Set up a 401(k)

Find your provider below for steps to connect your company's 401(k) to Gusto.

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 for you to send directly to your 401(k) provider.

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 Add existing plan. 
6. Click Continue to manage your 401(k) manually instead. 
7. Add a name for the benefit. This will appear on employee paystubs.
8. 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. 
9. 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. 
10. Indicate whether your plan uses the standard deduction limit or the special catch-up limit.  
    • If the employee is 50-59 or 64 and older: They may make an additional catch-up contribution of $7,500 in 2024 and 2025.
    • If the employee is 60-63: They may make an additional catch-up contribution of $11,250 in 2025, per a change made in the SECURE 2.0 Act.
11. 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.
    
    • In the “Annual maximum contribution” section, you can cap your company’s annual contribution per employee. The IRS limits employer and employee contributions for people who earn over a certain amount. We recommend setting a max in this field if any employee could exceed the compensation limit.  
12. Click Save & continue.
13. Indicate which employees should be deducted for this benefit.
14. Click Save.
15. If your employees each contribute different amounts to their 401(k)s, or if the company contribution is set up as partial matching, double-check and edit each employee’s individual deductions. Here's how:  
    • 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 appear 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.

If deductions collected through Gusto reach the annual contribution limit, Gusto automatically stops deductions. Keep in mind:

• If you have employees who are older than 50 years old and eligible, remember to select the catch-up limit in the plan details you enter in Gusto. 
• If an employee contributes outside of Gusto payroll to any 401(k) that year, they're responsible for tracking their annual limit. Employees should contact their employer if they need to change or stop their deductions. 

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.
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.