Each year, you need to report compensation for employees and owners in your company so we can complete the required annual plan administration for your Gusto 401(k) plan. This includes nondiscrimination testing, limits testing, and any requested profit sharing. At the beginning of each calendar year, you will get tasks on your dashboard to report owner and employee compensation. You need to report compensation for all eligible employees from the previous calendar year, even if they were never active in your 401(k) plan.
Note: If you used Gusto or a Gusto Embedded payroll for the entire year, you generally do not need to submit compensation for W-2 employees. We get this information automatically through payroll. However, if we cannot get the required compensation data from your payroll, you may see a task on your dashboard to provide compensation for some employees.
You need to report total compensation for all eligible employees through the compensation task in January if you:
Do not use Gusto or a Gusto Embedded payroll provider
Have employees for whom we could not get compensation from your payroll provider
Have any owners who earn self-employment income, and the sponsoring entity is taxed as a sole proprietorship or partnership (only W-2 wages count for owners of entities taxed as a corporation, including S Corps)
Switched your payroll provider during the year
Changed your payroll integration type during the year (for example, from self-service to Gusto payroll)
Moved to Gusto Retirement from a different provider this year
Final, total compensation data for every employee who was eligible in the prior plan year. You can typically pull an annual "gross compensation" report from your payroll provider.
If you changed your payroll provider mid-year, you may need to collect compensation amounts from your previous provider and combine them with your current provider for accurate information.
If you have any owners who earn self-employment income, you need to submit this information regardless of your payroll provider. Because self-employed individuals are not paid through payroll, we cannot automatically pull that information.
Typically, businesses with the entity type of sole proprietorship, partnership, or LLC have owners with self-employment income. The 401(k) plan can only consider the W-2 compensation of S-corporation owners.
A prepared draft of each owner's tax form:
Schedule C for owners of a sole proprietorship
Schedule K-1 for owners of an entity taxed as a partnership
If you need to provide compensation for more than five employees, you can upload a spreadsheet with compensation data to your 401(k) dashboard when the compensation task appears.
The spreadsheet must include specific information and meet our formatting requirements. Follow these tips to make sure reports are processed quickly and accurately:
File format must be CSV. Upload your compensation report as a .csv file.
Include column headers. Make sure your report includes the exact headers shown in the template we provide in the task. To reduce errors, use our template.
Include all required information. Review your report to confirm it includes all employees eligible in the prior year. The following information should appear in separate columns:
Participant ID – A required unique identifier for each participant, pre-populated in the template
First name – Pre-populated in the template
Last name – Pre-populated in the template
Birth date – Formatted as MM/DD/YY, pre-populated in the template
Total gross compensation – You need to fill in this column. Do not include commas or dollar signs
Important: Do not modify the columns or rows of the report in any way. The list of participants pre-populated in the template is based on the latest information from your 401(k) roster. Do not add or remove any participants in the template. If there are participants missing, update your roster first. If there are any participants who were dismissed, make sure your roster is updated with the relevant dismissal date and enter 0 (zero dollars) in the compensation column for that employee.