A Starter 401(k) is a simplified employer-sponsored retirement plan. If you're familiar with how standard 401(k) plans work, your Starter 401(k) will feel similar — but with different contribution limits and rules. This article covers eligibility and enrollment, contribution limits and types, and how loans, withdrawals, and rollovers work.
If you are at least 18 years old, you are eligible to participate immediately — there is no waiting period.
Once you're eligible, you'll get an email from Gusto 401(k) with your auto-enrollment date and default contribution rate.
If you do not take action to set up your account or opt out of the plan, you'll be automatically enrolled at the default rate outlined in the email. Default rates are between 3% and 15% of your compensation.
Starter 401(k) plans have lower contribution limits than standard 401(k) plans. Here’s what you can contribute and the types of contributions available.
The annual contribution limit for Starter 401(k) plans is $6,000 for 2026. The Internal Revenue Service (IRS) may increase this amount each year.
If you contribute to multiple 401(k) plans — either because you switched companies mid-year or you work for more than one employer — the standard annual deferral limit applies across your combined plans.
Pro tip: Report any contributions you make to other plans in your 401(k) dashboard. This helps us track all your contributions and stay within IRS limits. Learn how to report outside contributions.
If you are age 50 or older, you can contribute an additional $1,100 in catch-up contributions. This brings your total limit to $7,100 for 2026.
You can contribute on both a pre-tax and Roth basis. Your contributions are always 100% vested, which means you own 100% of the money you contribute from day one.
Starter 401(k) plans have a few key differences in how you can access your funds. Here's what to know about taking money out and moving money in.
You cannot take a loan from your Starter 401(k) plan. Hardship withdrawals are allowed in certain situations. Learn more about hardship withdrawals.
Once you’re eligible for the plan, you can roll over balances from other qualified retirement accounts — like a 401(k), 403(b), or traditional IRA. Rolled over amounts do not count toward your annual contribution limit.