401(k) Retirement Savings Plans
A 401(k) retirement savings plan allows you to save and invest money for retirement with tax benefits.
Contributions are made to an account in your name for the exclusive benefit of you and your beneficiaries. The value of the account is based on the contributions made and the investment performance over time.
Pre-tax contributions you make reduce your taxable income for the year. These contributions and all associated earnings are then not subject to tax until you withdraw them. You also may be able to make after-tax Roth contributions which allow for potentially tax-free earnings.
Your employer may also contribute to your account, matching contribution that you make. Taking full advantage of matching employer contributions is an excellent way to build your retirement savings.
Contribution limits apply - for 2013, you can contribute up to $17,500, or $23,500 if you are age 50 or over. The total contribution limit including both employer and employee contributions is $51,000 or $56,500 if age 50 or older.
To contribute to your 401(k) plan, contact your employer or your ICMA-RC representative for instructions, including whether you can submit these completed ICMA-RC forms to your employer:
- 401 Plan Enrollment Form - to participate for the first time.
- 401 Plan Amount of Contribution Change Form - to resume contributions if you previously enrolled.
You control how your account is invested, choosing from options selected by your employer.
A typical plan includes a wide range of options, from more conservative stable value funds and CDs to more aggressive bond and stock funds. You may choose to build a diversified portfolio of various funds, select a simple yet diversified target-date or target-risk fund, or rely on specific investment advice through Guided Pathways.
- To review investment options for your plan, login to your account.
- To learn more about investing for retirement, visit www.icmarc.org/invest.
You can make withdrawals from your account when you leave employment. You have the ability to take payments as needed or request scheduled automatic payments. You maintain control over your investments and continue to benefit from tax deferral even after you leave your employer.
During employment, subject to your employer and IRS rules, you may also be able to make withdrawals after age 59½ or due to a hardship. A loan option may also be available.
Withdrawals are generally taxable and distributions prior to age 59½ may be subject to an additional 10% penalty tax. For detailed tax information, view Special Tax Notice Regarding Plan Payments.
Have a plan for taking withdrawals from your account - both to manage the tax bill and to provide for your future needs. For guidance, visit RealizeRetirement or contact your ICMA-RC representative.
You designate a beneficiary, or beneficiaries, to receive any remaining assets upon your death. Designating beneficiaries can help ensure your assets are paid per your wishes, avoid the potential costs and delays of probate, and allow non-spouse beneficiaries to receive additional tax benefits.
Note: if you are married, most plans require your spouse be your beneficiary for 100 percent of your account unless your spouse waives this right.