3-4_Understanding-Why Participate.ai

Understanding Your 401(k) Retirement Plan

Let’s start with the basics. Since you are eligible to participate in your retirement plan, it is important to know what it is, how it works, and the advantages.

What is a 401(k) Retirement Plan? A 401(k) is an employer sponsored account that enables you to save money and make your savings grow. • Sponsored by your employer • Allows you to make contributions • Tax advantage: defer taxes until distribution and/or potential for tax-free income How Does it Work? Saving for retirement is easy. You decide the amount you want deducted from your pay check. * That amount is immediately placed into your 401(k) account and invested into the funds you select. The money you invest accumulates tax-deferred/tax-free in your account. You can track your account balance through quarterly statements or online anytime. Refer to the Plan Information Guide in the back of this folder for more information about online access. To build a successful retirement fund, you will need to make sure you are contributing the right amount.* You will also want to ensure that contributions will be invested the right way based on your needs. In this enrollment folder, you will learn how to do both.

* This amount can be adjusted periodically. Refer to your Summary Plan Description outline in the Plan Information Guide to find out how often your plan allows for changes.

Retirement Plan Advantages

• By contributing pre-tax, you can lower your taxes and keep more of what you’ve earned.

• Compounding–your balance may accumulate quickly, earning interest on top of interest.

• Investment customization and flexibility.

• Saving is easy with an automatic deduction from your paycheck.

• It is portable. If you leave your current employer, you can move the money to your next employer’s 401(k) or another qualified plan, such as an IRA.