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What to expect if your employer offers a Starter 401(k) plan with Guideline
What to expect if your employer offers a Starter 401(k) plan with Guideline

Starter 401(k) plans have different requirements and limits than standard 401(k) plans. Here are the features of a Starter 401(k).

Updated this week

A Starter 401(k) is a simplified employer-sponsored retirement plan. If you’ve had a standard 401(k) in the past or you’re familiar with how they work, your Starter 401(k) plan will be similar. However, Starter 401(k) plans have different requirements and limits than standard plans.

Here’s what you should know if your employer offers a Starter 401(k) retirement plan through Guideline.

Features of a Starter 401(k) plan

If you have a Starter 401(k) through your employer, here’s what you can expect:

Eligibility

If you are at least 18 years of age, you are eligible to participate in your employer's Starter 401(k) plan.

Auto-enrollment

Once you are eligible, you will receive an email notification from Guideline outlining your auto-enrollment date and default contribution rate. If you do not take action to manually set up your account or opt out of the plan, you will be automatically enrolled as outlined in the email. The default rate will be at least 3% of your compensation but can be up to 15%.

Employee contribution limits

The annual contribution limit for Starter 401(k) plans is $6,000 for 2024. This amount may be increased each year by the IRS.

If you contribute to multiple 401(k) plans – either because you switched companies mid-year or you work for more than one employer – then the standard annual deferral limit will apply across your combined plans.

We recommend reporting any contributions you make to other plans within your Guideline dashboard, so we can keep track of all your contributions and help prevent you from overcontributing. To report external contributions, click on your name in the upper right corner of your dashboard, then select Account Settings > Report outside contributions.

Catch-up contribution limits

If you are over age 50, you can contribute an additional $1,000 in catch-up contributions, for a total limit of $7,000 (for 2024).

Contribution types

You will be able to personally contribute on both a pre-tax and Roth basis. Your contributions are always 100% vested.

Loans and hardship withdrawals

While you will not be able to take a loan from your Starter 401(k) plan, hardship withdrawals are allowed in certain circumstances.

Rollovers

Once eligible for the plan, if you have funds within other qualified retirement accounts, such as a 401(k), 403(b), or traditional IRA, you can rollover those balances to your Starter 401(k) plan with Guideline. Any rolled over amounts will not count toward your annual contribution limit.

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