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Generous Roth 401(k) Plan
Key Features
- Contribute up to IRS Maximum of $46,000 ($51,000 if age 50+)
- Your Total Contributions can be Equal to 100% of Your Gross Wage up to IRS Maximum
- Roth 401(k) Option Allows Tax-free Retirement Distributions
Overview of P.A.C.E. 401(k) Retirement Savings Plan
- The P.A.C.E. 401(k) Plan Has Three Parts
- Safe Harbor Contribution – The mandatory (safe harbor) contribution level for each division is 3% of gross wage. This safe harbor contribution assures that every P.A.C.E. employee may contribute the maximum amount to their 401(k) retirement savings account. All P.A.C.E. employees participate.
- Employee Contribution – You may elect to contribute an additional 0% to 100% of your gross wage as an elective deferral to your 401(k) account. The elective deferral triggers a matching employer contribution from your division.
- Matching Contribution – Your division of P.A.C.E. will match your elective deferral at the rate of two to one (200%) and contribute that amount as an additional employer contribution to your 401(k) account.
- Reporting the Employer and Employee Contributions
- Employer contributions from your P.A.C.E. Division are reported as a division expense on your Division Report.
- Employee contributions are reported as a payroll deduction on your pay stub.
- Maximum Annual Contribution Limits for 2008
- Elective Deferral – You may contribute as a payroll deduction up to 100% of your gross wage up to the IRS maximum elective deferral of $15,500 ($20,500 if age 50+).
- Total Contributions – The combined maximum for employer and employee contributions is $46,000 ($51,000 if age 50+).
- Accelerated Contributions – Your 401(k) account may receive combined contributions up to 100% of your YTD gross wage up to the IRS maximum.
This means that, as a P.A.C.E. employee:
- You may contribute the IRS maximum of $46,000 to your 401(k) account on as little as $46,000 in gross wage.
- Or, if age 50+, contribute $51,000 on as little as $51,000 in gross wage.
- Two Investment Options
- Managed Funds Portfolio – Unless instructed otherwise,
P.A.C.E. will make tax-deferred contributions into a professionally
managed, risk-adjusted portfolio of 19 mutual funds offering
optimal diversification and security.
- Opt-in Self-directed Account – Alternatively,
you may instruct P.A.C.E. to make tax-deferred contributions
into a self-directed brokerage account where you may select
from a wide universe of load and no-load mutual funds,
plus stocks and bonds available on the major exchanges.
- No Waiting Period
- There is NO waiting period to join the plan. P.A.C.E. enrolls you in the plan when you join P.A.C.E., and your division makes tax-deferred contributions to your 401(k) account with your first payroll.
- Immediate Vesting
- Employee and employer contributions to your 401(k) account are vested immediately.
- 100% Participation
- P.A.C.E. employees are enrolled automatically in the plan when they join P.A.C.E., and all P.A.C.E. employees participate in the plan.
- Applicable Fees
- Annual Fee: $99 per employee when you join P.A.C.E. and at the beginning of each year thereafter.
- Loan Fee: $87 upon approval of the loan from your 401(k) account.
- Termination Fee: $57 to either roll over the account to another institution or cash out completely.
Overview of Roth 401(k) Option
- Allows Tax-free Retirement Distributions
- Elective deferrals to a traditional 401(k) account are made with pre-tax dollars. Investment growth is tax-deferred, and retirement distributions are taxed as ordinary income.
- Elective deferrals to a Roth 401(k) account are made with after-tax dollars. Investment growth is tax-deferred, and qualified retirement distributions are tax-free.
- The P.A.C.E. 401(k) Retirement Savings Plan has a Roth component, giving you the flexibility to designate your 401(k) elective deferrals from wage as:
- Traditional (pre-tax) 401(k) contributions.
- Roth (after-tax) 401(k) contributions.
- Or a mixture of both Roth and traditional
- Only elective deferrals may be made to a Roth account. Employer contributions, including the 3% safe harbor contributions and matching contributions, are pre-tax by their nature, and must be made as tax-deferred contributions to a traditional 401(k) account.
- Advantages of Roth 401(k)
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You can contribute more to a Roth 401(k) account than to a
Roth IRA. The maximum contribution limit to a Roth IRA is $4,000 ($5,000 if age 50+). The maximum contribution limit to a Roth 401(k) is $15,500 ($20,500 if age 50+); in other words, your entire elective deferral.
- Unlike a Roth IRA, a Roth 401(k) has no Adjusted Gross Income limitation. You can make Roth 401(k) contributions regardless of how much money you earn.
- Roth 401(k) contributions grow tax-deferred, but withdrawals of contributions and investment growth are tax-free, provided the recipient is at least age 59½ and the account has been held for at least five years.
- A Roth account provides a 1/3 higher tax shelter value for an employee who is taxed at a 33.33% rate both today and at the time of a future distribution from the 401(k). The Roth is even more valuable if there is a risk of higher taxes on retirement distributions, however the opposite is also true.
- Roth investments provide tax-free retirement income during years when your tax rate may be high.
Overview of P.A.C.E. 401(k) Support Services
- Securian Financial Services
- P.A.C.E. has partnered with Securian
Financial Services, Inc. to offer this very aggressive
401(k) Retirement Savings Plan, which is specifically designed for highly
compensated employees.
- Online Access Twenty-four Hours a Day,
Seven Days a Week
- Free Financial Advice
- P.A.C.E. has appointed Wayne C. Deutscher, CLU, ChFC to assist P.A.C.E. employees with
their P.A.C.E. 401(k) Retirement Savings Account and with their
personal finances.
- This service is available at no charge to P.A.C.E. employees.
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