What is 401(k)?
A 401(k) is a type of retirement savings plan sponsored by an employer. It lets employees save and invest a portion of their paychecks either before taxes are taken out (traditional) or after taxes (Roth). The plan allows employees to save for their future without having to rely on an employer offering a pension. Additionally, employers may elect to match employee contributions towards their accounts.
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 amounts for 2023 is $22,500 ($20,500 in 2022)
- If you’re 50 or older, the maximum annual contribution amount for 2023 is $30,000 ($27,000 in 2022). You also qualify for the catch-up contribution amount of $7,500 for 2023.
Justworks automatically caps the limit as long as all of the contributions took place through Justworks payroll.
These limits are specific to employee contributions only, employer profit sharing and matching contributions are not included in this amount.
Keep in mind that the $22,500 ($30,000 age 50 and over) can be a mix of pre-tax (traditional) and/or after-tax (Roth) regardless of income threshold.
Please see this IRS article on contribution limits for more information.
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 into any of the offered mutual funds.
- 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’ valued 401(k) provider is Slavic 401k
All companies on the Justworks platform can choose to have the Justworks 401(k) available to all their employees.
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!
Who is eligible for Slavic 401k?
All employees are eligible to participate in the company’s 401(k) plan once they have met the applicable waiting period. This includes full time employees, part-time employees, interns (required after 90 days), nonresident aliens (provided they have an SSN), and paid and unpaid owners. Please note that unpaid owners are only eligible to participate in Slavic 401(k) as long as they sign an addendum form provided by Slavic.
Contractors, vendors, and any employees under a labor union are not eligible to enroll in Slavic 401(k). These eligibility requirements are mandated under the plan documents and ERISA.
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. NEXT STEPS:
If your company chooses to provide 401(k) benefits, 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 401(k) - it could be either a flat amount with each paycheck, or a percentage of your salary.
You can also defer a separate flat dollar amount or percentage for any bonus and commission payments. To set this up, log in to Justworks and under Benefits select Retirement Benefits. Then click into “see details” on the Slavic card. You can view and edit your contribution rates from there.
As these changes can be applied directly on the platform, they will apply to the next payment that processes. We always recommend speaking with your admin to coordinate any contribution changes with any scheduled bonus or commission payments.
13. FINISH ENROLLING IN JUSTWORKS:
If you are enrolling in Slavic401k in the middle of the year and have previously contributed to another 401(k) outside of Justworks you will need to record the amount you contributed in order to complete your enrollment. This helps Justworks more accurately track and capping the amount you are contributing to your 401(k) per the IRS guidelines.
Login to Justworks and select Benefits on the left-hand side.
Under the benefits tab select Retirement Planning.
From there click the button that says Finish Setting Up 401(k).
From there you can input the amount that you contributed to your other 401(k) accounts in that year. Keep in mind that if you received any employer matching contributions, you do not need to include that amount in this box.
Once you submit the amount Justworks will use this and your current payroll contributions with Slavic401k to track and cap your deferrals at the IRS limit.
You can view the amount you inputted and how much you have contributed by clicking the See details link.
From there you can edit the amount you inputted in the box marked other.
What to expect once you've enrolled
You will receive an email 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 Slavic 401k website, such as logging in, should be addressed to Slavic 401k Customer Support. You can reach them at: Justworks@slavic401k.com or by phone at 800-356-3009 (9-7PM EST, M-F). Slavic401k: Contact US
What investment options are available?
The Justworks 401(k) plan has several investment options available. There is a core lineup of mutual funds, a self-directed brokerage account, as well as Slavic-Managed Portfolios.
The mutual funds do not have any additional transaction fees to buy or sell, they do however have expense ratios that range from 0.01% to 0.80%. For a full list of available options and expense ratios please see here.
The self-directed brokerage account that is offered under the Justworks Retirement Savings Plan is linked to your Slavic401k account and managed through Fidelity. In this option you will have access to hundreds of mutual funds, stocks, bonds, and exchange-traded funds (ETFs). There is no additional fee to open your brokerage account however the individual investments you select may be subject to a transaction fee. For more information on the brokerage account option please see here. Please note that the investments selected in a brokerage account are self-selected and are not monitored or selected by the Plan, Justworks, your employer, or Slavic401k.
If you do not actively select an investment when your employer transfers your existing 401(k) plan account into Slavic401k, or if you are automatically enrolled and do not make an investment selection you will be placed in a qualified default investment alternative (QDIA). The QDIA that you are placed in is based on your age and a target retirement date of 65. The QDIA for the Justworks 401(k) plan is the Vanguard Target Date Funds (TDF).
What is a target-date Fund (TDF)?
A target-date fund (TDF) is an investment vehicle, usually a mutual fund, that is designed to automatically adjust the portfolio and risk allocation (from aggressive to more conservative) over time, based on a targeted year of retirement.
For example; a person just starting their career might select a TDF for 2065. The idea is that they are aiming to retire in the year 2065. As they continue to work through their life, they contribute more and more to their 401(k) and invest in this fund. As they get older and closer to retirement, the fund automatically adjusts the investment risk profile from aggressive, to moderate, to more conservative.
When do funds appear in my Slavic401k account?
Justworks sends a payroll file to Slavic 401k every Tuesday capturing all contributions made during the week prior. Your contribution will typically appear in your Slavic401k account by the following Friday after payday.
Managing your 401(k) account
Any changes to your regular salary contribution must be made through Slavic401k 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 Slavic401k's online platform or contact them.
You can reach them at: firstname.lastname@example.org or by phone at 800-356-3009 (9-7PM EST, M-F). Slavic401k: Contact US
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. You can also set a different contribution rate for bonus and supplemental payments while maintaining your contribution rate for regular salary and wage payments.
Any changes to your regular wage and salary contribution amount should be done through Slavic401k. We recommend that this is completed at least 5 days prior to receiving your regular payments. This is to help ensure the changes are picked up before the payroll processes at your company.
Changes specific to your bonus and commission payments can be done through Justworks. As these changes can be applied directly on the platform, they will apply to the next payment that processes. We always recommend speaking with your admin to coordinate any contribution changes with any scheduled bonus or commission payments.
Please note: You will not be able to make changes to your salary deferral election amount in your Slavic401k account until after the first contribution is made. If you wish to make the changes, please contact Slavic401k’s customer service.
Does the maximum contribution level include matching funds contributed by my employer?
No, employer matching funds do not contribute to the IRS regulated employee contribution maximum for that year.
What are the differences between IRA and 401(k)?
Individual Retirement Arrangements (IRAs) is an individually held retirement and investment account that you can open and make tax deferred contributions into while a 401(k) is a defined contribution retirement plan that is sponsored by an employer.
An IRA has different contribution limits that can be viewed here: IRS IRAs
Can I take out a loan against my 401(k)?
You are able to take loans against your 401(k) assets. Please contact Slavic401k for more information.
Should I roll over my previous 401(k) accounts?
That is totally up to you! Whatever you decide to do, keep in mind that your previous 401(k) account will still accrue fees while you will no longer be able to contribute to it. If you would like to get more information on the matter, please contact Slavic401k for financial guidance.
How much does the 401(k) cost?
The Justworks 401(k) Plan offered through Slavic401k has a flat annual account fee that is broken out into equal quarterly payments and is charged directly to your account balance.
Account balances may be subject to additional fees depending on the investments selected and actions taken such as distributions and rollovers. For a detailed fee disclosure please reach out to Slavic401k.
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.