Employees can use this article to understand what happens to your 401(k) account when your employer moves the plan to a new provider or shuts it down.
If your employer’s Gusto 401(k) plan is transferring to a different retirement provider or terminating, here’s what you need to know about your options, timing, and access to your funds.
Here is the difference between transferring and terminating a plan:
Plan transfer: Your employer moves the 401(k) plan from Gusto Retirement to a different service provider. Your account balance moves with it.
Plan termination: Your employer completely discontinues the 401(k) plan. You need to move your funds out.
No action is required on your part. Your employer and Gusto Retirement work together to transfer all plan assets.
To gather data and move assets, we need to pause all changes and transactions. This is called a blackout period. During a blackout period, you cannot:
Select new investments
Take out loans
Request a distribution
You get advance notice of when the blackout period starts and when it’s expected to end — in most cases, at least 30 days before the start date.
Important: If you want to make changes to your account or request a distribution before the transfer, you need to do so before the blackout period begins. After that, you need to wait until your plan is active with the new provider and work directly with them.
Gusto Retirement notifies you by email if your employer terminates the plan. You have two options for moving your funds.
Roll over to another employer-sponsored retirement plan or individual retirement account (IRA)
Request a cash distribution (withdrawal) — keep in mind, early withdrawal penalties may apply unless you qualify for an exception
Submit your distribution request as soon as possible. If you do not act before the blackout date, your funds transfer to a third-party provider called PenChecks. Any requests made after that point must be completed directly with PenChecks.
Even if you submit a distribution request right away, we cannot process it until the account review stage is complete. This stage includes:
A final plan valuation
Required annual testing
Filing Internal Revenue Service (IRS)-required forms and documentation
This process typically takes 3 – 4 weeks, but may take longer depending on any issues found. This review is designed to prevent negative tax consequences for you and the plan.
Once the account review is complete, we email you with confirmation that the plan is being discontinued and your options for distributing funds. We follow up again when we begin processing your distribution and when your funds are on their way.
Uncashed checks
If we send you a check, cash it as soon as possible. Balances that remain uncashed after 180 days are sent to PenChecks.
Outstanding 401(k) loans
If you have an active loan, you have 90 days to repay the balance before it’s treated as a taxable distribution. Learn more about 401(k) loan repayment during plan termination.
Timeline
Plan transfers and terminations generally take around 90 days, though several factors may extend this. Your funds remain invested in your elected portfolio until the plan is fully transferred or liquidated.
Your employer is your best point of contact for questions about the transfer or termination.