How to Send Money to a Simple Plan IRA in QuickBooks

Managing employee retirement contributions through QuickBooks can streamline your business operations and help maintain compliance with federal laws. One of the most popular retirement plans for small businesses is the SIMPLE IRA (Savings Incentive Match Plan for Employees). Simplifying the process of sending money to a SIMPLE IRA through QuickBooks ensures accuracy for bookkeeping, payroll, and tax reporting procedures.

TLDR: Sending money to a SIMPLE IRA in QuickBooks involves setting up the retirement plan in your payroll settings, assigning contribution amounts for employees, and scheduling or recording payroll transactions. QuickBooks Online and Desktop versions have slightly different steps. Once configured properly, contributions can be tracked automatically and sent to the IRA provider either manually or via integrated services such as direct deposit. Regular audits and reconciliations are essential to ensure that all contributions are correctly reported and recorded.

Understanding SIMPLE IRA and QuickBooks Integration

A SIMPLE IRA is a retirement plan designed for small businesses with 100 or fewer employees. Employers are required either to match employee contributions or to make non-elective contributions. QuickBooks offers an effective toolset to help employers manage these contributions seamlessly.

QuickBooks does not directly manage investment transactions but can record and track payroll deductions and employer contributions destined for SIMPLE IRAs. Employers use this tracking to then send funds to the employees’ retirement accounts through a trusted financial institution.

Step-by-Step Guide to Sending SIMPLE IRA Money in QuickBooks

1. Set Up the SIMPLE IRA Deduction

To begin, ensure the SIMPLE IRA option is set up in QuickBooks Payroll:

1. Navigate to Payroll Settings from the Gear icon.
2. Select Deductions / Contributions.
3. Click Add a New Deduction.
4. Choose Retirement Plans and then pick SIMPLE IRA.
5. Label the deduction (e.g., Employee SIMPLE IRA).
6. Set the contribution type: either a fixed amount or a percentage of paycheck.

Additionally, configure the employer match or contribution if required:

1. Select Company Contribution.
2. Set match percentage or fixed contribution according to your plan.

2. Assign the Deduction to Employees

After the plan is created, apply it to every participating employee:

1. Go to Payroll and select Employees.
2. Click on each employee’s profile and select Pay.
3. Under Deductions, select the newly created SIMPLE IRA deduction.
4. Input the employee’s contribution amount or percentage.

Repeat this step for each employee who is enrolled in the SIMPLE IRA program.

3. Process Payroll as Usual

With the deductions and contributions configured, simply run payroll as you normally would. QuickBooks will automatically apply the deductions and calculate the employer contributions during each payroll run.

Each paycheck will reflect employee contributions and employer match, which are then recorded in the appropriate accounts.

4. Send Money to the IRA Provider

QuickBooks tracks the amounts deducted and accrued for SIMPLE IRA contributions, but it does not send the funds automatically unless integrated with a financial provider that offers this feature.

To remit the funds:

• Generate a payroll liabilities or retirement contributions report to see the amount due to each provider.
• Log into your IRA provider’s portal or use a third-party service to send the contributions manually.
• In QuickBooks, record the payment as an expense by choosing your bank account and retirement liability account.

5. Record Payment in QuickBooks

To properly record the transaction in QuickBooks:

1. Go to + New and click on Expense.
2. Select the bank account used to pay for the IRA contributions.
3. In the Category field, choose the payroll liability or retirement account.
4. Add a memo (e.g., “May 2024 SIMPLE IRA Contribution”).
5. Save and close.

Automating IRA Payments (If Available)

Some editions of QuickBooks integrate with third-party retirement plan providers like Guideline, Human Interest, or Patriot. With integrated services, payments can be automated and directly debited each payroll run. If automation is available for your software and provider, enable this option to prevent errors and save time.

Reconciling Contributions

Regularly reconcile your SIMPLE IRA payments with your bank statement and employee payroll reports. This ensures accuracy and prepares your business for audits or year-end reporting.

• Run a report like Payroll Summary or Deductions and Contributions Report.
• Compare the totals with confirmations from your IRA provider.
• Verify employee and employer contributions match your payroll setup.

Common Mistakes to Avoid

• Not updating employee contribution changes: Ensure any changes to an employee’s contribution amount are updated in QuickBooks immediately.
• Missing employer match contributions: Verify employer match amounts are correctly calculated and recorded for every payroll.
• Not remitting payments on time: SIMPLE IRA contributions are time-sensitive. Late deposits may result in penalties.

Benefits of Managing SIMPLE IRA in QuickBooks

• Streamlined payroll and accounting process
• Clear record-keeping for tax time
• Better compliance with labor and retirement laws

When utilized efficiently, QuickBooks becomes a reliable ally in managing every aspect of employee benefits administration, including retirement contributions.

Frequently Asked Questions

Can QuickBooks send money directly to the IRA provider?

No, not by default. You must manually send the funds to the IRA provider unless you are using an integrated retirement service provider like Guideline.

What if an employee changes their contribution amount?

Update their profile under Payroll settings > Deductions. Ensure the change is saved before the next payroll to reflect the updated amount.

How do I handle employer contributions in QuickBooks?

Set up a company contribution line during the deduction configuration. QuickBooks will track this automatically each payroll run once properly set up.

Can I backdate SIMPLE IRA contributions in QuickBooks?

QuickBooks records contributions based on paycheck dates. If a mistake occurred, you may need to adjust the payroll liabilities manually and communicate with your IRA provider to ensure proper application.

Is there a report I can pull to view all SIMPLE IRA contributions?

Yes. Use the Deductions and Contributions report to see details for both employee and employer contributions over a selected timeframe.

Effectively managing SIMPLE IRA payments through QuickBooks requires careful configuration but pays off through improved accuracy, compliance, and peace of mind. Staying up to date with software updates and leveraging automation features where available will make the process even more seamless.