401(k) Frequently Asked Questions
What exactly is a 401(k) plan?
A 401(k) named after the section of the tax code that governs them is essentially a retirement savings plan sponsored by an employer. It allows workers to save and invest a piece of their paycheck before taxes are taken out. Taxes are taken out when the money is withdrawn from the account.
Why contribute to a 401(k)
Good personal planning determines the factor of your satisfaction with your retirement lifestyle. It allows you to budget for life expenses for when you are ready to retire.
CleanSlate contributes to your retirement fund as well. Free money!!!
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If you make Salary Deferrals to the Plan, you will be eligible to receive a Safe Harbor Matching Contribution equal to 100% of the amount you contribute to the Plan for the Plan Year up to the first 3% of Plan Compensation plus 50% of the amount you contribute between 3% and 5% of Plan Compensation.
What’s a salary deferral?
Salary deferral is simply the term that the 401(k) company refers to which means setting aside a portion of your income for later in life. Your contribution bi-weekly to your 401(k) in whichever form you elect is your salary deferral.
What types of deferrals exist?
401(k) Percent: Deducts a percentage of your money from your pay bi-weekly pre-tax to add to your retirement fund.
401(k) Flat Rate: Instead of deducting a percentage of your income bi-weekly pre-tax, this option allows you to deduct a flat amount from each paycheck example: 50 dollars bi-weekly.
Roth 401(k)Percent: Deducts a percentage of your money after tax. An account holder of a Roth 401(k) is not subject to any taxation with distributions so long as they are qualified
Roth 401(k) flat Rate: Instead of deducting a percentage of your income bi-weekly post-tax, this option allows you to deduct a flat amount from each paycheck example: 50 dollars bi-weekly
A 401(k) allows you to control how your money is invested
Tell me more: CleanSlate offers many investment options for your 401(k) monies. To find out more about these options visit the John Hancock employee portal. From the home page click on my investments and read through the individual investment options
For more information about deferral rate limits for 2019 or helpful tutorials, please reach out to Heather Wardrop at HWardrop@cleanslatecenters.com Don’t wait to save for your future!