How do I record 401 K contributions made by employees?

You would put the contributions to an account like "401k Expense" then when you cut the check to the company that manages your 401k you would use the same account. Net effect should be the match your company puts in is the expense.

You could do it a number of ways… You could use more accounts for example One for contributions one for just the match expense. What accounts do you have available or are you starting this from scratch?

Thanks for your response. Actually we have just started this at our company. For the time being there is no employer contribution.
Should I post the contributions to a liability account till they are transferred to the 401K Admin company?

Yes it is a liability, and then when the amounts are remitted to the 401k administrator you clear the liability. I would simply label the account Employee 401(k) contributions.

Just an FYI, the proper way to refer to it is 401(k) with the lower case k. This refers to the section of the tax code in which it was enacted. Just something I thought you might find interesting.

401(k) plans are sanctioned under the IRS code as noted. Employee contributions need to be deposited with a plan administrator.

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Originally Posted by ScottGem

401(k) plans are sanctioned under the IRS code as noted. Employee contributions need to be deposited with a plan administrator.

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Right but typically they are deducted from payroll and as such are part of the payroll entry (as they reduce the amount the company needs to pay the emp). Then the same day as payroll the company cuts a check and deposits it with the 401(k) administrator. I used to do this every Thursday at an old job a few years back.