401(k) Program
The 401(k) plan is one of the most widely used retirement vehicles. It is an arrangement that allows an employee to choose between taking compensation in cash or deferring a percentage of it to an account under the plan. The amount deferred is usually not taxable to the employee until it is withdrawn or distributed from the plan. However, if the plan permits, an employee can make 401(k) contributions on an after-tax basis, and these amounts are tax-free when withdrawn.
401(k) Participants
(401(k) Plan Sponsors Click Here)
Reach your goal with a 401(k)
Your 401(k) plan is designed for your retirement security. When the money remains in the plan, YOU choose how it’s invested. When you withdraw your money at retirement, YOU choose the form of income that best suits YOUR needs.
Choose your contribution amount.
- Up to plan limit
- Elective deferrals
- Voluntary after-tax contributions
- Designated Roth contributions
- Catch-up contributions
Pre-Tax Savings = More Money In Your Pocket
Example:
- A single person who earns $50k annually in the 25% income tax bracket.
- A $3,000 pre-tax contribution is made to the 401(k)
- Reduces taxable income from $50k to $47k ($750 tax savings)
- The same amount saved with after-tax dollars would not have offered any tax benefit!
- Contributions do not affect Social Security, Medicare, and federal unemployment taxes or benefits
401(k) Benefits
- Always keep YOUR contributions
- The money belongs to you even if you leave employment
- Employer may contribute to YOUR 401(k)
- Earnings grow tax-fee in your account