How would my payroll company handle a $5,000 ROTH 401K employee salary deferral? | 401k Questions

Question

Asked 12/18/2007

How would my payroll company handle a $5,000 ROTH 401K employee salary deferral?

This is my first year contributing to my new 401k, and the employee contribution part of it is of the Roth 401k variety. I'm trying to figure out exactly how the payroll company is going to handle the breakdown.

This is my business so I handle the company checking account. $5,000 to 401k company, 13% employment taxes + income tax withholding? How much needs to be available in the account to cover everything?

I asked my payroll company and so far the girl who handles my account seems a bit confused, and she is hesitant to give me a final breakdown for liability reasons; she says she doesn't know the numbers until they run the final payroll.

I need to figure this out soon since the deadline is quickly approaching.

Thank you for any help!

Answers

Answer 1/1 - Submitted 12/18/2007

You don't say ifi you want any cash after the contribution, how much your annual pay is, or if you plan on making a bonus payment at the end of the year. You also don't say if it's a sole proprietorship, partnership, C-Corp, or a S-Corp. The timing of the contribution is dependent upon that. If it's a sole prop or partnership then the deadline isn't approaching so soon. you just need the deferral election in place. If it's an S-Corp or C-Corp then the pay needs to be 2007 pay so your deadline is 12/31

But, in general, with no cash back on the final check you should have at least 1.4x's the deferral amount available for taxes. So in your case, $7,000...

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