Adding your 401(k) to Payroll

A guide to setting up your retirement account in Gusto

Updated over a week ago


This process below is for running 401(k) and Roth 401(k) through your S Corp by:

  1. funding them from S Corp business checking account and

  2. reporting them as benefits in the employee profile setup in Gusto.

This process IS NOT for Roth IRA, Traditional IRA, or SEP IRA. Roth IRAs and Traditional IRAs should be paid from personal accounts not connected to your S Corp accounting software and not reported through Gusto. They will be reported on your 1040 personal tax return, so please tell us about them when we file your 1040 personal tax return every year.

If you are operating as an S Corp then you can make SEP IRA through your business account. The SEP IRA contribution is not required to be recorded in Gusto but needs to be recorded in your accounting software.

First, read this article to learn about the different types of retirement accounts. We do not advise you which retirement account to get. You must make this decision on your own. Once you decide we will help you set it up in Gusto if applicable.

If you decide to proceed, you'll need to:

  1. Sign up with a financial institution that provides retirement accounts (click here if you need help choosing a financial institution).

  2. Run your retirement contributions and deductions through payroll for W-2 reporting purposes.


  1. In Gusto, look for Benefits on the left side menu

  2. Select 401(k) under Add benefits

  3. Select Yes - we currently offer Traditional or Roth 401(k) to your employees

  4. Click Next

  5. Click I’ll Manage 401(k) myself

  6. Input Benefit Name (Keep it generic: 401k)

  7. Benefit Type: select 401(k) or Roth 401(k). If you have setup a traditional Solo 401k, you would select '401k.' If you are making Roth contributions in the Solo 401k then you would select 'Roth 401k'.

  8. Employee deduction per pay period: Select either percentage of gross pay or a fixed amount: input your employee deduction based on your 401(k) details. This is the amount Gusto will deduct from your employee's wages each pay period (if applicable)

  9. Annual deduction limit: Select Use standard limit (The catch-up contribution limit is for employees aged 50)

  10. Company contribution (employer) per pay period: Select either a percentage of wage or a fixed amount: enter your company contribution based on the 401(k) details

  11. Annual maximum contributions: The maximum amount that your company can contribute for the year.


How will I make my contributions?

You’ll make your contributions from your business checking or credit card account. Gusto does not remit payment to third-party service providers, so please ensure you make these payments yourself.

What if my contributions exceed the annual limits?

The system will prevent you from contributing above the max for the year.

How do I need to map the accounts in Gusto so it syncs correctly with Quickbooks?

Sync the information in Gusto to Quickbooks by mapping it in App Directory > QuickBooks > Mapping

How does this affect my Profit and Loss and Balance Sheet?

After following the mapping the instructions above, Gusto will sync with Quickbooks each time a payroll is run. A journal entry is created in the books to record a business expense for the employer contribution portion (if option selected) as Employer Retirement Contributions account on the Profit & Loss statement.

These contributions will be recorded under the Retirement Plan Payable liability account on the Balance Sheet. You are now responsible for making the payments to the retirement plan administrator (both employee & employer portions). When the payment is made, you will categorize the payment to the Retirement Plan Payable liability account to reduce the amount due to zero.

If you do not have these accounts in Quickbooks, you will need to add them to your Chart of Accounts and remap them in Gusto once created. If you need guidance on how to create the accounts, please reach out to your Member Relationship Manager (MRM).

How do I add retirement deductions and contributions retroactively?

Reach out to your Member Relationship Manager at [email protected] 😄

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.

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