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401(k) Plan

Extremely popular for employers and employees alike, a 401(k) Plan is an excellent choice for businesses, partnerships, corporations and some not-for-profit groups. Organizations of all sizes can choose from several different Modern Woodmen 401(k) Plans customized to fit their own investment, custodial and administrative needs. 

Advantages

Employer advantages
Employers can make tax-deductible contributions, subject to limitations. A 401(k) Plan is flexible in that matching and profit sharing contributions may be optional, and employers can apply a vesting schedule to contributions they make.

Employee advantages
Traditional 401(k) Plans reduce the total tax burden for employees because they allow for pretax contributions and tax-deferred growth until withdrawal, at which time they are typically taxed at ordinary income rates. Employee contributions are always 100 percent vested.

An alternative to traditional pretax 401(k) contributions is the Roth 401(k). Roth 401(k) accounts may be allowed on certain 401(k) plans, allowing participants to make after-tax contributions and take qualified distributions income tax-free.**

Distributions prior to age 59½ may be subject to an additional 10 percent federal premature distribution penalty, unless an exception applies.

Additional information

Employee Salary Deferral Contribution Limits

 

Age as of 12/31 of the Calendar Year Tax Year 2013
Under 50 $17,500*
Age 50 or older $23,000*

 

Employees who will turn age 50 or older by the end of the calendar year can make additional catch-up contributions of $5,500.*


Total Combined Employee and Employer Contribution Limits

 

Age as of 12/31/of the Calendar Year Tax Year 2013
Under 50 $51,000*
Age 50 or older $56,500*

 

The combination of employee salary reductions and employer contributions cannot exceed the lesser of 100 percent of the employee’s compensation.  Total deductible employer contributions to the plan cannot exceed 25 percent of total eligible compensation.


Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America, 1701 1st Avenue, Rock Island, IL 61201, 309-558-3100. Member: FINRA, SIPC. Products are available in most states. Individual representatives may not be licensed to sell all products.


*These amounts are subject to indexing by the Internal Revenue Service and may increase in the future.

 

 

 

 

 

 

**The Roth 401(k) permits participants to take qualified distributions tax-free if withdrawn after five years of first Roth 401(k) contributions and attainment of age 59 1/2, death or disability. Nonqualified withdrawals may be subject to a 10 percent early withdrawal penalty, and the earnings portion of nonqualified withdrawals may be subject to income taxes. Tax issues involving Roth 401(k)s can be complex. Please consult with your tax or legal advisor before making any decisions.

 

 

 

 



http://www.modern-woodmen.org/ProductsServices/IRAs/Employer/Pages/401(K)Plan.aspx