Set up a 401(k)

For a 401(k) that automatically integrates with your payroll, you can set up a new 401(k) with one of the 401(k) providers we partner with: Guideline, Human Interest, Vestwell, and/or Betterment. Learn more here or check out available providers in the App directory under Financial benefits.

If you’re looking for more information about an integrated 401(k) or 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. Go to the Benefits tab.
3. Under "Financial Health," click Set up next to "Traditional or Roth 401(k)."
4. We partner with several 401(k) providers—take a look at each to compare their features and pricing.
5. 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.

If deductions collected through Gusto reach the annual contribution limit, Gusto automatically stops deductions for that employee.

Plan administration

Refer to our Guideline, Betterment, Human Interest, or Vestwell help center articles for specific plan administration questions (including deduction troubleshooting, changing contributions, loan information, and more).

FAQs

I’m setting up a new 401(k) plan, but I don’t see the benefit in my Gusto account. When will I see the benefits?

This is dependent on your 401(k) provider’s timeline. Plan implementation can take 2–3 months in some cases. Please contact your 401(k) provider for more information about this.

Why are employees missing from the 401(k) benefit tile in Gusto?

There are a few reasons why this could be happening:

• Your 401(k) provider has not synced your employee elections yet
• The employee has not yet enrolled in 401k
• The employee is still in the waiting period
• Your plan’s effective date is in the future 

Please contact your 401(k) provider for assistance. 

I ran payroll, but Gusto didn’t debit my account for 401(k) benefits. Why did this happen?

Your 401(k) provider will debit your company’s account. This typically happens within a few business days of the check date. Please contact your 401(k) provider if you have any questions.

If your company already offers a 401(k) with one of the below providers, find your next steps below.

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.