User Support Forum

We hired a new pastor. He is having money deducted from paycheck for 403b deduction. Board approved to have his wife, who is also a pastor paid retirement. I was told she had to be an employee to receive 403b deduction. I entered her in payroll as a pastor and set it up as salary for the amount of her deduction and then the retirement deduction. I thought it was ok, but notice that her amount does not show up on income/expense sheet correctly. I do a manual check titled eft for her pay since it's a 0 amount paycheck and just print a paystub. on the 20th of the month the total for both pastor's is automatically deducted from our bank account and I do manual check and debit to the retirement witheld account and credit the checking account. Is there a way to get her retirement to show correctly on the income/expense sheet?

Sue

Lighthouseag wrote:We hired a new pastor. He is having money deducted from paycheck for 403b deduction. Board approved to have his wife, who is also a pastor paid retirement. I was told she had to be an employee to receive 403b deduction. I entered her in payroll as a pastor and set it up as salary for the amount of her deduction and then the retirement deduction. I thought it was ok, but notice that her amount does not show up on income/expense sheet correctly. I do a manual check titled eft for her pay since it's a 0 amount paycheck and just print a paystub. on the 20th of the month the total for both pastor's is automatically deducted from our bank account and I do manual check and debit to the retirement witheld account and credit the checking account. Is there a way to get her retirement to show correctly on the income/expense sheet?

Sue

Sue .. this is what you should do.

DO NOT set this up as a salary, this is an employer provided benefit. The difference comes in if this is a non-taxable benefit, or not

For a Non Taxable Benefit do the following

1. So basically in your chart of accounts you would create a expense account under Personnel Expenses for 'Assistant Pastor (or whatever) Retirement', and add the yearly budget to that.

2. Then create a NEW Item Description for this Employer Liability. Use the Expense account you created in step 1 for the expense account, and the regular retirement liability account as the liability account listed. Leave the checkbox for Non-tax item checked.

3. Then you set her up as an employee in Maintain List of Employees, and add the pay item. You would process this once a month, and just print the pay stub since there won't be a check.

The funds are transferred to the liability account for you, and all you have to do is write the manual check for the entire amount as I assume its going to the same location.

If this is a taxable benefit, then there will be some changes. Let me know if you need that setup.

Here's what I have setup for this sort of thing here:



its setup for Health benefits, but the process is the same.

It is non taxed so this is perfect. Thanks so much!

Neil,

I am processing this now. Can you tell me what accounts I should debit/credit for my manual check?

Lighthouseag wrote:Neil,

I am processing this now. Can you tell me what accounts I should debit/credit for my manual check?

Have you looked at the Payroll function Create Accounts Payable Entries for Deductions?

When you setup the Item Description for the deduction, you should have included a Vendor. The Vendor should be setup to access the Liability Account that you entered in the Item Description, and the checking account.

Then when you access the Create Accounts Payable Entries function, you'll pull that vendor from the list, and you should see a list of all the deductions for that month (or more) listed. You'd then select the deductions for the month you're paying for, enter a due date (the date you're going to have it deducted), the reference, and then select the radio button for Manual Check.

Click OK and the system will then tell you that a Manual Check for the total amount of the deductions you selected will be found in Accounts Payable.

Its very simple to do. I use this method for all Federal, State & Local taxes, along with Health and Retirement payments.