Step 11: Fold the handles and pin
Fold the handle in half with the top-stitched seams going towards the inside of the bag. Pin on either side of the top seam and keep pinning until you're about three inches down from the center on both sides.
This will leave a nice folded edge that lines up perfectly with the gussets. Because there are multiple thicknesses at the very top of the bag, make sure you fold those seams in opposite directions or you'll end up breaking a needle which will scare the ever-loving crap right out of you. Not that I would know from personal experience or anything.