Retirement Benefits » Roth 401(k)
Los Alamos National Security, LLC (LANS) offers eligible employees a new Roth 401(k) retirement savings option under the current 401(k) Savings Plan and 401(k) Retirement Plan.
The Roth 401(k) option differs from a traditional 401(k) in two specific ways, contributions are made on an after-tax basis and there are limits on when withdrawals from the account may begin after retirement.
After-tax Contribution:
Roth 401(k) contributions are made on an after-tax basis. This means that Roth 401(k) contributions will reduce your current take-home pay in order to provide a tax benefit in the future. Participants considering the Roth 401(k) should consider their future planning and the influence their tax bracket may have on the benefit of a Roth 401(k).
Qualifying Distributions:
Roth 401(k) retirement distributions are tax-free as long as the distribution is qualified. A qualified distribution is one that occurs at least 5 tax years after the year the first Roth 401(k) contribution was made and after the participant has reached age 59 ½ or becomes disabled or deceased.
Additional Information:
A Fidelity "Building a Portfolio" on-demand webinar is available for more information regarding the Roth 401(k). This resource identifies plan features of the Roth 401(k), how a Roth 401(k) differs from a traditional 401(k), and important considerations to weigh before enrolling.
If you are a participant in either the LANS 401(k) Savings Plan or the LANS 401(k) Retirement Plan, then you are eligible to make Roth 401(k) contributions.
You may elect the Roth 401(k) by logging onto Fidelity NetBenefits website. From the “LANS 401(k)” option, choose “Contribution Amount” from the “Select Action” drop-down menu. Follow the instructions to continue choosing your contribution amounts.
If you are not registered, click on "New User Registration" and follow the instructions to create a password or contact Fidelity's Customer Service Desk at 1-800-835-5095 with any questions. Please see the Fidelity Managing Your Workplace Savings Plan Accounts Online brochure (pdf) for instructions on how to manage your 401(k) savings plan online. Additionally, you may also access the Fidelity Roth 401(k) presentation which provides more information about the Roth 401(k) option, considerations to make prior to enrolling, and steps to take if enrollment in a Roth 401(k) is an option for you.
The Roth 401(k) will be available for election beginning August 06, 2010. The first contribution will be seen on the August 26, 2010 paycheck. Contributions may be made only through salary reduction and may only come from income paid through the LANL/LANS payroll system. Contributions to the Roth 401(k) will be made on an after-tax basis, and are therefore, included as taxable income and will reduce your net after-tax income. Fidelity will track your Roth 401(k) contribution separately from your traditional pre-tax or after-tax 401(k) contributions.
You may choose to contribute to the Roth 401(k) and the traditional (pre-tax or post-tax) 401(k) to a combined maximum of 75 percent of pay. You may contribute to the traditional 401(k) (pre-tax or after-tax) and the Roth 401(k) option as long as you do not exceed the total IRS maximum annual contribution (MAC). ). Please note, employer contributions, regardless of plan, will always be made on a pre-tax basis as required by law.
Roth 401(k) contributions are counted toward your maximum annual pre-tax contribution along with your pre-tax salary deferrals. Your MAC is determined by your age on the last day of each calendar year.
| MAC Limits (By age on December 31, 2010) | |
|---|---|
| If your age is | Your MAC is |
| <50 year | $16,500 |
| > or = 50 years | $22,000 |
Plan Contribution Maximum: The total that can be contributed to your LANS 401(k) Plan from all sources (employee and employer contributions, before and after tax and Roth), is $49,000.
Excess Contributions: Payroll systems monitor your contributions throughout the year, so generally you will not over contribute to your plan. Although the earnings are subject to ordinary income taxes for the year in which the excess amount is refunded, they are not subject to the penalty taxes on early distribution.
IRS Information Regarding MAC Limits
The Roth 401(k) contributions, like the traditional 401(k) contributions, may be rolled over to or from other qualified plans. Active LANS employees age 59 ½ or older may generally rollover money into the plans. There are some constraints that may apply to your Roth 401(k) monies, so you should contact Fidelity Investments or 1-800-835-5095 for more information concerning rollovers.
You may use your Roth 401(k) monies for a hardship withdrawal or 401(k) Plan loan. A Roth 401(k) hardship withdrawal or loan may have tax implications for you so you should be sure to contact Fidelity website or 1-800-835-5095 before requesting a loan.
Information regarding Fidelity BrokerageLink is available through a Fidelity On-Demand Workshop. The 401(k) Savings Plan allows for an open brokerage window, allowing participants to select mutual funds that are not in the Plan’s preselected core line up. Funds outside of the core line up are not reviewed or monitored by a Plan fiduciary for suitability of participant accounts, so participants should carefully consider the risks before using the open brokerage window. More information regarding the open brokerage window is available in the TCP1 LANS 401(k) Savings Plan Summary Plan Description (pdf) or TCP2 LANS 401(k) Savings Plan Summary Plan Description (pdf).
You may also review the IRS Retirement Plans FAQs on Designated Roth Accounts for more information about the Roth 401(k).
Questions? Contact the Lab’s Benefits Office at 505-667-1806.
