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2024 Guide to Maximizing Employer Retirement Benefits: Don’t Leave Money on the Table!

This year, I am on a mission! A mission to help my fellow millennials and other generations maximize employer retirement benefits in 2024! Employers provide multitudes of benefits to their employees every year. Like most people, your eyes probably glaze over in your open enrollment presentation, where they cover health insurance, retirement plans, and other benefits. I know the eyes glazing over point; I’ve been on both sides of those presentations. There are many benefits that you could be missing out on or not using to the fullest. I want to highlight these benefits throughout the year. Naturally, I’d like to start with your retirement savings because, as your resident millennial financial advisor, we’ve got a long time to get where we need to be in retirement, and the sooner we maximize our retirement savings, the better.

Review your current employer’s retirement plan benefits.

According to Brightscope’s most recent survey released this past September, “87 percent of large 401(k) plans, covering more than nine out of 10 401(k) participants, had employer contributions…Employer contributions are also common even among smaller 401(k) plans—88 percent of 401(k) plans in the sample with 100 to 499 participants had them in 2020.” While this survey is specifically related to private-sector plans, there’s a high probability that you could be leaving money on the table if you’re not contributing to your company’s retirement plan. Many employers offer their employees matching contributions to their retirement plans. It’s worth a phone call to your plan’s administrator to ask about the current match offering. For example, a company could say, “We will match 100% of your contributions up to 3% of your salary.” In this example, here’s how the match would be applied:

  • If you contributed 2%, the employer would contribute 2%. You’d be leaving the extra 1% on the table if you did not contribute 3%.
  • If you contributed 3%, the employer would contribute 3%.
  • If you contributed 4%, the employer would contribute 3%. The maximum they stated in the example that they would match is 100% up to 3%.

By using these benefits, depending on the match rate, you could double your savings efforts. Half of it isn’t even coming out of your pocket.

Do you max out your employer plan? 

Some people may find themselves well past getting the maximum match, and contribute the allowable amount for plans. If you are considered a “highly compensated employee,” you may find yourself getting retirement contributions sent back to you, as you more than maxed out your contribution limit based on the plan rules. Usually, when you have that level of income, you’re looking to reduce your tax liability as much as possible. This is where inquiring about extra retirement savings opportunities like a deferred compensation plan could come in handy! If your employer offers a deferred compensation plan, that will allow you to set aside a certain amount for retirement that may not be allowed through your company’s original retirement plan. Research your company offerings and ask a plan administrator. Then, follow up with a call to your tax professional to discuss if this could benefit you.

Do you contribute to an Individual Retirement Account (IRA)?

Maybe your employer doesn’t offer a retirement plan, or maybe you’re not eligible to contribute to one. You can start saving for retirement by using an Individual Retirement Account (IRA)If you’re reading this blog at the right time, you have until April 15th to contribute for the prior year. Keep in mind that the maximum contributions for IRAs are lower than retirement plans. Consult your financial professional to go over the maximum contributions and if those contributions can be considered deductible contributions (read: reducing your taxable income). One of the things I like to go over with clients when we talk about IRAs is if a Roth IRA or a Traditional IRA contribution or a combination of the two would be better for their financial goals. Each person’s situation is unique, and there is no one correct answer.

Like I said, I’m on a mission to help us maximize the benefits that are out there! Keep following along as we learn more about other employer benefits together. Every little bit of retirement savings helps; keep the chances for matched contributions and investing from passing you by!

March 2024

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