An employee-funded retirement plan.

What is a 401(k)?
A 401(k) is an employee-funded retirement plan. Employees contribute tax-deferred income to the plan. Employers may elect to match employees' contributions. Amount participants receive in retirement will be based on amount contributed to plan, and the investment returns on contributions.

What are the participation requirements?
Employees must have been with the company for at least one year. They must work at least 1,000 hours per year, and be 21 years of age or older.

How much can employees contribute?
For 2002, employees may contribute up to $11,000 of their annual salaries to a 401(k) tax-deferred. The annual tax-deferred amount employees' can contribute will increase by $1,000 each year until 2006, unless there are any changes to the laws. Additionally, if an employee is over 50, he or she may contribute up to $12,000 for 2002.

What do employers contribute?
Employers may contribute the lesser of 25% of an employee's annual compensation, or $30,000.

How are 401(k) contributions made?
Contributions are made to a 401(k) in the name of each employee administered by a third party.

Can you rollover 401(k) assets?
This varies by plan. If a triggering event is met, then 401(k) assets can be rolled to an IRA within 60 days of receipt without incurring penalty. Only one rollover is allowed per 12-month period.

How can I learn more about 401(k) plan?

To establish a 401(k) plan or learn more about setting one up for your employees or visit the Academy Bank location nearest you today.