401(k) Retirement Savings Plans
A 401(k) plan is a retirement savings plan that allows you to set aside money for retirement. The plan may be funded by a combination of employer and employee contributions. You should check with your employer to confirm whether they make matching contributions to your plan based on the contributions that you make. Taking full advantage of matching employer contributions can significantly increase your retirement savings over time.
What are the Benefits of participation in a 401(k) plan?
- By making pre-tax contributions to the plan, you reduce your current income taxes while boosting your retirement investments.
- You can dollar-cost average through convenient payroll deductions.*
- You have the flexibility to consolidate your savings in another public sector employer's 401 plan, a tax-sheltered 403(b) annuity plan, a 457 plan, or an IRA if you change employers.
- Pre-tax contributions are not subject to federal and (in most cases) state income taxes until withdrawn.
- Earnings accumulate tax-deferred.
- You may also participate in a 457 Deferred Compensation Plan if offered by your employer, and be eligible to contribute up to the maximum allowable amount to both plans.
The 401(k) Plan Advantage:
- You choose from a wide range of investment options.
- There are no minimum investment requirements.
- Your designated beneficiaries are entitled to receive all remaining funds in your account in the event of your death.
- You have the most flexible withdrawal payment options available under law. You determine the payment schedule that is right for you.
- You control your account even while your are withdrawing assets.
Keep in Mind:
- You may stop and/or restart employee contributions to the plan at any time.
- You are always 100% vested in your employee contributions and earnings.
- There are strict Internal Revenue Code limits on the amount you may contribute each year.
- You should review the 401(k) Withdrawal Information carefully prior to initiating any withdrawals.
*Dollar cost averaging does not assure profit or protect against loss in a declining market. Since dollar cost averaging involves continuous investing, regardless of fluctuating prices, investors must consider their level of comfort in continuing to invest during a declining market.