As a business owner earning self-employment income, you may be able to participate in your Guideline 401(k) plan by contributing to your account via an owner’s draw.
On the other hand, if you are paid via W-2, you can make deferrals to your 401(k) through payroll. You can find out if you are eligible to contribute through an owner’s draw here.
How to schedule an owner's draw
If you are eligible for an owner’s draw, you can initiate the request from your participant dashboard. An administrator will not be able to initiate this request on your behalf.
Here’s how to set up an owner’s draw:
Log into your Guideline participant dashboard.
From your main dashboard, click “Schedule contribution.”
Note: If you do not see the “Schedule Contribution” option on your participant dashboard, you either are not listed as earning self-employment income in Guideline or your entity type doesn’t allow for owner’s draw contributions (e.g., S Corporations). Therefore, you will not be able to request an owner’s draw. We suggest you reach out to your plan sponsor if you believe you should have this option available.
From the Change Contribution page, you can enter the information for your owner’s draw.
Contribution frequency
One-time: Allows you to schedule a single lump sum deferral. You can select the date and year you would like the funds to pull from the company’s bank account.
Quarterly: Allows you to set up a recurring deferral to automatically pull funds from the company’s bank account on a quarterly basis. Funds will pull on the last day of each calendar quarter.
Note: Deferral elections must be made by year’s end (12/31). If you would like to elect to defer in the current year, but not make the contribution until the following year (once your taxes are finalized and self-employment income is known), you can select a date in the following year for the withdrawal to occur (but no later than 3/15 of the following year). However, please ensure this request is submitted to Guideline through your participant dashboard no later than 12/31 in order to show intent to contribute for the current plan year. After 12/31 of the applicable year, the deferral elections cannot be canceled. For example, if you intend to make a deferral for 2023 but you do not want the withdrawal to occur until March 1, 2024, you must select a withdrawal date of March 1, 2024 on or before 12/31/23 and specify a tax year of 2023.
How much do you want to contribute?
Choose the dollar amount(s) you would like to defer and indicate if they should be pre-tax, Roth, or both. Please consider the following as you select your contribution type and amount:
If you select a Roth contribution, you are responsible for calculating and paying any self-employment and estimated taxes on your Roth contributions.
If you do not receive enough earned income to support the contribution, it will be returned to you as an excess contribution after year end.
Keep in mind that your total deferrals cannot exceed the annual deferral limit for the year. If you contribute to more than one 401(k) plan, your deferrals in all plans are added together to determine if this limit has been exceeded.
Once you set up the owner's draw deferral, please note the date of your draw and inform your finance team so they are aware of the upcoming withdrawal. Guideline will pull the funds for the owner’s draw from the company’s Contribution default bank account on file.
To cancel scheduled deferrals on owners' draws, you must return to the Change Contribution page and set the contribution dollar amount to zero. You may also reach out to Guideline at least two business days prior to the scheduled draw to request that the transaction be canceled (unless the contribution is for the prior plan year). To reschedule an owner’s draw, navigate back to Change Contribution and adjust the date you want the funds to pull.
We will send you a task notification early in the following year to confirm the amount you will be including on your self-employment income tax filing (your compensation for purposes of the plan) so that we may calculate nondiscrimination test results and any employer contributions accordingly.