What are the advantages of participating in a 401(k) plan?
When people talk about 401(k) plans, you often hear about advantages like:
- Free money from your employer
- Lower taxable income
- Savings and earnings that accumulate without you having to remember to make deposits
- The opportunity to retire and not have to worry about money anymore
Does this sound too good to be true? It isn’t. It’s what you can gain from investing in the Labor Unions 401(k) plan. The 401(k) is one of the most popular retirement plans around.
Read more about the Labor Unions 401(k) Plan.
How do I participate?
In most cases, you are eligible to participate immediately upon employment under a collective bargaining agreement (CBA) or non-bargaining participation agreement that permits wage reduction contributions to the Plan. You can check your CBA, ask your Human Resource Department, or contact Coast Benefits to confirm this.
How do I make contributions?
You contribute through payroll deduction by completing an enrollment form and giving it to your employer.
Will my employer contribute?
The amount of mandatory employer contributions or employer matching contributions are specified in a collective bargaining agreement between the employer and sponsoring union.
How much can I contribute?
Pre-Tax Contributions. You can contribute up to 100% of your wages, in whole percentages, up to a maximum of $19,500 per year in 2021. This dollar amount is adjusted periodically for cost-of-living increases. Call us for the most recent maximum.
Voluntary After-Tax Contributions. You may contribute between 1-10% of your compensation in the form of after-tax contributions via payroll deductions. These contributions will be placed in an After-Tax Savings Account, are 100% vested at all times, and may be withdrawn at any time.
Total Contributions/Annual Limits. Total contributions to the Plan from voluntary contributions, employer contributions and employer matching contributions cannot exceed the lesser of 100% of compensation or $54,000. (Catch-Up and After-Tax Contributions are excluded).
What are “catch up” contributions?
Participants age 50 and over will be allowed to make annual “catch up” contributions of $6,500 a year for 2021. If you intend to take advantage of this “catch up” provision, contact your employer to coordinate the contribution through your employer’s payroll office.
Can I lose my contribution?
No. All contributions, employee and employer, are 100% vested.
Remember, depending upon the investment fund or funds you choose, the value of your account may, at any time, be more or less than the amount of your contributions based on investment performance.
Can I revoke my election?
Yes, at any time. Contact your employer to stop contributions. A revocation will be effective as soon as it can be processed by your employer’s payroll office. You cannot withdraw any funds at that time unless you also satisfy one of the eligibility for benefit rules.
When am I eligible to receive funds from my account?
You are eligible for benefits when you satisfy one of the following conditions:
- You attain age 59 1/2 or older. You do not need to terminate covered employment to receive a distribution of benefits at age 59 1/2.
- You terminate employment for any reason (including death, disability, layoff, etc.) with any employer maintaining this Plan prior to age 59 1/2. Your contributions and investment earnings are available for distribution as soon as practical following termination of employment and receipt of an application for benefits, but may be subject to early withdrawal penalties.
May I borrow money from my account?
Yes, you may have up to 2 loans at any one time. The minimum loan is $1,000 and the maximum is one-half of your account balance or $50,000, whichever is less. The maximum term of the loan is 5 years unless it is for purchase of your principle residence, which has a maximum term of 15 years. The interest rate charged on the loan, and paid back to your account, is the prime rate plus one percent, currently 4.25%.
How and where are my funds invested?
Under the Labor Unions 401(k) Plan, you have the opportunity to select from the investment options described below for investment of your account once you become a vested Participant. These investment options are mutual funds managed by several high quality investment management firms and selected for this Plan under guidelines established by the Trustees. You may invest any percentage of your vested account in one or more of the investment options.
See a list of investment funds for the Labor Unions 401(k) Plan.
How often can I switch my investment selection?
Under the Labor Unions 401(k) Plan, you may switch your investment selection(s) or transfer existing account funds any time you want. Changes will be effective by the end of the next business day, following the receipt of the request. Changes can be made by accessing your account online, or submitting the Change of Investment Form. You can submit the form via mail, fax, or email to Coast Benefits.
Will I be charged any fees for participating in this Plan?
Administrative Fees are expenses for record keeping and administrative services. All participant accounts are charged a flat rate based on their balance to cover the administrative fees (legal, accounting, consulting, recordkeeping etc.). For those participants with an account balance of under $500 the flat fee per month is $3. This flat rate increases as follows:
The monthly fee is $7 for accounts between $500 and $1,000.
The monthly fee is $10 for accounts between $1,000 and $2,500.
The monthly fee is $15 for accounts between $2,500 and $5,000.
The monthly fee is $20 for accounts between $5,000 and $25,000.
The monthly fee is $25 for accounts between $25,000 and $100,000.
The monthly fee is $37 for accounts over $100,000.
In addition, investment management fees will be deducted as described in general detail in the prospectus of the mutual funds.
How is the Plan administered?
The Plan is sponsored and administered by a joint labor management Board of Trustees with the assistance of a third-party administrator.
How do I know my account balance?
Statements are mailed out quarterly, generally 30 days after the end of the quarter (March 31, June 30, September 30, and December 31), and are also up on the website. At any time between quarters you may call the administrator to check your account balance or to access your account online, click here.