An in-service distribution lets you access your vested 401(k) account balance — as a cash withdrawal or a rollover — while you are still employed. To be eligible through Gusto Retirement, you must generally be at least age 59½ and meet other qualification requirements. Fees may apply depending on your plan’s terms.
To be eligible for an in-service distribution, you need to meet both of the following requirements.
You are at least 59½ years old.
You are still an active employee of the company sponsoring the 401(k) plan.
While not every retirement provider offers in-service distributions, they are available from all Gusto 401(k) plans.
Depending on your plan’s terms, you may be charged a $50 fee for in-service distributions. To confirm whether these fees apply to you, review your Terms of Service.
If you do not meet the age or employment requirements for an in-service distribution, you may have other options depending on your situation.
If you are still employed, you may be eligible to take out a 401(k) loan or apply for a hardship withdrawal.
If you are no longer employed, you are eligible to take a full distribution of your entire account balance.
An in-service distribution can be taken as either of the following.
Cash withdrawal: You get the funds directly.
Rollover: You transfer funds to another eligible retirement plan or IRA.
You can withdraw your entire vested balance or just a portion.
The tax treatment of your distribution depends on the type you choose.
If you roll over your in-service distribution into an eligible plan or IRA, no withholding applies, and the distribution will not be included as taxable income until you take a cash distribution from the receiving account.
If you take a cash distribution, we withhold 20% of the taxable amount for federal taxes, plus state taxes where applicable. You can choose to have a higher percentage withheld, but you cannot elect less than 20% or waive this withholding. The taxable amount will be included as income for the year you took the distribution.
Because you must be at least 59½ to take an in-service distribution, you are exempt from the 10% early withdrawal penalty tax.
In Jan. of the following year, you will get a Form 1099-R to use when filing your taxes.
Once you are eligible, an in-service distribution form will automatically become available in your Gusto Retirement dashboard.
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 submit a request.
Go to Documents in the main menu.
Select the Resource Library tab.
Download the In-Service Distribution Form.
Once completed, submit the form through the Shared Files.
Contact our Retirement Participant Support team to let us know about your submission so we can get started on your request.
Standard processing and shipping take about 4 – 6 weeks after you submit the form and notify our team.
This information is for general education purposes only and is not intended to be tax advice. We encourage you to consult a qualified tax professional before requesting a distribution.