Mesa 4/23/2019 10:00:00 AM
News / Finance
Defined Contribution Plans - Saving for Retirement in Your Working Years
Retirement plans share some characteristics, but each has unique features.
Employers who sponsor defined contribution plans have the right to automatically enroll you in their plan. With automatic enrollment, your employer decides the percentage of your salary that you contribute—often 3% with a built-in annual increase—as well as the type of investment you initially make: a target date fund, a balanced fund, or a managed account. If you don’t want to participate in the plan, you can refuse in writing. If you do participate, you have the right to change the default investment and the percentage you contribute.
401(k) Plan - at public and private companies and nonprofit organizations Annual contribution limits and vesting rules
Balances portable when leaving job
Transfers into plan may be possible
Tax-free Roth option may be available in addition to tax-deductible plan
403(b) Plan - at nonprofit organizations
Annual contribution limits and vesting rules
Balances portable when leaving job
Transfers into plan may be possible
Expanded opportunities to make catch-up contributions
Tax-free Roth option may be available in addition to tax-deductible plan
457 Plan - for state and municipal workers
Annual contribution limits and vesting rules
Balances portable when leaving job
Transfers into plan may be possible
Expanded opportunities to make catch-up contributions
TSP Plan - for federal employees and at some public and private companies
Annual contribution limits and vesting rules
Balances portable when leaving job
Transfers into plan may be possible Tax-free Roth option available in addition to tax-deductible plan
Simple IRA/401(k) Plan – public & private companies 100 employees or less
Matches are mandatory
Simple IRAs have lower contribution limits than other plans
Balances portable when leaving job
Profit Sharing/Money Purchase Plan - public & private companies
Contribution limits higher than with most other plans
Money purchase but not profit sharing plans require annual contributions
Assets can be rolled over to an IRA
Contributions from the book Guide to Understanding Life Insurance in this press release are used with permission from Light Bulb Press.
