Add a 529 savings plan to Gusto

Gusto does not offer 529 benefits, but if your company manages one through a third party and would like to contribute to employee accounts, payroll admins can add the benefit to Gusto. This lets you apply employee deductions and employer contributions on payroll, then we'll calculate company and employee taxes. Deducted/contributed funds remain in the company bank account for you to transfer to your 529 provider. 

If your company does not contribute to employee 529 accounts, then you do not need to add 529 deductions to Gusto. You can instead have employees fund their 529 accounts directly with their chosen provider.  

Add 529 payroll deductions to Gusto

You can add 529 deductions to Gusto by setting up a custom benefit. 

Before you start: You'll record employee and company contributions in Gusto as a dollar amount per pay period. If contributions are set up with your provider as percentages, check your 529 provider's records to verify the dollar amount per pay period. 

1. Sign in to your Gusto admin account.
2. Go to the Benefits section.
3. Under “Custom Benefits,” choose Custom Benefit.
4. Add a name for the benefit. This will appear on employee paystubs.
5. Under "Employee Deduction Per Pay Period," enter an amount. This is how much we'll deduct from your employees' wages each pay period.
   • If employees contribute different amounts, you can customize each person’s deductions and company contributions in step 10.
6. Enter the "Company Contribution Per Pay Period." We'll keep track of this for your records and year-end taxes. If your company contribution is set up as a percentage, refer to your 529 provider's records to add it as a dollar amount per pay period. 
7. Click Save & continue.
8. Select which employees you'd like to be deducted for this benefit.
9. Click Save.
10. If your employees each contribute different amounts or receive different company contributions, you can now edit each employee’s individual amounts:  
    • Click View benefit to see the deductions you've just set up.
    • Find the name of the employee whose deduction or company contribution you need to change and click Edit benefit.
    • Update their deduction and/or company contribution.
    • Click Save. 

On the next regular payroll you run, the deduction will show up on each enrolled employee's paystub under "Employee Earnings" as its own line item. 

Taxability 

529 contributions are post-tax, but earnings are tax-free. Any employer match is considered imputed pay, which is taxable as income. Gusto automatically records company contributions on employee tax forms.

Manage deductions

To add an employee, change an individual's deductions or contributions, or remove the deduction, check out our guide to benefit deductions.