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What is a 401(k) plan?
Why should I participate in my employer's 401(k)
plan?
Where will my money be invested?
When can I begin contributing to the 401(k) plan?
How do I enroll in the 401(k) plan?
How do I choose my investments?
When is my money invested?
Why is the 401(k) contribution amount shown on my
statement different than what is shown on my paycheck?
Are loans available?
How do I apply for a loan?
I've left my job. Can I get help in the rollover
of my retirement fund assets?
How do I obtain a distribution of my funds?
I'm a new employee and want to rollover my assets
from my prior employer's plan. What do I do?
My company used a Professional Employer Organization
(PEO or employee leasing company). We no longer use them but
they say I can't have a distribution. Why?
What
is a 401(k) plan? { back to top }
A 401(k) plan is a retirement plan that is sponsored by your
employer. It allows you to save a portion of your current income
for retirement. At retirement, you may withdraw the balance of
your account to provide income and support. Consult with your tax
advisor regarding tax consequences surrounding your withdrawal.
Why
should I participate in my employer's 401(k) plan? { back
to top }
In this era of political promises of tax cuts, many Americans
miss the most obvious tax reduction - their 401(k) plan. Your contributions
to the 401(k) plan reduce your current taxes. You also do not pay
tax on the interest or gains from your investments until you withdraw
them at retirement. This allows you to accumulate more wealth for
your retirement.
Where
will my money be invested? { back to top }
Your employer chooses the investments that are available in your plan. Pinnacle Financial Services works with many investment companies including Lincoln Financial, John Hancock, Nationwide and American Funds.
When
can I begin contributing to the 401(k) plan? { back
to top }
Each employer has different age and service requirements for
an employee to become eligible to participate in their 401(k).
Most employers require that you have reached age 21 and that you
have been employed for 1 year to be eligible to join the plan.
You can contact a plan administrator at 561-547-4200 to find out
when you will be eligible to participate.
How
do I enroll in the 401(k) plan? { back to
top }
Your employer will provide an enrollment package that includes
general information on 401(k) plans, educational materials
on investment principles, specific information on the investments
available to you and the forms necessary to begin your contributions
to the plan. These forms must be completed and returned to your
payroll service administrator to begin your participation in the
plan.
How
do I choose my investments? { back to top }
First, review the material in your enrollment package. It contains
a wealth of information that will be very useful to you. Then choose
an investment allocation formula that meets your individual needs
and objectives. If you want specific financial planning assistance,
you may contact a fFinancial advisor at 561-547-4200. This
is a "fee for service" arrangement.
When
is my money invested? { back to top }
Department of Labor regulations require that your employer deposit
your funds by the 15th business day of the month following your
salary deduction. The data required to process your company's contributions
is lengthy and the laws regarding 401(k) plan contributions are
complex. Each contribution must be examined to verify that it meets
the plan and IRS requirements.
Most employers process contributions to their 401(k) plan on a
semi-monthly basis. Although the contributions can be processed more
frequently, there is a tradeoff between the frequency of contributions
and expense to the participants. Many employers choose to limit
the expense to their participants rather than increasing the frequency
of contributions.
Why
is the 401(k) contribution amount shown on my statement different
than what is shown on my paycheck? { back
to top }
There is always a "lag time" between when your money
is deducted from your paycheck and when they are deposited to your
account. Be assured that Pinnacle Financial Services and your employer
are making every effort to deposit your funds as quickly as administratively
feasible.
Are
loans available? { back to top }
For most plans, yes! In general, you may borrow up to 50% of
your vested account balance. There is a maximum loan amount of
$50,000. Consult with your Plan Administrator to determine if there
is a minimum loan amount.
A loan will not be considered a taxable distribution provided
certain criteria are met. Non-payment of a loan may result in tax
consequences. It is not our position to offer tax advice. You should
consult with your tax advisor about your particular situation.
To estimate the payment required to amortize a loan, use PAT's
Loan Amortization Calculator.
How
do I apply for a loan? { back to top }
Click here to download a loan application. Pinnacle Financial
Services will prepare the necessary documentation to complete your
loan and email or fax it to you along with instructions on how
to complete the process and receive your check.
I've
left my job. Can I get help in the rollover of my retirement
fund assets? { back to top }
Yes! Click here and a representative will contact you.
How
do I obtain a distribution of my funds? { back
to top }
401(k) and other types of retirement plans have specific laws
and regulations detailing who may receive a distribution of their
assets in the plan. To receive a distribution from a 401(k) plan,
a participant must have incurred a "distributable event".
Distributable events include termination of employment, retirement,
attainment of age 59½, disability as defined in the plan
document and death of the participant. Distributions prior to 59½ will
result in a 10% penalty as well as federal and state taxes. Click
here to download Distribution Forms.
I'm
a new employee and want to rollover my assets from my prior employer's
plan. What do I do? { back to top }
If you would like help, click here and representative will contact
you. If you want information, click here to transfer to Rollovers.
My
company used a Professional Employer Organization (PEO or employee
leasing company). We no longer use them but they say I can't
have a distribution. Why? { back to top }
IRS regulations prohibit a distribution if you continue employment
with your company. Your company has the option to establish a "successor
plan" and transfer all employees’ assets to the successor
plan. This may occur if your company contracts with a new PEO or
it may occur if your company establishes their own plan. If you
terminate employment with your company, you will become eligible
for a distribution.
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