This article is to solve the purpose of confusion in understanding the UPSers 401K plan. UPS offers this plan to their employees. You will find the details of this plan ahead. The details will include – the need for this plan, the procedure of this plan, the risk involved in this plan. To help you understand better we will try to structure it properly and add an example.
UPSers 401K Plan Brief
This is a plan for the employees in the company. It is a retirement savings plan. The employer in the company sponsors this plan. It helps the employee to take out a part of his salary before the tax is deducted and use it to invest it somewhere. You have to pay the tax once you withdraw the money. You won’t see the effect of this plan in the short term as the money is small in amount. Once it starts to accumulate then in the long term it can prove to be very helpful.
The Need For This Plan?
This plan is more about saving up for your future than about getting benefits out of it right at the moment. Currently, more than 50 million workers are active in the 401K plans. Along with half a million company places already in place. This plan, when started out, had a lot of criticism. Now, with time and the reforms made in this plan have started benefiting the employees in real and not just for the sake of saying.
Procedure For UPSers 401K Plan
This section will explain how does this plan work. This plan is dependent on your salary. You can choose how much money you want to get deducted for the plan but you can choose the amount up to a certain limit. This limit is in percentage and only revealed to the employees. The more the salary the more you can save but the percentage of savings remains the same.
This amount can get increased if there are any incentives from your employer. The whole incentive can go to your savings plan. There are some restrictions to when you can withdraw this money. There is a specified time after which you can withdraw the money. If you choose the withdraw the money before the specified time then there will be some penalty for it which you will be required to pay. This time period and the penalty is specified in the plan.
Let us illustrate this plan with the help of an example. Suppose a company offers a UPS 401K to Mr. X. Now, If Mr. X’s pre-tax salary is $1,000 and he decides to invest 10% to his 401K plan, then it would be $100 that he is willing to invest in the plan and this will be his security deposit from his pre-tax salary.
UPSers 401K Plan
The participants can contribute money to their 401K plan only through their salary or the rollover distribution. You can not take loans from the bank to give it to this plan. Neither can you use your other retirement savings to invest in this one? You can know more logging into your account. To know how to log in, click here.
UPS has all the rights under the terms and conditions of UPSers 401K plan that they can terminate this plan anytime. Although they have to inform the trustee to plan separate accounts for each participant of the 401K Plan. The accumulated amount until the termination will be returned back to the individual.