This article will help you determine whether you are eligible for a withdrawal or an outbound rollover (referred to as a distribution) from your Gusto 401(k). It also outlines the necessary steps and expectations after submitting your distribution request.
Your specific 401(k) plan and Internal Revenue Service (IRS) rules may limit your options before you leave your employer or reach retirement age. The conditions defined under your plan rules are also referenced in your Summary Plan Description document.
IRS rules only allow you to distribute 401(k) funds in certain circumstances. The most common qualifying reasons are:
You left the company sponsoring your 401(k) — whether you were laid off, fired, retired, terminated, or left for any other reason
Your company is terminating (canceling) the 401(k) plan
Your beneficiary is requesting funds after you pass away
You may also qualify for an in-service distribution if you're still employed with the company that sponsors your plan and you're at least 59½ years old. Learn more about in-service distributions and how to request one.
Note: If none of the above apply to you, see Alternatives if you don't qualify.
To start your distribution request, choose the path that matches how you signed in, then follow the steps.
Sign in to Gusto and go to Benefits > Active Benefits > 401(k) > Manage.
Go to the Move money tab and select Take money out.
Under See my options, choose Withdraw or borrow for a cash distribution, or Transfer an account to roll your funds out to another retirement account.
Follow the guided steps to complete your request. Read the disclosures, enter any required information, and choose how you'd like to get your funds, like direct deposit or a check mailed to your address on file.¹
Sign in directly at the Gusto Retirement sign-in page.
Select Money movement in the main navigation, then select Move money out.
Choose Withdraw or borrow for a cash distribution, or Transfer an account to roll your funds out to another retirement account.
Follow the guided steps to complete your request. Read the disclosures, enter any required information, and choose how you'd like to get your funds, like direct deposit or a check mailed to your address on file.¹
Note: If the distribution banner does not appear, you may not be eligible for a distribution at this time. See Understand why the withdrawal or rollover option may not appear below.
You have two distribution types to choose from in Step 5 of the request flow above.
A rollover is when you move money out of your retirement account into another qualifying retirement account, like a new employer's 401(k) or an IRA at a different financial institution.
To select this option, click Roll your funds into another 401(k), IRA, or other qualified retirement provider. You'll then choose whether to have the check mailed directly to the receiving financial institution or to your address, then enter the required details.
A cash withdrawal (distribution) is when you permanently remove money from your 401(k) or IRA and receive it as a direct payment to yourself. The funds are no longer in a retirement account, so you'll owe income taxes on the amount — and a 10% early withdrawal penalty if you're under age 59½ and do not qualify for an exception.
You can avoid taxes and penalties by indirectly rolling over the funds to an IRA or another retirement plan within 60 days of receiving the check. However, you'll need to cover any withheld tax amount out of pocket to avoid being taxed on it. We cannot refund any tax withholding — that amount may be refunded when you file your taxes, depending on your situation.
To select this option, click Request a cash distribution to withdraw your 401(k) funds directly.
We'll process your request as quickly as administratively possible. After you submit, you'll get two email notifications:
One with an expected timeline
One when your payment is ready to be sent
Processing generally takes 7 – 10 business days. In some cases, we may need to request additional information, which can cause delays.
After processing, we'll send your funds to you or your new financial institution based on your request. The exact timeline depends on the distribution type and delivery method.
Delivery method
Estimated timeline
ACH
2 – 3 business days
Check
7 – 10 business days
Your outbound rollover check will be mailed via United States Postal Service (USPS) from the account custodian, Benefit Trust Company.
Delivery destination
Estimated timeline
Your address
7 – 10 business days
Your new financial institution
10 – 12 business days
Note: The day your new financial institution receives the check may not be the day it's deposited. To confirm the status, contact your new provider directly.
If your check has not arrived after 15 business days from the date of our processing confirmation email, follow these steps.
Contact your new financial institution first — it's possible they received the check but did not send a notification.
If they confirm the funds have not arrived, contact our distribution line at (888) 498-2766 or email [email protected], and we can look into it further.
Checks are sent via standard USPS mail. We're unable to provide a tracking number.
If your distribution is still showing as Pending past the original estimated timeline, there are a few possible reasons.
Delays often occur because we're working on plan changes or adjustments with your employer. Although these adjustments may not impact your account directly, they can temporarily pause our ability to process distributions.
Common reasons for distribution delays include:
Pending corrections: In some cases, our corrections team may need to work with your employer to resolve specific matters with the company's overall 401(k) plan. Any necessary corrective changes must be made within the plan before we can distribute funds.
Plan termination in progress: If your employer is in the process of terminating the 401(k) plan, certain system requirements must be completed before we can proceed with your distribution. Our retirement specialists must complete an overall account review to properly close the plan, preserve all employees' tax benefits, and prevent any negative tax consequences. We are not permitted to disburse funds to any participants until this stage is complete.
As soon as we're able to move forward with your distribution or rollover, you'll receive an email confirmation notifying you that your funds have been sent. If further information or documentation is needed to complete your request, our support team will reach out to you directly.
If you or your new provider cannot locate your mailed check after receiving a funds-released email — or if you received a check but need the payee details updated — submit a ticket to our Retirement Participant Support team to start a reissue request.
Before we can issue a new check, we need to process a stop payment on the original check to make sure it cannot be used. This step takes 7 – 15 business days. The next step depends on whether the payee information stays the same or needs to change.
If your payee information is unchanged, no additional forms are required. Here's the expected timeline:
New check delivery: approximately 12 business days after the stop payment is confirmed
Total processing time: approximately 22 business days from start to finish
If the payee information needs to change, there are additional steps — the custodian must retrieve the funds and return them to the plan's trust account before a new payment can be issued.
When the stop payment is complete, a member of our support team will guide you through submitting a new distribution request. Here's the expected timeline:
Stop payment and fund retrieval: up to 15 business days
Check reissue after stop payment is fulfilled: approximately 17 business days
Total processing time: approximately 32 business days from start to finish
If you believe you meet one of the IRS allowable reasons for a distribution but still don't see the distribution banner, there are a few possible reasons.
Employment status not yet updated: If you recently left the company that sponsors the 401(k) plan, your former employer needs to update your employment status to “terminated” in payroll before you'll be eligible. Refer them to this article for instructions on how to do that.
Pending payroll transaction: If there's a pending or unprocessed payroll transaction in your account, you'll need to wait until it's complete before the distribution banner appears.
If you don't meet any of the qualifying reasons above and still want to access your Gusto 401(k) funds, check to see if you qualify for a 401(k) loan or hardship withdrawal.
If you want to roll funds in from another account instead, check out our inbound rollover guide.
¹ If your request is going to a foreign address, you'll need to upload Form W-8BEN or W-9 (based on your citizenship) via the Shared Files folder within your Gusto Retirement account. In addition, there may be mandatory federal withholding applied to your distribution.
The information provided herein is general in nature and is for informational purposes only. It should not be used as a substitute for specific financial advice that considers all relevant facts and circumstances. You are advised to consult a qualified financial adviser to determine a strategy that fits your needs.