Weather
The Pine Tree, News for Calaveras County and Beyond Weather
Amador Angels Camp Arnold Bear Valley Copperopolis Murphys San Andreas Valley Springs Moke Hill/West Point Tuolumne
News
Business Directory
Weather & Roads
Sports
Real Estate
Search
Weekly & Grocery Ads
Entertainment
Life & Style
Government
Law Enforcement
Business
Wine News
Health & Fitness
Home & Garden
Food & Dining
Religion & Faith
Frogtown USA
Legal Notices
Calendar
Polls
Columns
Free Classifieds
Letters to the Editor
Obituaries
About Us

Coming Soon...
Wednesday, Oct 16
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
06:00 PM Overeaters Anonymous (OA)
Thursday, Oct 17
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
Friday, Oct 18
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
11:00 AM MURPHYS DIGGINS ANNUAL CRAFT FAIR
11:00 AM Valley Springs Health & Wellness Center Grand Opening on October 18th
04:00 PM Mountain Ranch 4H Club Enchilada Dinner
Saturday, Oct 19
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
All Day Mark Twain Wildwest Fest is October 19th in Historic Downtown Angels Camp!
All Day The Hopper Connects You to Calaveras's Wine Country & More
All Day Ride The Rails Into History at Railtown 1897
10:00 AM Old Timers Museum Walking Tours Are Every Saturday at 10am.
Until 05:00 PM MURPHYS DIGGINS ANNUAL CRAFT FAIR
11:00 AM Town Tours of Columbia State Historic Park Every Weekend!
01:00 PM Spend the Summer at Big Trees State Park. Guided Hikes Every Weekend
07:00 PM The Young Dubliners – Irish Rock
Sunday, Oct 20
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
All Day Ride The Rails Into History at Railtown 1897
All Day Our Sunday Edition with Local Features, Local Specials & More Every Sunday All Day Long!
09:00 AM Murphys Farmers Market is Every Sunday From 9am - 1pm
11:00 AM Town Tours of Columbia State Historic Park Every Weekend!
01:00 PM Spend the Summer at Big Trees State Park. Guided Hikes Every Weekend
04:00 PM Austin Lounge Lizards – Folk/country/bluegrass and laughable weirdness!
Monday, Oct 21
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
Tuesday, Oct 22
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
10:00 AM Grief Support Classes Offered By Hospice of Amador & Calaveras
Wednesday, Oct 23
All Day Rotary Shoe Drive to Wear Out Poverty Now Though October 23rd! Donate Now!!
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
All Day Buy Your Drinks & Treats at Day-O Espresso on October 23rd & 24th!
06:00 PM Overeaters Anonymous (OA)
06:30 PM Overeaters Anonymous (OA) Meeting
Thursday, Oct 24
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
All Day Buy Your Drinks & Treats at Day-O Espresso on October 23rd & 24th!
11:30 AM Tina Macuha Headlines ‘Steps to Kick Cancer’ Luncheon on Oct. 24th at Mark Twain Medical Center
11:30 AM Steps To Kick Cancer Awareness Luncheon is October 24th at Mark Twain Medical Center!
Friday, Oct 25
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
Saturday, Oct 26
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
All Day The Hopper Connects You to Calaveras's Wine Country & More
All Day Ride The Rails Into History at Railtown 1897
10:00 AM Old Timers Museum Walking Tours Are Every Saturday at 10am.
11:00 AM Town Tours of Columbia State Historic Park Every Weekend!
01:00 PM Spend the Summer at Big Trees State Park. Guided Hikes Every Weekend
05:00 PM Sunset Dinner
Sunday, Oct 27
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
All Day Ride The Rails Into History at Railtown 1897
All Day Our Sunday Edition with Local Features, Local Specials & More Every Sunday All Day Long!
11:00 AM Town Tours of Columbia State Historic Park Every Weekend!
01:00 PM Spend the Summer at Big Trees State Park. Guided Hikes Every Weekend
Monday, Oct 28
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
Tuesday, Oct 29
All Day Sign Up For The Big Trees Fitness Challenge! Get Fit For The Holidays!!
10:00 AM Grief Support Classes Offered By Hospice of Amador & Calaveras
06:00 PM Spooktacular Monster Mash at Greenhorn Creek on October 29

Search Announcements




Log In
Username

Password

Remember Me



Posted by: thepinetree on 04/26/2016 12:23 AM Updated by: thepinetree on 04/26/2016 09:38 AM
Expires: 04/26/2026 12:00 AM
:



401(k) Plans ~ From Brian J. Tewksbury

Murphys, CA...Qualified cash or deferred arrangements (CODAs) permitted under Section 401(k) of the Internal Revenue Code, commonly referred to as "401(k) plans," have become one of the most popular types of employer-sponsored retirement plans. How does a 401(k) plan work? With a 401(k) plan, you elect either to receive cash payments (wages) from your employer immediately, or defer receipt of a portion of that income to the plan. The amount you defer (called an "elective deferral" or "pretax contribution") isn't currently included in your income; it's made with pretax dollars. Consequently, your federal taxable income (and federal income tax) that year is reduced. And the deferred portion (along with any investment earnings) isn't taxed to you until you receive payments from the plan.

unnamed (25)
btewks_1 (1)


Example: Melissa earns $30,000 annually. She contributes $4,500 of her pay to her employer's 401(k) plan on a pretax basis. As a result, Melissa's taxable income is $25,500. She isn't taxed on the deferred money ($4,500), or any investment earnings, until she receives a distribution from the plan.

You may also be able to make Roth contributions to your 401(k) plan. Roth 401(k) contributions are made on an after-tax basis, just like Roth IRA contributions. Unlike pretax contributions to a 401(k) plan, there's no up-front tax benefit, but qualified distributions from a Roth 401(k) account are entirely free from federal income tax.

When can I contribute?
You can contribute to your employer's 401(k) plan as soon as you're eligible to participate under the terms of the plan. In general, a 401(k) plan can make you wait up to a year before you're eligible to contribute. But many plans don't have a waiting period at all, allowing you to contribute beginning with your first paycheck.

Some 401(k) plans provide for automatic enrollment once you've satisfied the plan's eligibility requirements. For example, the plan might provide that you'll be automatically enrolled at a 3% pretax contribution rate (or some other percentage) unless you elect a different deferral percentage, or choose not to participate in the plan. This is sometimes called a "negative enrollment" because you haven't affirmatively elected to participate--instead you must affirmatively act to change or stop contributions. If you've been automatically enrolled in your 401(k) plan, make sure to check that your assigned contribution rate and investments are appropriate for your circumstances.

How much can I contribute?
There's an overall cap on your combined pretax and Roth 401(k) contributions. You can contribute up to $18,000 of your pay ($24,000 if you're age 50 or older) to a 401(k) plan in 2016. If your plan allows Roth 401(k) contributions, you can split your contribution between pretax and Roth contributions any way you wish. For example, you can make $10,000 of Roth contributions and $8,000 of pretax 401(k) contributions. It's up to you.

But keep in mind that if you also contribute to another employer's 401(k), 403(b), SIMPLE, or SAR-SEP plan, your total contributions to all of these plans--both pretax and Roth--can't exceed $18,000 ($24,000 if you're age 50 or older). It's up to you to make sure you don't exceed these limits if you contribute to plans of more than one employer.

Can I also contribute to an IRA?
Yes. Your participation in a 401(k) plan has no impact on your ability to contribute to an IRA (Roth or traditional). You can contribute up to $5,500 to an IRA in 2016, $6,500 if you're age 50 or older (or, if less, 100% of your taxable compensation). But, depending on your salary level, your ability to make deductible contributions to a traditional IRA may be limited if you participate in a 401(k) plan.

What are the income tax consequences?
When you make pretax 401(k) contributions, you don't pay current income taxes on those dollars (which means more take-home pay compared to an after-tax Roth contribution of the same amount). But your contributions and investment earnings are fully taxable when you receive a distribution from the plan.

In contrast, Roth 401(k) contributions are subject to income taxes up front, but qualified distributions of your contributions and earnings are entirely free from federal income tax. In general, a distribution from your Roth 401(k) account is qualified only if it satisfies both of the following requirements:

It's made after the end of a five-year waiting period
The payment is made after you turn 59½, become disabled, or die
The five-year waiting period for qualified distributions starts with the year you make your first Roth contribution to the 401(k) plan. For example, if you make your first Roth contribution to your employer's 401(k) plan in December 2016, your five-year waiting period begins January 1, 2016, and ends on December 31, 2020. Each nonqualified distribution is deemed to consist of a pro-rata portion of your tax-free contributions and taxable earnings.

What about employer contributions?
Many employers will match all or part of your contributions. Your employer can match your Roth contributions, your pretax contributions, or both. But your employer's contributions are always made on a pretax basis, even if they match your Roth contributions. That is, your employer's contributions, and investment earnings on those contributions, are always taxable to you when you receive a distribution from the plan.

Should I make pretax or Roth contributions?
Assuming your 401(k) plan allows you to make Roth 401(k) contributions, which option should you choose? It depends on your personal situation. If you think you'll be in a similar or higher tax bracket when you retire, Roth 401(k) contributions may be more appealing, since you'll effectively lock in today's lower tax rates. However, if you think you'll be in a lower tax bracket when you retire, pretax 401(k) contributions may be more appropriate. Your investment horizon and projected investment results are also important factors. A financial professional can help you determine which course is appropriate for you.

Whichever you decide--Roth or pretax--make sure you contribute as much as necessary to get the maximum matching contribution from your employer. This is essentially free money that can help you reach your retirement goals that much sooner.

What happens when I terminate employment?
Generally, you forfeit all contributions that haven't vested. "Vesting" means that you own the contributions. Your contributions, pretax and Roth, are always 100% vested. But your 401(k) plan may generally require up to six years of service before you fully vest in employer matching contributions (although some plans have a much faster vesting schedule).

When you terminate employment, you can generally leave your money in your 401(k) plan (if your vested balance exceeds $5,000) until the plan's normal retirement age (typically age 65), or you can roll your dollars over tax free to an IRA or to another employer's retirement plan.*

What else do I need to know?
Saving for retirement is easier when your contributions automatically come out of each paycheck
You may be eligible to borrow up to one-half of your vested 401(k) account (to a maximum of $50,000) if you need the money
You may be able to make a hardship withdrawal if you have an immediate and heavy financial need. But this should be a last resort--hardship distributions are taxable events (except for Roth qualified distributions), and you may be suspended from plan participation for six months or more

If you receive a distribution from your 401(k) plan before you turn 59½, (55 in certain cases), the taxable portion may be subject to a 10% early distribution penalty unless an exception applies

Depending on your income, you may be eligible for an income tax credit of up to $1,000 for amounts contributed to the 401(k) plan
Your assets are generally fully protected from creditors in the event of your, or your employer's, bankruptcy


What's Related
These might interest you as well
phpws Business Directory

Local News

Photo Albums

Calendar


Mark Twain Medical Center
Meadowmont Pharmacy
Bank of Stockton
Bear Valley Real Estate
Bear Valley Cross Country
Cedar Creek Realty
Cave, Mine & Zip Lines
Fox Security
Bistro Espresso
Pinnacle Physical Therapy
Chatom Winery
Middleton's Furniture
Bear Valley Mountain Resort
Paul D. Bertini
Premier Properties
High Country Spa & Stove
Calaveras Mentoriing

Ebbetts Pass Scenic Byway
Sierra Logging Museum
Jenny's Kitchen

Copyright © The Pine Tree 2005-2019