401(k) Account
401(k)
A 401(k) helps you save for retirement through powerful tax advantages and a range of investment options. You can make two types of contributions in the plan: a traditional 401(k) contribution, and a Roth 401(k) contribution.
Traditional 401(k) contributions
First, there are the tax advantages, which apply to any traditional 401(k) pre-tax contributions, no matter which company is offering it:
- The money you contribute to your 401(k) is taken out of your paycheck before taxes. If you figure you pay an average of about 23% in federal income tax, that means for every $100 you invest in a 401(k), you could only invest $77 in most other types of accounts. (Since you can’t contribute to most accounts until after your taxes have been taken out.)
- The money isn’t taxed as long as it stays in the account. (And that includes any earnings accrued from 401(k) investments.)
- As long as you wait until you are 59 and-a-half or older to withdraw the money, you’ll just pay the regular income tax rate on the funds. No penalty will be applied.
Roth 401(k) contributions
Waters also allows you to make Roth 401(k) contributions, which has different tax advantages than traditional 401(k) contributions.
- Instead of contributing money into the account pre-tax, you contribute post-tax money, which means that you pay the taxes upfront. So, unlike traditional contributions, contributing $100 as Roth 401(k) contributions means you’ll be seeing $100 less in your take-home pay–however, that’s the last you may see of federal taxes on the money.*
- When you withdraw the money in retirement, you won’t pay federal income tax on the funds, including any earnings (this is the exact opposite of the traditional 401(k) contributions, where you pay taxes when the money is withdrawn, if certain conditions are met).*
But whether you choose to contribute traditional or Roth, in addition to the standard advantages, Waters will match any contribution you make, dollar for dollar, up to 6% of your salary per year. That’s a 6% bonus you can give yourself just for thinking about your future. And you are immediately 100% vested1 in that match contribution.
To help decide which to contribute, check out Fidelity’s NetBenefits.com.
*A distribution from a Roth 401(k), Roth 403 (b) and Roth 457 (b) is federally tax free and penalty free, provided the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, disability, or death.
Requirements
You’re eligible to contribute to your 401(k) from day 1 at Waters.
Contributing Funds
You can set up or adjust your contributions at any time during the year with Fidelity, at NetBenefits.com.
If you are a new hire and do not actively enroll in the 401(k) within 31 days of your start date, Waters will auto-enroll you at 3% of your yearly salary. (Though you are allowed to opt out.)
Once you have been auto-enrolled, you will be set up for an automatic 1% annual increase to your contribution. (Again, unless you opt out.)
If you have any retirement savings in other qualified 401(k) accounts, like prior employer plans, you can consolidate those accounts into the Waters plan without losing any tax benefits. (call Fidelity at 1-800-835-5095 for assistance.)
Additionally, if you consolidate your retirement savings, you’ll be able to use those funds toward Waters College Tuition Benefit program, which is linked below.
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- College Tuition benefit: Earn discounts off of tuition at participating colleges/universities for your children, grandchildren, godchildren, nieces, and/or nephews.
Contribution Limits
There is a yearly limit to how much you may contribute to the account each year, determined by the IRS.
The limit is $23,500 in 2025 (The IRS can change the limits annually). Both Traditional pre-tax contributions and after-tax Roth 401(k) contributions count toward this IRS annual contribution limit.
And if you happen to be 50 or older, you can contribute an extra $7,500 in catch-up contributions. (Even if you turn 50 on December 31st, you can still add that extra .)
Investing Your 401(k) Money
Don’t worry. You don’t have to have a have a background as a hedge fund manager to handle your 401(k). There are a number of investment funds to choose from, including those geared toward brand-new investors.
Though, there is a self-directed brokerage account option for an expanded offering of funds outside the lineup.
Withdrawing Money
You can start withdrawing money from the account once you turn 59 and-a-half, with no penalty. At that time, you’ll just pay federal income tax and state tax.
If you withdraw money from the account before you turn 59 and-a-half, per government regulation, you will pay an extra 10% penalty fee on the amount withdrawn, on top of federal income taxes.
In the event of your death, your saved money will go to your beneficiary2. So don’t forget to declare a beneficiary on Fidelity’s NetBenefits.com and to double check whom you’ve got set as your beneficiary every year.
More
Click for a 401(k) Summary and for the 401(k) Plan Summary Plan Description (SPD)
Questions?
Fidelity will send to you a welcome kit in your first few weeks at Waters. To learn more, go to Fidelity’s NetBenefits.com, or call 1-800-835-5095.
1 Vesting: When you are given money or assets by your company, but required to work a certain period of time at your company before you can keep the money or assets.
2 Beneficiary: This is a person or an organization (like, say, a charity) that you choose to receive money, or even property, after you die.