401(k) basic info (for employees)

A 401(k) is an employer-sponsored retirement plan that lets eligible employees save and invest part of their paycheck. Because it’s employer-sponsored, employees can only contribute if their employer offers one. Contributions are deducted from an employee's gross pay and put into a 401(k) account.

The maximum contribution an employee can make in elective deferrals is determined by their age:

• Under 50: The elective deferral limit is $23,500 in 2025 ($23,000 in 2024).
• 50-59 or 64 and older: They may make an additional catch-up contribution of $7,500 in 2024 and 2025.
• 60 to 63: They may make a special catch-up contribution of $11,250 in 2025. For 2024, the catch-up contribution was $7,500 for those age 50 and over, including ages 60-63.
• 64 and older: They may make an additional catch-up contribution of $7,500 in 2024 and 2025.

Note: These limits are for employee elective deferrals only. The total contribution limit for a 401(k) plan, which includes both employee and employer contributions, is also set by the IRS. This is different from the individual deferral limits. For the most current total contribution limits, check IRS publications or talk to your plan administrator.

Roth 401(k)

A Roth 401(k) is an employer-sponsored retirement plan where eligible employees make after-tax contributions from their paycheck. This means contributions are made with money that has already been taxed —federal and state income taxes are applied to your gross pay before the Roth 401(k) deduction is considered. If the deduction is based on a percentage, it's typically calculated on your gross pay, and that amount is then deducted from your net pay. Because it’s employer-sponsored, employees can only contribute if their employer offers one.

A key benefit of a Roth 401(k) is that qualified withdrawals in retirement are tax-free.

In some plans, the employer may also contribute by matching up to a certain percentage of the employee's contribution.  It's important to note that employer matching contributions are always made on a pre-tax basis, even if your personal contributions are Roth.

The employee elective deferral limits for a Roth 401(k) are the same as for a traditional 401(k), determined by age:

• Under 50: The elective deferral limit is $23,500 in 2025 ($23,000 in 2024).
• 50-59 or 64 and older: They may make an additional catch-up contribution of $7,500 in 2024 and 2025.
• 60 to 63: They may make a special catch-up contribution of $11,250 in 2025. For 2024, the catch-up contribution was $7,500 for those age 50 and over, including ages 60-63.
• 64 and older: They may make an additional catch-up contribution of $7,500 in 2024 and 2025.

More 401(k) terms to know

Custodian: The financial institution holding the 401(k) funds.
Plan participant: An employee enrolled in the 401(k) plan.
Plan sponsor: The employer (company) that establishes and maintains the 401(k) plan. While there may be a designated administrator, the employer is the plan sponsor with ultimate responsibility.

Enroll in your company's 401(k)

Once you're eligible to participate in your company's 401(k), your 401(k) provider will notify you when you can opt in or out. Your company may have a waiting period that you must meet before you can participate—ask your company admin if you have questions. 

View your 401(k) plan details

If you're enrolled in an integrated 401(k) plan with Guideline, Betterment, Human Interest, or Vestwell, you can view your plan's high-level details right from Gusto. To make changes or view your balances in more detail, sign in to your provider's website. 

1. Sign in to your Gusto employee account.
2. Go to the Benefits tab.
3. Under "Savings & Philanthropy," click 401(k).
   • If you do not see the 401(k) listed here: You may not yet be eligible to enroll, or you may have met the IRS annual contribution limit. Sign in to your provider's website to confirm. 
4. View each tab of your dashboard for information about your 401(k) plan.

If you don't see a 401(k) in your Benefits tab, you may not be eligible to enroll yet. If you no longer see 401(k) deductions on your paystubs, you may have already met the annual IRS maximum contribution. Sign in to your 401(k) provider's website to make changes or to view more details. 

For more info about your plan, contact your company's 401(k) administrator.

Change your 401(k) contribution

Any changes must be made directly on your 401(k) provider's website—check out the steps to change your contribution in Guideline, Betterment, or Vestwell, or contact your provider for more info.

If your 401(k) is not listed in Gusto or on your paystub, start here. This may be because:

• Your plan may not have started yet—check your provider's online account to confirm the start date.
• You may not yet be eligible per your plan's eligibility settings. Ask your employer to find out when you'll be eligible to participate.
• Your company may have run payroll before your enrollment or deduction change was processed. 
• A traditional 401(k) is a pre-tax deduction. If gross pay was too low or tax withholdings too high, net pay after taxes might have been $0, leaving no funds for your 401(k) deduction.
• Reimbursements  (e.g., for expenses) are not considered wages and therefore are not eligible for 401(k) deductions. 
• You may have reached the IRS annual contribution limit. 
• If you have taken out a loan from your 401(k), your repayment may be collected through payroll deductions (check the terms of your loan to confirm). These deductions are generally taken on an after-tax basis.

For more help, sign in to your online account on your provider's website or call your 401(k) provider directly.