at a minimum remesh cloes to the hot spot.
if that mesh is 3" x 3", this thing is much bigger than i thought it was.
be aware, remeshing is certain to increase the peak stress, albeit over a smaller area, but this is FE detecting something which wasn't detectable with hand calc methods. convince yourself that the high stress is very localised and in the real world there'd be a tiny amount of plasticity.
if the gusset is welded, what are the properties post-welding ? maybe that's why you have such a low allowable ??
if you're still worried, you could test it later ??