Page 6 - SGH Profit Sharing & 401(k) Plan and Trust

Three Steps to Enroll Today 1. DECIDE HOW MUCH TO SAVE. 2. Decide which investment strategy is right for you. 3. Act now–Enroll. Savings Opportunities Since Social Security may not provide enough income during your retirement years, and inflation could reduce the value of your savings, it is important to develop a sound retirement plan. Contributing to an employer-sponsored retirement plan can be an important part of your retirement planning. First—Consider the Tax Deferrals PRE-TAX CONTRIBUTIONS: The amount you put into your pre-tax Plan account is deducted from your paycheck before it is taxed. The net impact on your take-home pay may be less than the actual amount you are contributing to the Plan. TAX-DEFERRED EARNINGS: In addition to having your money go into the Plan on a pre-tax basis, any growth is tax-deferred. This means any tax due on any future earnings stays in the Plan and may add to the compounding of investment earnings over time. Of course, at retirement the withdrawals you make from your Plan account will be considered income, and may be subject to regular income taxes depending on your tax bracket at that time. You may be in a lower tax bracket during retirement and your tax burden may be less than it is today. TAX-FREE EARNINGS: You also have an opportunity to have your money grow tax-free with Roth 401(k) contributions. Roth 401(k) contributions are made on an after-tax basis. Earnings on Roth 401(k) contributions are eligible for tax-free treatment as long as the distribution occurs at least five years after the year you made your first Roth 401(k) contribution and you have reached age 591⁄2, have become disabled, or have died. Some of the factors to consider include: how long you expect your contributions to stay in your Plan account, how much they may earn, your tax rate when your money is contributed and when it’s withdrawn, and the tax laws in effect at those times. PLUS, THERE’S THE COMPANY CONTRIBUTION When you ask the question, “How much should I save for retirement?” invariably you’ll hear the answer, “As much as you can.” That may be true, but if you’re looking for a number, consider this: You can contribute from 1% to 75% of your eligible salary to the Plan up to the IRS limit, and if you are 50 years of age or older, you can make an additional catch-up contribution. The contribution limits are set annually and can be found at workplace.schwab.com. So, save “as much as you can,” and remember, SGH makes a contribution as well. QUICK TIP Go to workplace.schwab.com to access the Paycheck Calculator. The Paycheck Calculator may be found on the Learning Center tab under Tools and Calculators. This will help you run scenarios to see how different pre-tax deferral percentages may impact your take-home pay. You’ll see that if your contributions come out pre-tax, the net impact on your take-home pay is less than the amount you actually contribute. This may help you choose to save “as much as you can.” There are also several worksheets available that you can use to help determine how much savings you may need when you retire. This may help you move from “how much you can save” to “how much you need to save.” Since each individual’s tax situation is different, take the time to consider all of the facts specific to you and consult your tax advisor. This is only a brief overview of our Plan’s features and does not constitute a legally binding document. A more detailed Summary Plan Description is available at workplace.schwab.com. Please review it carefully for additional information about the specific provisions of our Plan. If you have further questions, contact your Human Resources Department. 6 SGH Profit Sharing & 401(k) Plan and Trust