401(k) Plans Help Attract and Retain Quality Employees
A 401(k) plan is a profit-sharing plan designed to allow employees to defer salary for retirement savings. An employer can also make deductible matching contributions, which provide a strong incentive for employee participation. Because contributions are pretax, employees can choose to defer pre-tax salary for retirement savings. Many 401(k) plans now allow a participant to designate part or all of his salary deferrals as after tax Roth contributions. This plan can be set up by any type of business including sole proprietorships, partnerships and corporations.
A 401(k) Can Accept Six Types of Contributions:
• Employer profit-sharing contributions
• Employee pretax contributions
• Catch-up contribution for those age 50 and older
• Matching contributions by the employer
• After-tax Roth contributions
• After-tax employee contributions
Roth Contributions: If your employer offers a 401(k) plan, you may be able to take advantage of the Roth 401(k) option. The Roth option in a 401(k) allows you to designate part or all of your 401(k) contribution as Roth after-tax dollars. If certain requirements are met, the Roth distributions from your 401(k) may be tax-free.
As your advisor, CMR Benefits Group provides comprehensive support and customized account management for your retirement plan.