401K and Employer Contribution

[John Reynolds]

------Original Message-----
From: Derek Atkins <warlord at MIT.EDU>
Sent: Saturday 21 February 2004 10:16 am
To: "T. Cabugao" <tycabugao at earthlink.net>
Cc: GnuCash Users Group <gnucash-user at gnucash.org>
Subject: Re: 401K and Employer Contribution

>You should create an "Equity:Employer Match" account and
>use that in lieu of an income account.
>
>-derek
>
>"T. Cabugao" <tycabugao at earthlink.net> writes:
>> I've searched the archives but I can't see if this has been asked
>> before. If so, I apologize.
>>
>> My question is regarding employer's contribution to 401k's. My
>> employer matches a percentage of my contribution to my 401k. Their
>> match is 100% vested, so this money is basically mine once it is in my
>> account. I was wondering, how I would account for this matching
>> contribution in gnucash without it affecting my taxable income?
>>
>> I am thinking the entry for the paycheck could be something like this:
>>
>>
>> Income:Salary                    		2000
>> Expense:Tax:Federal            		300
>> Expense:Tax:SocSec            		150
>> Expense:Tax:Medicare             	75
>> Assets:401kAccount(Employee Contrib)    200
>> Assets:BankAccount            		1275
>> Assets:401kAccount(Employer Match)    	100
>> Income: (?) (Employer Match)            	100
>>
>> Would this be a correct entry? (Sorry, my last college accounting

This is the way I do it ( Income:401K match ), but now that I think of it, it 
does inflate my income total. To avoid that, do as Derek says and make the 
matching entry from equity. I think the preference is up to you... unless I'm 
mistaken.

John R.

>> class was about 7 years ago.) What kind of income account would be
>> best for this? If I create a new income account,and assign a Tax
>> Category (Form) to that account, what Tax Form should I assign to it
>> so it does not show up as a taxable income in my reports?
>>
>> Thanks!