This article covers common questions about setting up your new Gusto 401(k) — from changing your plan start date and running your first payroll, to managing employees, making plan changes, and understanding compliance testing.
If your plan has not yet begun, you may be able to change the start date. Several factors determine when your plan can or must begin.
If your plan starts in less than 30 days: You cannot move the start date sooner. The IRS requires employers to give employees an automatic enrollment notice — and a safe harbor notice, if applicable — at least 30 days before the plan starts. During plan setup, our system generates the earliest available start date based on your payroll schedule to meet this requirement.
If your plan starts in more than 30 days: You may be able to move it earlier. The soonest available date will still depend on the 30-day notification window.
You can push your plan start date back in most cases, as long as the plan has not yet begun. If you have a new safe harbor plan, keep in mind the Oct. 1 deadline — your plan needs to start by then to be eligible for safe harbor status in the current year.
If enrollment notifications have already been sent to participants, we will send a follow-up email letting them know about the updated start date.
All entities within a controlled group or legally related group need to be treated as a single entity for employee benefit purposes. This means all entities starting new plans need to share the same start date and plan design, since the plans are tested together for nondiscrimination testing. Any change to the start date needs to apply to all entities in the group.
Contact your dedicated Onboarding Specialist to confirm whether a start date change is permissible. If approved, they will prepare a plan amendment for the trustee to sign.
If you do not have a dedicated Onboarding Specialist, email [email protected] to request a change. An Onboarding Coordinator will assess whether the adjustment is permissible and publish a plan amendment task on the trustee's dashboard for approval.
Your plan start date is when your 401(k) becomes active — when eligible employees begin participating and contributions can be withheld. Wait at least one business day after your plan start date before running payroll. This gives the system time to sync employee contribution elections.
Check your 401(k) administrator dashboard for any open tasks before running payroll. If there are no outstanding tasks, nothing else is needed from you.
On your plan start date, the 401(k) integration with your payroll provider becomes active. Your payroll provider will automatically get each participating employee's deferral election and apply the deduction to their paycheck. Any employee changes to their deferral rate after the start date sync to payroll in real time.
Before running each payroll, review your 401(k) administrator dashboard to gather employee deferral rates and employer contribution amounts, and update your payroll system accordingly.
Once you process payroll, upload a payroll journal at least two days before the scheduled pay date to make sure we can process contributions on time. Delays in uploading a complete payroll journal may result in lost earnings owed to participants or excise tax penalties for late contributions. Repeat this process each time you run payroll. Learn more about self-service plans and requirements.
Eligible employees get an email invitation to enroll in their accounts. The email is sent at least 30 days before your plan start date, or when an employee becomes eligible if they join after the plan begins.
From the email, employees can select the enrollment link to complete a guided setup where they can choose their contribution rate, portfolio preferences, and more. Employees who do not want to contribute can opt out through the same link.
Your 401(k) administrator dashboard shows the date each employee's invitation was or will be sent. If an employee does not get the invitation, ask them to check their spam folder first. You can also resend invitations from the Roster tab of your dashboard. See the guide to employee enrollment for full details.
A few common questions come up about who shows as eligible on your roster.
Employees with a status of “Inactive” or “Not on payroll” may sync to your 401(k) as potentially eligible. If these employees have been dismissed, update their profiles in your payroll account to reflect “Dismissed” or “Terminated” and include their termination dates.
Gusto or Gusto Embedded payroll: Changes sync in real time
Self-service plans: Update employee statuses directly in the Roster tab of your administrator dashboard
Gusto 401(k) plans do not allow part-time, seasonal, temporary, or intern employees who are paid through a W-2 to be excluded from plan eligibility. As long as these employees meet your plan's age and service requirements, they are eligible to participate.
You can request changes to your age or service eligibility requirements before your plan starts or, in some cases, mid-year. Outside of those requirements, non-resident aliens with no US-sourced income are always excluded. Leased, union, and Puerto Rico resident employees can also be excluded if they are excluded from your payroll. Learn more about employee eligibility.
Employers can generally add, remove, or change plan provisions at any time. However, a few important rules apply:
Certain features — like safe harbor contributions and automatic enrollment — can only be added, removed, or changed within specific timing windows and following required notice procedures
Amendments cannot reduce benefits a participant has already earned
Amendments generally cannot be applied retroactively to prior plan years
To request a plan change, contact your dedicated Onboarding Specialist if you have one, or email [email protected]. Plan changes can take up to 10 business days to process and will require a new plan document to be signed.
If you are an owner who is not on payroll and gets self-employment income through a partnership or sole proprietorship, you can contribute to your 401(k) as a one-time election or on a quarterly basis through an owner contribution.
Note: For entities taxed as corporations — including S-corporations — the 401(k) plan only counts W-2 compensation when calculating owner contributions.
Compliance testing is required by the IRS after year-end to confirm your plan does not unfairly favor owners and highly compensated employees. Plans that exceed contribution limits based on testing may need to refund participant contributions or make additional employer contributions. Learn more about compliance testing.