Intro to 401(k)s
Everybody wins with a 401(k) plan. A well-designed plan can be a powerful recruiting and retention tool for both employers and employees.
With the tax-deduction for you, it’s a valuable part of your benefits package. With the tax-deferral and growth potential for your employees, it’s a high-value benefit for their futures. Plus, you can add the Roth 401(k) option, which may benefit your employees even more.
There’s no time like now to make sure you’ve got the right plan working for you. Why not start by getting the right company working for you – COUNTRY Trust Bank. Get in touch with a local COUNTRY Financial rep to set the wheels in motion.
Who It’s For
A 401(k) might be a good choice if you want a retirement plan that allows participants to contribute pre-tax money with tax-deferred earnings and your company is an incorporated business, a self-employed business, or a not-for-profit organization.
How It Works
It’s no secret that 401(k)s are the most popular type of business retirement plan available. Here’s some 401(k) information to explain why.
If your employees decide to participate, they can choose what percent of their compensation they want to contribute to the plan, up to a set limit. For 2015, that contribution can be 100% of compensation up to $18,000. If they’re over age 50, they can contribute an additional $6,000.
Contributions by owners and highly compensated employees may be limited, based on participation by other employees. If that’s an issue, a Safe Harbor 401(k) might be worth considering.
As employer, you have the option to offer a match. That’s a tax-deductible contribution to the participants’ accounts that match their contribution up to a certain dollar amount or percent of compensation.
The overall maximum employee/employer contribution per eligible employee in 2015 is 100% of compensation up to $53,000. Participants age 50 and older can make an additional catch-up contribution of $6,000.
Employee participation rules
There are a couple of rules governing who can participate in the plan. Generally, employees who are 21 years old and have worked for you for over one year (minimum 1,000 hours) are eligible to participate.
Can employees take loans from their 401(k) plan?
When COUNTRY Trust Bank is designing your plan, you have the option to allow participants to take loans from their accounts. The money is repaid at an interest rate based on the current lending environment. The repayments and interest are credited back to the participant’s account.
Loans vs. withdrawals
Instead of a loan, participants can generally withdraw money from the plan for the following reasons: retirement, disability, death (beneficiary withdrawal), termination of employment or financial hardship.
Applicable taxes will be assessed and a possible 10% penalty may apply.
We Can Help
You might think 401(k) plans are complicated. They can be unless you have an experienced service provider to do the heavy lifting for you – one like COUNTRY Trust Bank. We’re a “bundled” provider, which means we can handle various parts of your 401(k).Learn More
Call us at 855-535-PLAN (855-535-7526) to find out how we can help you!
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Investment management, retirement, trust and planning services provided by COUNTRY Trust Bank®. Please see our Terms & Conditions for more information about COUNTRY Trust Bank and its affiliates.
COUNTRY Financial and our representatives cannot give tax advice. Any information we provide reflects our understanding of current tax laws, which are subject to change and reinterpretations.