How to claim contribution to a Roth 401k from business account as a business owner.

Forum|Forum|3 years ago
February 24, 2023
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My payroll company set up a 401k account for me and they set it up so contributions are being taken from my business account and placed directly in a Roth account. We are an LLC, but we have been accepted by the IRS to be taxed as an S-Corp, pay pay ourselves through our payroll and get W2s. Now I'm confused as how to claim the Roth contributions. Should I treat it as a distribution? Do I need to put it on my personal tax return. We are doing business tax returns and personal tax returns this year.

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AliciaP1

No, the contribution should not be considered a distribution. The employer contribution to your Roth 401(k) is a tax deduction to your business at the time of contribution but will be taxable to you personally when you take it as a distribution. You should enter the business contributions on your business tax return (Form 1120S) under the Insurance, health and other benefits category in TurboTax Business. You will not enter the employer contributions anywhere in your personal return until you receive a 1099-R reporting any distributions you have taken from the account.

To enter the contribution expense in TurboTax Business you can follow these steps:

Within your tax return, under the Federal Taxes tab and Deductions, scroll down to Compensation and Benefits and click Start for Insurance, health and other benefits
Use the Other Fringe Benefits line for the applicable column to report the total contributions for the year

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