) to use on paychecks. Click Next.
Enter the name of the agency for the employee-paid liability and the account number for that agency. Click Next.
Click Tax Tracking Type and select None. Click Next > Next.
Under Calculate based on Quantity, select Neither and click Next.
Choose Net in Gross Vs Net and click Next.
Under Default Rate and Limit, add limits if necessary.
To add the repayment payroll item to the employee profile:
- Choose Employees > Employee Center, and double-click the employee's name.
- Click Payroll to enter the Payroll Center. Choose Employees > View/Edit Employees, and double-click the employee's name.
Click the Change tabs drop-down arrow, and then select Payroll and Compensation Info.
In the Addition, Deduction and Company Contribution box, click the next available space under Item Name. A down arrow will appear.
Click the down arrow to display the list of payroll items and select the deduction item you created for the 401K loan repayment.
Press Tab key to move to amount collumn and enter the repayment amount per period and any limits.
QuickBooks will automatically display and calculate the 401k loan repayment item and amount specified, in the Preview Paycheck window. You may manually change the default amount on the paycheck detail, if necessary. If you entered a limit, QuickBooks will stop deducting when the limit is reached.