Gusto 401(k) eligibility and withholding rules for non-US residents

All Gusto 401(k) plans exclude non-resident aliens (NRAs). It is important to distinguish NRAs from resident aliens — not all aliens (non-US citizens) are excluded from participating in a Gusto 401(k) plan.

You're generally eligible to participate in your employer's 401(k) plan as a resident as long as the following requirements are met:

• You are earning US-sourced income

• You meet the plan's eligibility requirements (applicable to all employees), like age or length of service requirements

Provided you meet the requirements above, you're able to participate in the 401(k) plan with the same rights and benefits as a US citizen.

Your residency can also affect how a distribution (or withdrawal) is treated from your Gusto 401(k). If you take a distribution and are considered a “US person,” specific withholding rules apply.

To be considered a US person, you need to have:

• A Social Security number, and

• A mailing address either in the US or in a country that has a treaty with the US, exempting its residents from US tax on retirement plan distributions

Additionally, distributions from a US-based retirement plan cannot be rolled over directly into a non-US-based retirement plan.

If you are not a US person, the Internal Revenue Service (IRS) requires that 30% federal withholding apply to your distribution. You cannot waive this withholding. However, your current country of residence may include a different withholding rate in its tax treaty with the US. You can find a list of the current treaty withholding rates here.

For more information about withholding and taxation for non-US persons, see Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, and Pub. 519, U.S. Tax Guide for Aliens.