Life Change: Employment

• Most people know DC plans as Traditional 401(k) or 403(b) plans, but they can also include 457 plans. Each of these options is a “self-directed” benefit that lets the employee contribute pre-tax. In addition, you usually receive an employer match up to a specified percentage of your compensation. These plans also have different rules for withdrawals, distributions, and participation provisions. You should understand how these plans can impact your retirement. They can also affect the tax-deductibility of individual IRA contributions.
• Employers also offer ROTH Defined Contribution Plans, a type of qualified retirement plan similar to the traditional versions above. The key difference is that you contribute after-tax money. This means that the tax treatment of this money is vastly different before, during and after your retirement.

If you have a pension lump sum available to you, click here. One of our fiduciary advisors can then give you an independent analysis of all your available options.

• Most people know DC plans as Traditional 401(k) or 403(b) plans, but they can also include 457 plans. Each of these options is a “self-directed” benefit that lets the employee contribute pre-tax. In addition, you usually receive an employer match up to a specified percentage of your compensation. These plans also have different rules for withdrawals, distributions, and participation provisions. You should understand how these plans can impact your retirement. They can also affect the tax-deductibility of individual IRA contributions.
• Employers also offer ROTH Defined Contribution Plans, a type of qualified retirement plan similar to the traditional versions above. The key difference is that you contribute after-tax money. This means that the tax treatment of this money is vastly different before, during and after your retirement.

If you have a pension lump sum available to you, click here. One of our fiduciary advisors can then give you an independent analysis of all your available options.

• Employee Stock Ownership Plans or ESOPs are employee benefit plans that allow for corporate ownership participation. In these qualified plans, the employer makes the stock contributions.
• Company Stock inside 401(k) lets employees buy shares of company stock inside their qualified plan. They use personal and employer match contributions to do so. Perhaps you hold company stock inside your 401(k) with significant appreciation. In that case, you may be able to initiate an NUA (Net Unrealized Appreciation) transaction. You could then enjoy favorable tax treatment on the difference between your cost basis and current holding value.
• Stock Purchase Plans let employees purchase company stock at a discounted price. Typically, you contribute through payroll deductions. The plan then uses those funds to buy shares for you on predetermined dates.
• Qualified and Non-Qualified Stock Options have vast differences in tax treatment and transferability. If your benefits package includes either one, it is important to understand the details of ownership and timing of exercise.

Think twice before rolling over your company stock into an IRA. Even a partial 401(k) rollover of non-company stock can forfeit the ability to initiate a future NUA transaction. Talk to one of our loyal advisors today to get a tax analysis on your company stock.

• Bonuses are often large chunks of compensation that depend on individual or corporate performance. A bonus can further seed your retirement assets. You can also put it toward other major family investments.
• Life insurance is something a lot of employers offer to their employees. Know what type of plan your employer offers and whether it will have a cash value. These plans should not replace any permanent insurance, as they are typically not portable when you separate from service.
• Disability Insurance is something you can purchase on your own or through your employer, if your employer offers it. Your career field and personal debt service affect how crucial long or short term disability coverage is to your plan.
• Health Insurance offered by your employer can be extremely valuable depending on how you are splitting the monthly costs. For small business owners, talking through the various group health insurance options could potentially save thousands of dollars a year.