You can contribute to more than one employer-sponsored retirement plan in the same year — for example, if you switched jobs or work for multiple employers. There is no limit to the number of accounts you can contribute to, but the Internal Revenue Service (IRS) sets annual limits on how much you can contribute across all plans combined.
Each year, the IRS sets the annual deferral limit (also known as the 402(g) limit), which limits the total contributions you can make across all employer-sponsored plans. This limit applies to your pre-tax and Roth contributions across 401(k), Starter 401(k), 403(b), Salary Reduction Simplified Employee Pension (SARSEP) IRA, and Savings Incentive Match Plan for Employees (SIMPLE) IRA plans. See the current year contribution limits.
If you exceed the limit, you must generally remove the excess deferrals from the plans, adjusted for any applicable gains or losses. If your employer offers a match, any match tied to the excess will be forfeited.
To avoid excess deferrals, track how much you contribute across all employer-sponsored plans for the year — especially if you contribute to more than one account at the same time.
We will automatically adjust your contribution rate as you get close to the limit, based on information from your payroll provider and employer. You can also change your contribution rate at any time.
Even with these measures in place, excess deferrals can still occur if your pay fluctuates — for example, due to bonuses, commissions, a change in hours worked, or a salary adjustment.
If you made contributions to a retirement plan outside of Gusto Retirement, report those contributions in your Gusto Retirement dashboard. This helps determine your total projected deferrals for the year and reduces the risk of exceeding the limit.
Choose the path that matches how you signed in.
Sign in to Gusto and go to Benefits. Under Savings, find 401(k) and select View, then select Manage 401(k)
Sign in directly at the Gusto Retirement sign-in page.
Once you're in your 401(k) dashboard, follow these steps to report outside contributions.
Go to the Contributions page from the main menu. If you have more than one Gusto Retirement account, select the applicable plan.
Within the Projected contributions section, select Report outside employee contributions.
Follow the on-screen steps.
If you have more than one Gusto Retirement account, you do not need to report contributions from your other Gusto Retirement accounts, as long as those accounts are linked. The system will account for all internal accounts and notify you if you exceed the deferral limit.
If you exceed the deferral limit, we will notify you by email and a task will show up on your Gusto Retirement dashboard. What happens next depends on whether your contributions are within a single plan or across multiple plans.
If you exceed the limit within a single Gusto Retirement plan, you will get an email and a refund task on your dashboard. The task will include the deadline to act. If you do not respond, the refund will be processed and a check will be mailed to your address on record.
If you contributed to a Gusto Retirement plan and at least one outside plan, you must report your external contributions no later than March 1 of the year after the deferral year. This lets us include those amounts when we check whether you exceeded the limit.
If you exceed the limit, you need to:
Report the outside contribution by March 1 of the following year.
Complete the refund by your tax return due date (typically April 15).
Important: If the March 1 reporting deadline is missed, the excess contributions cannot be removed from your plan until you are otherwise eligible for a distribution. Because this deadline is specified in the IRS-preapproved plan document, we are unable to make an exception when it is missed.
To request a refund, follow these steps.
Go to the Tasks and notifications section of your Gusto Retirement dashboard.
Find the excess contribution refund task and select Start.
Confirm your information, payment method (check or direct deposit), and mailing address.
If you get an excess contribution refund, you will owe taxes on the amount. The tax timing depends on when the distribution is processed.
Refunded in the same year as the excess deferral: You will owe taxes on the excess and any applicable gains as regular compensation in the year distributed.
Refunded after the tax year but before April 15: The excess is taxable in the calendar year it was deferred. Any earnings on the excess are taxed in the year the refund is distributed.
Refunded after April 15 of the following year: The excess is taxable in the calendar year it was deferred. Both the excess and earnings are also taxed in the year the refund is distributed.
If the refund is not done by April 15, the distribution may be delayed until you have a distributable event — which may be several years after the excess occurred. If the excess was made entirely within plans sponsored by the same or related employers and is not detected or distributed in time, the distribution may still occur before you have a distributable event.
You will get a 1099-R for the applicable tax year once the distribution is processed. Use this form to report your excess contributions and any gains or losses for income tax purposes.
The above information is intended as general information. If you have specific questions about your situation, consult your tax advisor.