Deseret Mutual's 401(k) is a retirement savings plan offered to all eligible employees. You can contribute a percentage of your gross income each pay period to a before-tax or after-tax account. BYU-Idaho will match up to a certain percentage of your contribution.
Contribution Match Percentages
For those contributing to the 401(k) retirement savings plan, BYU-Idaho provides a percentage for percentage match to your contribution up to 3%. For example, if you contribute 3% into a 401(k) account, BYU-Idaho will contribute 3%, which equals a total of 6% invested into your retirement. The maximum match to your contribution is 5/4. This means that if you contribute 5% or more into a 401(k) account, BYU-Idaho will contribute 4%, which equals a total of 9% or more that you will be investing in your retirement.
Once you choose what percentage of your income will be invested, you will then need to decide which type of savings account to invest in. There are three account types to which an employee may make contributions: the before-tax 401(k), after-tax Roth 401(k), and after-tax 401(a). Changes can be made to contribution percentages at any time.
In the 401(k) before tax account, your contributions are made before tax is withheld. This means that the money you invest is tax free. While this lowers your taxable income, all of the funds in this account will be taxed upon withdrawal, including the original investment and any growth earned.
When you invest in the Roth 401(k) account, your contributions will count towards your taxable income for the year. However, when you withdraw the funds from the Roth account during retirement, all of your investment and growth is tax free.
The 401(a) After Tax is an alternate investment option to either of the 401(k) plans. While your contributions to the 401(a) will still include the employer match, your investments will be taxed both when you invest and when you withdraw.
* While the employee contribution can be in either of the three options, the employer matching contribution will always be taxed when withdrawn.
Each of the accounts has yearly contribution maximums. For the before tax 401(k) and the Roth 401(k) after tax combined, the annual maximum for 2015 is $18,000. If you are over the age of 50, there is an additional $5,500 that you can invest in these accounts as a catch-up contirbutions, There is a $55,000 contribution maximum for all three accounts combined, including the employer contributions.
The 401(k) offers five preset mix options for the allocation of your contributions. Before-tax and after-tax funds are combined for investment purposes. The preset mixes are designed to provide the right balance of growth and stability, depending on how many years from now you plan on withdrawing the funds:
- Stock-only preset mix: 12+ years
- Long-term preset mix: 12+ years
- Intermediate preset mix: 5 to 11 years
- Short-term preset mix: 0 to 4 years
- Current income preset mix: 0 to 15 years
Vesting is the ownership of the funds in your account. At BYU-Idaho, you are always 100% vested in the value of your contributions to the 401(k), which includes BYU-Idaho's matching contributions as well. This means that if you end employment with the university you will receive all funds contributed to your account, as well as any earnings.