How does 401(k) work with Embedded Payroll?

If your employees have 401(k) contributions as part of payroll, there are a few options for getting these included on your payroll run.

The very first step is making sure all deduction codes and any employer company match configurations are properly established during your system implementation. Be sure to work directly with your GoCo Payroll Specialist to complete this setup. 

What Retirement Types does GoCo support?

• 401(k)

• SIMPLE IRA

• Roth 401(k)

• 403(b)

• Roth 403(b)

• SEP-IRA

Managing Deductions and Loans

When it comes to loan repayment options, you have a choice of 5 different options to consider.

• 401(k) Loan Repayment 
• Roth 401k) Loan Repayment 
• 403(b) Loan Repayment 
• Roth 403(b) Loan Repayment
• IRA Loan Repayment 

When selecting any one of these options you will need to fill out the following:

1. Deduction Amount: this can be set up as either a flat dollar amount or a  Gross Percentage of wages% 
2. Total Amount Owed: Used for trailing tracking on active loan repayments
3. Effective Date: Dictates exactly when the change should take hold (e.g., Immediately or Scheduled in the future)
4. Notes: An optional text area to input any administrative details for your internal auditing
   

What Happens When My Employee Turns 50? (Catch- Up Contributions)

When an individual turns 50 at the end of the calendar year, they become eligible to make catch-up contributions to their 401(k) retirement account. This allows them to contribute a higher annual amount than younger participants, helping to close any savings gaps from earlier years.

• Standard Limit vs. Catch-Up Limit: The standard annual contribution limit is set at $23,000, while the Catch-up limit extends to $30,500.
• ‼️ Manual Adjustment Required: Switching an employee over to an expanded catch-up threshold is not automatic in GoCo. You must manually adjust the employee's deduction tracking dropdown from Standard Limit to Catch-Up Limit to ensure their deductions reflect the increased IRS allowances.

If you have Human Interest, an integrated partner with GoCo, there is an easy 360° integration.

• When you add a new hire to GoCo they are automatically synced over to Payroll. Human Interest then pulls their information from GoCo and creates an account for them in their system.
  • Human Interest reaches out to the new hire with login and plan information and handles employee communication from there. 
• Employees select or change deferrals in Human Interest and the changes automatically flow into their GoCo profiles before each pay-run.
• After each payroll, Human Interest runs the report to see how much was deducted and then plugs that into their end to fund the employee accounts. 
• There is no action for you as an employer!
  

  Note: Human Interest only supports some retirement types: 401(k), Roth 401(k), 403(b), and Roth 403(b).

If you have any other provider, you have to take a few extra steps.

1. When you add a new hire to GoCo that is 401k eligible, you must set them up with your 401k vendor manually. 
2. Before their first deferral, you must add their deduction into their GoCo profile under the "Payroll" card.
3. Before running payroll, check your 401k vendor's site to make sure no deferral amounts have changed. If they have changed, you will need to update those deferrals in the employee's GoCo profile.
4. After each payroll, you must pull a report of the amounts that came out of payroll to fund employee accounts. Enter these in your vendor's system as you normally would. 
   

   Note: Your 401k vendor will debit employee accounts based on what you upload/enter into their site. This is how employees accounts are funded.

5. You're all set! 🎉

Additional Information

• If you have the active Human Interest integration, loan repayment rows are locked for editing because that data is sourced directly from their active system files to ensure matching balances.
• Did contributions come to a stop 🚫 for an employee? The employee may have hit their maximum contribution! Check your Gusto account for further information.

• Note that Roth and Regular 401(k) contributions are combined into a single total.  

• To learn more about adding 401(k) contributions to GoCo click here. 
• If you have Betterment or Guideline: while there is a 360° integration directly to Gusto, we cannot support it through embedded payroll at this time.
  

   

Have additional questions? Please email support@goco.io 💚