401(k) Plan for Your Future

The 401(k) Plan, administered by Principal, is a great tool for helping you save and invest for your retirement. It can also help you save on current or future taxes.
To help you build up savings for your future, you can set aside contributions from your pay and place them in the 401(k) Plan through convenient payroll deductions. To boost your savings, the company will match all or part of the contributions you make, up to a maximum of 4% of your pay. You place your contributions in your choice of investments offered by the plan, to help you meet your growth and savings goals. The sooner you start saving, the better.

Because the 401(k) Plan is intended to help you save for retirement, withdrawals from the plan before you reach age 59½ may be subject to penalties and are generally not allowed. However, you may be allowed to make a hardship withdrawal for certain serious financial needs. You may also be able to take a loan from your account, if you pay it back.

Your contributions
You can contribute to the 401(k) Plan on a before-tax basis (the “traditional” way of making 401(k) contributions), which reduces your taxable pay, and therefore your current income taxes. Your contributions and their earnings are not taxed until you withdraw them from the plan at retirement, when you may be in a lower tax bracket.

You may also contribute to the plan on a Roth after-tax basis. Because Roth contributions are taxed before they go into the plan, they are not taxed when you withdraw them. Neither are their earnings, as long as you keep your first Roth contributions in the plan for at least five years and are at least age 59½ when you make your withdrawal.

You may wish to consult with a tax or financial advisor about whether before-tax contributions or Roth after-tax contributions are most beneficial for your situation.

Federal law limits the amount you can contribute to the 401(k) Plan each year. For 2024, this limit is $23,000. To help people nearing retirement, if you are at least age 50 you can make an additional “catch-up” contribution each year. For 2024, the maximum catch-up contribution is $7,500.

You can start, stop or change contributions to your 401(k) Plan at any time throughout the year.

Company matching contributions

To add to your savings and encourage you to use the 401(k) plan, the company matches your contributions:

  • For the first 3% of your eligible pay you contribute to the plan, the company matches your contributions 100%.
  • For the next 2% of your eligible pay you contribute to the plan, the company matches your contributions 50%.

If you contribute at least 5% of your eligible pay, you get the maximum company match: 3% of your eligible pay plus 1% (50% of the next 2% of your pay) for a total of 4% of your eligible pay.

Investing for your future

The 401(k) Plan offers you a variety of investments, which you can choose according to your own financial goals and personal situation. Are you someone who is a long way from retirement? Then you may want to consider investments that offer more potential for your savings to grow over the long term, putting time to work for you. If you are only a few years from retirement, on the other hand, you may want to invest more in conservative investments that focus on keeping the money you have and are unlikely to change much in value.

You can learn more about investments at www.principal.com. You may also want to consult with a financial advisor before making investment decisions.

Vesting (ownership of your account)
You are always immediately 100% vested in the full balance of your 401(k) Plan account, including company matching contributions. This means you have a non-forfeitable ownership of your account balance, even if you leave the company.
Hardship withdrawals
Although you normally are not allowed to withdraw money from your 401(k) Plan before age 59½, you may be able to take a hardship withdrawal before that age in case of certain serious financial needs (including medical bills, purchase of your home, or payments to avoid eviction from or foreclosure of your home) if you don’t have other resources. Early withdrawal penalties and ordinary taxes may apply.
Loans

Although you should keep your money in the plan so it has the maximum opportunity to grow, for financial needs you may be able to borrow money from your account temporarily by taking a loan. The maximum you may borrow is the lesser of:

  • $50,000
  • 50% of your 401(k) account balance, minus any amounts you may already have outstanding from a previous loan

If you fail to repay what you borrow according to the terms of the loan, it will be considered an early withdrawal, and penalties and ordinary taxes may apply.

Visit the Principal website at www.principal.com to create an account or log in. There, you can begin or manage your contributions and view your balance. Learn more about creating your account.

Note: Information or links you might see on the Principal website about selecting a dentist or vision provider do not apply to our company employees.

Contact:

The Principal 401(k) Retirement Plan