What is 401(k)?
A 401(k) is a retirement savings plan that an employer sets up for their employees. In a standard 401(k), employees can allocate a portion of their paycheck, pretax, to the retirement savings plan. The employee then pays taxes on their earnings much later (during retirement), when the money is withdrawn. This system allows employees to save for their future without having to rely on an employer offering a pension (another form of retirement savings plan that is being offered less and less often). 401(k) refers to to the specific section of the Internal Revenue Code that spells out this retirement savings plan.
Making the maximum annual contribution
The IRS has an annual contribution limit for anyone participating in a 401(k) plan. If you’re under 50, the maximum annual contribution amount is $18,000 (excluding match) and if you’re 50 or older, the maximum annual contribution amount is $24,000 (excluding match). Justworks automatically caps the limit so you will not over contribute.
If your employees want to max out their 401(k) contribution for 2016, they need to make any adjustments to their usual contribution before we run final payroll on December 23, 2016. If adjustments are not made before this date, any additional contribution amounts will not count towards their 2016 maximum.
What are the benefits of Justworks 401(k)
- You're able to invest anywhere, including big fund managers like Vanguard and Fidelity.
- You can choose the amount you’d like to invest, either a flat amount with each regular paycheck, or a percentage of your salary.
- You can choose where to invest your earnings: you can select from mutual funds, stocks, bonds, and money market investments.
- Employers have the option of matching your contributions to any degree they choose.
- We take care of both pre-tax and after-tax (Roth) deferrals.
- Saving for your future feels pretty great!
Justworks partners with Slavic 401(k)
Justworks 401(k) is available to all customers. There is a $350.00 annual fee imposed by our partner Slavic 401(k) that is charged to the company. That fee is reduced by $39 for every participant that enrolls in the plan since participants are charged a $39 annual fee ($9.75 per quarter).
Here’s how to enable Justworks 401(k) and what to do if your company offers 401(k):
How to set-up 401(k) on Justworks via Slavic 401(k):
- First, you would need to contact us to let us know you’re interested - you can reach us any time at email@example.com or (888) 534-1711.
- We would then connect you with our 401(k) partner, Slavic401k, who would walk you through setting up the best plan for your company and how much (if any) your company will match of your employee’s contributions.
- Everything is automated from there. We'll withhold the appropriate amounts, calculate the matching (if applicable), and send the funds to your employee’s 401(k) accounts!
How does an employee set-up their 401(k) on Justworks via Slavic 401(k)?
1. Head to Slavic 401(k) and click "Enroll"
2. Enter your Social Security Number and Date of Birth
3. Verify and confirm your personal details
4. Choose your contribution amount
5. If you select other, choose between entering a dollar or percentage amount and whether it will be pre-tax or roth/after-tax
6. Decide whether your investing path will be "Portfolios" or "Self-Directed"
7. Decide on your investments
8. Select your beneficiaries
9. Review and confirm your info
10. Complete an online signature
11. Enrollment confirmation
12. Final Steps:
After your company turns on it’s 401(k) plan, you’ll be told how much your company is matching (if applicable) and given directions to choose how much of your earnings you want to defer to your retirement plan - either a flat amount with each paycheck, or a percentage of your salary.
You will receive an e-mail from Slavic401k prompting you to set up your login for their website portal. You may also simply follow the steps for a 'First time user' on slavic401k.com.
Everything is automated from there. We'll withhold the appropriate amounts, calculate the matching (if applicable), and send the funds to your 401(k) account!
Any issues experienced on Slavic401k's website, such as logging in, should be addressed with Slavic401's Customer Support. You can reach them at: firstname.lastname@example.org or by phone at 800-356-3009 (9-5PM EST, M-F).
When do funds appear in my Slavic account?
Justworks sends payroll files to Slavic every Tuesday for the week prior. Since this is done in weekly arrears, the payment you received this week (and has a Slavic contribution) will appear in your Slavic account by next Friday.
Managing your 401(k) account
Any changes to your contribution must be made through Slavic and NOT Justworks. These changes may not be immediate and will depend on your company’s setup with Slavic. To make changes or to find out more about your plan, please use Slavic's online platform or contact them. You can reach them at: email@example.com or by phone at 800-356-3009 (9-5PM EST, M-F).
Can I change my 401(k) contribution level? Can I contribute $0?
Yes. Once enrolled, you can change your contribution level at any time, including contributing $0.
Does the maximum contribution level include matching funds contributed by my employer?
No, employer matching funds do not contribute to the IRS regulated maximum for that year.
Should you wish to cancel your 401(k) benefits, you'll need to contact Slavic directly.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.