Understanding the FedEX 401k Plan
What is the FedEx 401k Plan?
The FedEx 401k Plan is a retirement plan offered by the company to help employees begin saving for retirement. As you contribute to the plan, your money is typically invested in a variety of stocks and bonds to help grow your money over time. 401k Plans in general can be a great tool to help you reach your retirement goals.
What is a 401k Match?
Most 401k plans offer a match to contributions added to the 401k account. This means that your employer will contribute a certain amount towards your 401k. In some ways you can look at it as free money.
Here is an example of how a 401k Match may look.
Let’s assume Jimmy is making $100,000 at his company. His employer will match 100% up to 5% of his base salary. If Jimmy decided to contribute 5% to his 401k, he would be investing roughly $5,000 to the plan every year. However, in addition to Jimmy’s contribution, his company will also match an additional $5,000 into his plan. All in all, in this example, Jimmy would have $10,000 additional dollars added to his 401k.
Every 401k plan match is different. Some plans match up to 3% while other match even higher. If you need help understanding the match program at FedEX or your company feel free to contact us as we provide free consultations.
Please keep in mind, most matches from an employer are subject to a vesting schedule.
How much should I contribute to my FedEx 401k?
How much you should contribute to your 401k plan is purely based on your goals and income level. Some decide to put as much as they can into their 401k, while other only contribute what they employers will match up to while contributing additional money to other investment vehicles like Roth IRAs.
There are many ways to reach your retirement goals and there is no one size fits all in this scenario. Financial advisors like IntelliVest Wealth Management can help you build a plan to help you figure out how much you should be contributing to your 401k plan.
When can I pull out of my FedEx 401k Plan?
401k Investments are available after 59 and a half years old. This means you can begin taking from this account to help supplement your retirement years. Depending on if you contributed to a Traditional 401k or a Roth 401k would determine the potential tax implications.
It is theoretically possible to pull from your 401k earlier, however it comes with heavy penalties and tax consequences.
How should I invest my FedEx 401k?
You should typically invest your 401k in a manner that is most appropriate with your comfort ability with the market while also making sure you are investing towards your goals. Everyone’s 401k plan is different in how they invest.
Most of the time, if you do not personally choose the investments inside of your plan, you are auto enrolled into a Target Date Fund. While Target Date Funds have gotten many people to retirement, they sometimes may not be the most optimized approach. As mentioned earlier, do to the construction of a target date fund, it may not be structured to help you achieve your goals.
Many firms, like IntelliVest Wealth Management, help clients everyday try to optimize their 401ks and other retirement assets.
What happens to my 401k when I leave FedEx?
Your 401k assets simply stay inside of the 401k plan until you decide to do something with it. You have a couple of options.
Your first option when you leave FedEx is that you can simply leave the money inside of the 401k plan. This would allow it to continue to stay invested. Once you turn 59 and a half, you are able to begin pulling from the account for retirement.
Your second option is to roll the 401k assets into your new 401k plan at your new job. This can help consolidate your 401k assets into one spot.
Your third option is to roll the 401k assets into a Traditional IRA or a Roth IRA (depending on if you are rolling over a traditional 401k or Roth 401k). Like you second option this can help keep all of your assets in one location rather than many. This is can be helpful if you have multiple 401ks. Traditional IRAs and Roth IRAs allow you to invest in a larger array of investments that are typically not available in a 401k plan.
Lastly, you theoretically can take the money out of the 401k plan. This is usually not advised as you can incur heavy penalties and tax implications by doing so.
Please speak with a financial professional to determine which of these options is best for you.
Disclosure
IntelliVest Wealth Management is a Registered Investment Advisor Headquartered in Spartanburg South Carolina. This is not a solicitation or financial advice. This article should only be used for educational purposes. Please consult with IntelliVest Wealth Management about your personal financial situation.
