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Overview
Reliant provides an employer sponsored contribution plan called a 401(k) plan. This plan is similar to an individual retirement account (IRA) except that only employers may establish a 401(k) plan for employees through their payroll.
Reliant's 401(k) Plan offers two types of savings opportunities for our employees - a traditional 401(k) and a Roth 401(k). The Traditional 401(k) Plan allows employees to save money for retirement while deferring federal, state, and in some cases local taxes on the amount invested. The Roth 401(k) Plan does not offer tax savings at the point contributions are made to the retirement plan, but, the employee's Roth contributions as well as the interest and dividends earned while invested in the plan are not subject to federal and/or state income taxation at the point of withdrawal (at retirement - age 59½ or above).
If withdrawals are made to either of these 401(k) Plan Retirement accounts prior to age 59½ the employee may incur tax penalties. Employees who have worked for Reliant at least 1 year may be eligible to begin participating in the 401(k) plan (previous internships and employment with Reliant may apply toward eligibility). Upon becoming eligible to participate, employees will receive an enrollment packet from the Reliant Finance Department. For questions or additional information about Reliant's 401(k) Plan please contact the Finance Department.
What is a 401k?
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Traditional vs. Roth Contributions
You have 2 choices for the portion of the 401(k) contribution that that’s deducted directly from your paycheck.
Traditional “Pre-tax” 401(k) contributions: The money you invest in the Traditional 401(k) plan (from your monthly paychecks) is not taxed by the government at this time. You will pay taxes on this invested money (plus any interest you make on that $) when you withdraw the funds at retirement.
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Traditional 401k Contribution Example Year wages = $20,000 |
Roth “After-Tax” 401(k) contributions: This option does NOT reduce your taxable earnings for the year. With this type of contribution you pay taxes on the money NOW (even though it gets directly deposited into your 401(k) account). However, when you withdraw these funds at retirement your invested money (plus the interest earned) is not taxed.
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Roth 401k Contribution Example Year wages = $20,000 However, if that grows with interest to $100,000 over 35 years you will not owe taxes when you withdraw it. |
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Roth tax savings do not apply to the employer match and interest earned on the match. |
Getting Started Saving for Retirement
After 1 year of service with Reliant, you’ll be automatically enrolled in the 401(k) retirement savings plan.
Reliant will auto-enroll you in the 401(k) plan starting at $50/month on the next corresponding quarterly enrollment date after your one-year anniversary date as a Reliant employee. We will deduct $50 from your paycheck and deposit it into a 401(k) retirement savings account with the Principal Financial Group.
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You will have the option to log on to Principal.com and change your contribution amount at any time. |
Important things to know about the 401k plan
Reliant offers matching your contributions up to 5% of your salary!
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“Ineligible” earnings such as your ministry expense bonus, taxable reimbursements, and wages earned prior to your 401 (k) plan entry date are not eligible for the 5% employer match. |
How will this effect my MTD Goal?
You will have to raise the extra $ for the employer match and it will increase your support goal.
Why would you want to participate and raise the extra funds?
The advantage of a 401(k) plan vs. personal investing/saving is the employer match does not get taxed (until you retire and withdraw it). So, the match enables you to save extra money (on top of any money you save through other methods) towards your retirement.
It’s like opting to receive a special bonus every month that goes directly into your retirement savings account and that the government doesn’t tax you on (until retirement). That’s smart!
Investment Options
The 401(k) Plan has over 20 different investment options for you to choose how your money is invested.
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