How does 401(k) work with Embedded Payroll?

Whether you are matching employee contributions or simply facilitating deductions, GoCo keeps your retirement deductions running smoothly right alongside your pay runs. 

The 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? 📈

All retirement account options are fully supported for clients using Gusto Embedded Payroll, including:

• 401(k)

• Roth 401(k)

• 403(b)

• Roth 403(b)

• SIMPLE IRA

• SEP-IRA

Managing Deductions and Loans 📁

When an employee needs to make payments toward an existing retirement loan, 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 

Setting Up a Dedication or Loan Repayment

When configuring a retirement deduction or loan itembyou will need to fill out the following fields:

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 above the standard annual limits to accelerate their retirement savings. 

• 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. (Note: Contribution caps adjust annually per IRS guidelines).
• ‼️ Manual Adjustment Required: Enabling catch-up tracking is not automatic in GoCo. An admin must navigate to the employee’s deduction setting and update the Annual Deduction Limit dropdown from Standard Limit to Catch-Up Limit to permit contributions up to the higher IRS threshold. 

What Happens When My Employee Turns 50 and is a High Earner? (Catch- Up Contributions)

Starting in 2026, IRS regulations require that catch-up contributions for high earners must be designated as Roth (post-tax) rather than traditional pre-tax. 

This rule applies to employees who meet all of the following criteria:

• They are 50 or older by the end of the year.
• Their company's plan supports catch-up contributions.
• Earned more than $150,000 in Social Security wages (Box 3 of Form W-2) with your company during the previous calendar year.

2026 Limits Reference:

• Standard limit: $24,500
• Catch-up contribution limit (Age 50+): additional $8,000
• Total possible contribution: $32,500

Integrated 401(k) with Human Interest 🔄

• Automated Sync: 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.
  • Direct Outreach: Human Interest reaches out to the new hire with login and plan information and handles employee communication from there. 
• Hands-Off Deferrals: Employees select or change deferrals in Human Interest and the changes automatically flow into their GoCo profiles before each pay-run.
• Automatic Funding: 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).

Working with Non-Integrated 401(k) Providers 🛠️

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: 401k payroll deductions become the company's liability in payroll and your 401k vendor will debit your company's account based on what you upload/enter into their site. This is how employee 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. 
  

   

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