Do you have an employer-sponsored retirement plan?
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Employer-sponsored Retirement Plans
With Americans living longer and Social Security benefits typically covering less than 40% of retirement income, saving for retirement is more important than ever. A valuable workplace benefit is an investment savings plan that allows employees to save for retirement with contributions each pay period. Participants decide how much to contribute to the plan and can choose from a variety of investment options with diverse investment styles.
Workplace retirement plan advantages
Employer-sponsored plans offer the convenience of automatic salary deductions and the flexibility of being able to change contribution amounts and investment options at any time. Before-tax contributions reduce taxable income which may save on taxes now, and any earnings grow tax deferred until funds are withdrawn. In addition, some employers offer matching contributions up to a certain percentage of the contribution amount.
Types of retirement plans
Depending on the type of workplace, an employer-sponsored plan may be a 401(k), 403(b) or 457(b) plan. While each of these types of plans have different features, all three allow employees to set aside a portion of their salary on a pre-tax basis.
- 401(k) retirement plans, the most common retirement plan, serve small to large for-profit and non-profit organizations. Employer contributions are permitted.
- 403(b) retirement plans are available to heath care, academic, and tax-exempt organizations such as, hospitals, nursing homes, charitable institutions, public and private school systems, colleges and universities. Employer contributions are permitted.
- 457 retirement plans are offered by state and local government entities, and their agencies, including public schools. Employer contributions can be made separately to a 401(a) qualified plan.
Many tax planning strategies emphasize the deferral of current income taxes, on the basis that your federal income tax rate may be lower at retirement. Please keep in mind that federal income tax rates are unpredictable and may be higher when you take a distribution than at the time of deferral. Other factors, including state tax rates and your income, may also affect your overall tax rate upon distribution. Please consult with your tax advisor for individual tax planning strategy and advice. MassMutual does not predict or in any way guarantee favorable tax results.
This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. This information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.
Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the mutual funds or The Hartford's group variable annuity products and funding agreements, and their underlying funds. For fund and product prospectuses and/or a disclosure document containing this and other information, contact your financial professional or visit our website. Read them carefully.
Effective January 1, 2013, Massachusetts Mutual Life Insurance Company ("MassMutual") acquired The Hartford’s Retirement Plans Group ("RPG"). In connection with the transaction, MassMutual has no affiliation, and the RPG business no longer has any affiliation, with The Hartford Financial Services Group or any of its subsidiaries. MassMutual has been appointed by Hartford Life Insurance Company (“HLIC”) to provide all administrative services necessary to support the insurance contracts issued by HLIC in connection with the RPG business. Additionally, Hartford Securities Distribution Company, Inc. (“HSD”) entered into a services agreement with MassMutual Retirement Services, LLC ("MMRS") pursuant to which MMRS provides all of the necessary plan administrative services under the Premier Enterprise plan Administrative Services Agreements, as HSD’s designee.
"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries.
RPS 114031 07/13