10 Things to Know
About Your Retirement Plan at Work

1. What is a 401(k)?

401(k) plans are tax-deferreddefined-contribution retirement savings vehicles. These plans allow an employee to contribute a portion of salary through automatic payroll withholding. These are tax-deferred contributions for retirement. Employers frequently match a percentage of participant contributions.The contributions are invested in a range of vehicles such as stocks, bonds or mutual funds.

2. What is a 403(b)?

A 403(b) is similar to a 401(k) but a 403(b)plan is a tax-advantaged retirement program for employees of educational institutions, and certain other not-for-profit organizations.

3. What’s with the alphabet and number soup?

401(k) and 403(b) plans are named for the section of the Internal RevenueCode that governs them.

4. What is the difference between a traditional 401(k)/403(b)and Roth?

In a traditional 401(k) or 403(b), employees are allowed to make income tax deductible contributions and defer income tax on earnings until withdrawn. With a Roth, employees make contributions with after-tax income, meaning the money is taxed in the year it is contributed, there are no further income taxes due and, once certain requirements are met, all withdrawals will be income tax free With both types of plans, money in the account is not taxed as it grows.

employees discussion group meetings

5. When can I access my money?

Generally, the government prefers that you leave the money in your account until age 59 ½. If you withdraw money prior to that, you will have to pay a 10% penalty and applicable taxes. There are some ways around this (e.g., some plans offer loan provisions), but you should assume any money going into your 401(k) or 403(b) won’t be available until retirement.

6. How much money will I have when I retire?

401(k) and 403(b) accounts are known as defined contribution accounts, which means you contribute a certain dollar amount or percentage of income.Some employers also choose to match a portion of contributions. The account balance at retirement is determined by contributions and the performance of your investments over time. These funds should not be accessed until you hit retirement age or you will be subject to penalties.

7. What is “matching?”

When you contribute money to your employer-sponsored 401(k) or 403(b), some employers may contribute up to a certain percentage! For every dollar or percentage you allocate, they add a certain amount up to a certain percentage.

8. What does it mean to be vested in my 401(k) or 403(b)?

Vested is a term used to determine what percentage of your 401(k) funds you can take with you when you leave your employer. You will always keep 100% of your contributions. If your employer matches, you may need to remain with the organization for a specific period of time to keep all their contributions, or risk forfeiting a portion.

9. How much can I contribute to my retirement account?

For 2021, employees may contribute a maximum of $19,500 to an employer-sponsored 401(k) or 403(b). Individuals age 50 and older are permitted to add a "catch-up" contribution of $6,500 fora total of $26,000.

10. What if I have more questions about enrollment or my employer’s plan?

Our team is available to help! We can also assist with other financial needs outside your work-sponsored plan (e.g., review options available for old retirement accounts, review other investments, supplemental life or disability income insurance coverage). Or, we can collaborate with you to create a personalized, comprehensive financial plan.

The views and opinions expressed are those of Charles Dweck of Fortis Lux Financial and are not necessarily those of MMLInvestors Services, LLC or its subsidiaries. Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC (www.SIPC.org). Supervisory Office: 420 LexingtonAve 25th Fl, Suite 2510 New York, NY 10170. (212) 578-0300. Neither MMLInvestors Services, LLC nor any of its employees or agents are authorized to give legal or tax advice. Consult your own personal attorney legal or tax counsel for advice on specific legal and tax matters. CRN202303-278638