Set up a 401(k)

For a 401(k) that automatically integrates with your payroll, you can set up a new 401(k) with a number of 401(k) providers we partner with. Learn more here or check out available providers in the App directory under Financial benefits.

When you're ready to set up a new 401(k) plan that automatically integrates with Gusto, follow these steps: 

1. Sign in to your Gusto admin account.
2. Click the Benefits tab.
3. Under "401(k)," click +Add.
4. Choose No - we want to offer new benefits.
5. Click Next.
6. We partner with several 401(k) providers—click See partner offers to compare their features and pricing.
7. Once you choose a provider, you'll be taken to their website to set up your new plan. 
   • Betterment customers: head to this article for next steps, including how to approve your first payroll in Betterment and review new hire eligibility.

Once you're all set up, eligible employees will be notified when it's time to enroll or opt out. Because your company's Gusto and 401(k) accounts are integrated, company and employee contributions are automatically included on payroll after the plan's start date. If you have questions about the first payroll that should deduct employees for 401(k) contributions, reach out to your 401(k) provider.  

After the plan's start date, the new 401(k) benefit will be listed in the Benefits section of your Gusto admin account. 

Plan administration

New hires

• Gusto automatically sends your eligible new hires' info to your 401(k) provider. Your provider will notify new hires to enroll once they're eligible.
  • Betterment customers: before new hires are notified, admins must first review and approve their eligibility. 
• If contributions haven't started yet for a new hire, it's likely because they're not yet eligible to enroll per your company's plan settings. This could also be because the new hire enrolled after your payroll admin already ran payroll for the pay period. 

Change your contributions

• Admins: reach out to your 401(k) provider directly to manage your company's policy settings.
• Employees: change your contributions directly on the provider's website.

If you offer a 401(k) through a third party, you can set up payroll deductions in Gusto. Employee deductions and company contributions will be left in your company bank account to be moved externally.

Remember: if the company contributes to employee 401(k)s, those contributions are applied to the employee’s traditional 401(k) (and not their Roth 401(k)). 

Set up deductions

Follow these steps to set up a new benefit deduction for your company. First you'll enter the amount and frequency, then you'll choose which employees you want to be deducted.

1. Before you start, make sure you have a list of all employees enrolled in this benefit, their personal contributions, and your company contributions per pay period.
2. Sign in to your Gusto admin account. 
3. Go to the Benefits section.
4. Under “Financial Health,” click Traditional or Roth 401(k). 
5. Select Yes — we currently offer this benefit. 
6. Click Next. 
7. Click I’ll manage 401(k) myself. 
8. Add a name for the benefit. This will appear on employee paystubs.
9. Choose the benefit type. 
   • If you have employees who participate in both a 401(k) and Roth 401(k), set up deductions for one benefit at a time. Once deductions are set up for the first benefit, repeat these steps to set up the second. 
10. Under “Employee deduction per pay period,” indicate whether employees contribute a fixed dollar amount or a percentage of their wages, and how much they should be deducted for.
    • If your employees contribute different amounts, you can customize each person’s deductions in step 16. 
11.  Indicate whether your plan uses the standard deduction limit or the special catch-up limit.  
12. Under "Company contribution per pay period," indicate the company’s contribution method and amount. We keep track of this for your records and year-end taxes.
    
    • Under “Annual maximum contribution,” you have the option to cap your company’s annual contribution per employee. Leave this field blank if your company contribution isn’t capped. 
13. Click Save & continue.
14. Indicate which employees should be deducted for this benefit.
15. Click Save.
16. If your employees each contribute different amounts to their 401(k)s, or if the company contribution is set up as partial matching, next double-check and edit each employee’s individual deductions. Follow these steps:  
    • Click View All Benefits to return to the Benefits page. 
    • Under “Active benefits,” click the name of the benefit deduction you just created.
    • 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. If your company’s policy is set up with your provider as a partial matching contribution, we recommend you choose Amount ($) so you can record each employee’s specific contribution. 
    • Click Save. 

If you have employees who also contribute to another type of 401(k) (such as a Roth 401(k), repeat the steps above to set up employee deductions for the second type of benefit. 

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

If anyone changes their 401(k) contribution after you’ve set up deductions in Gusto, edit their deductions with the steps below. 

Change an employee’s deduction or company contribution 

If an employee changes their contribution with your 401(k) provider, you’ll need to update their deductions in Gusto. If you’ve already run payroll for a pay period in which the contribution was already changed, update the contribution with the below steps and then request a benefit adjustment so we can amend their prior deductions.

1. Sign in to your Gusto admin account.
2. Go to the People section and click Team members.
3. Select the employee.
4. Go to their Benefits tab.
5. Next to the benefit you created, click Edit.
6. Modify the benefit details for this employee.
7. Click Save.

The new deduction details will take effect on the next payroll you run.