“By failing to prepare, you are preparing to fail.”
Plan Basics
Ben had it right. And the best time to start planning for the future is now. Start with the Latham 401(k) basics and be prepared for your future years!
How a 401(k) Works
Your 401(k) is made of three main components:
- Your payroll deduction contributions
- Latham’s annual profit sharing contribution*
- The investment growth of your account over time
Investments can be made pre-tax or Roth after-tax, or a combination of both. You can also grow your account through voluntary after-tax contributions above and beyond your pre-tax 401(k) salary deferrals and Roth 401(k) contributions, up to IRS limits. Earnings on voluntary contributions will be taxed when you take a distribution.
* Latham makes annual profit sharing contributions for eligible staff and paralegal employees. The current contribution is 7.5% of your eligible compensation up to the current Social Security Wage Base (SSWB) of $176,100. If you have eligible compensation above the SSWB, you will receive an additional 12.5% contribution, subject to plan limitations. Profit sharing contributions are not taxable income when they are contributed to your account, but will be considered taxable income at the time of distribution.
Partners are subject to different contribution requirements.
Start
You’re making an investment in your future when you save in a 401(k) plan. Convenient payroll deductions make regular contributions easy. Good news: When you join Latham, you are automatically enrolled in the 401(k) Plan if you are paid from the US payroll.
Enrollment
Latham believes that saving for the future is so important that you will be automatically enrolled in the 401(k) Plan at a 6% pre-tax contribution rate with your first paycheck (or as soon as administratively possible). Your money is invested in a Vanguard Target Retirement Trust for you based on the year you turn age 65.
The Vanguard Target Retirement Trusts have been designated by the 401(k) Plan trustee and recordkeeper as the “Qualified Default Investment Alternative” for the 401(k) Plan.
Once enrolled, you can change your contribution level or investments at any time.
Register your account
Go online: workplace.schwab.com
Call Schwab: 1.800.724.7526
Download the Schwab Workplace Retirement mobile app:
Choose
You can choose to make pre-tax, Roth after-tax and/or voluntary after-tax contributions. It’s important to understand the differences as you make your contribution decisions.
Pre-Tax Contributions
The money you contribute is deducted from your pay before federal and state (if applicable) income taxes are withheld. This reduces your taxable income and the taxes you pay now. Your withdrawals generally will be subject to income tax and a penalty if made before you have reached age 59½ or if you become disabled or die.
Roth After-Tax Contributions
You contribute after taxes have been deducted from your pay. Your contributions and earnings will grow federal and state income tax-free. No taxes will be withheld at withdrawal if your first contribution was made at least five years ago and you have reached age 59½, or if you become disabled or die.
Voluntary After-Tax Contributions
Quick Glance
| Pre-Tax | Roth After-Tax | Voluntary After-Tax | |
|---|---|---|---|
| Your Contributions IRS limits are the total amount you can contribute to a 401(k) account — a combined total of your pre-tax and Roth after-tax account contributions. | IRS contribution limit of $23,500 for employee deferrals.  if you are age 50-59 or age 64 or older, up to $31,000 for employee deferrals. if you are age 60-63, up to $34,750 | IRS contribution limit of $70,000 for any employee pre-tax and/or Roth after-tax contributions, voluntary after-tax and partnership contributions. $77,500 if you're age 50 or older. |
|
| Discretionary Contribution for Staff and Paralegal Employees All firm discretionary contributions are made to a pre-tax 401(k) account and will be considered taxable income at the time of distribution. | 7.5% of your base pay, up to the Social Security Wage Base (SSWB) + an additional 12.5% (for those with eligible compensation above the SSWB). | N/A | |
| How Your Account Grows | Tax-free but taxes will be paid on contributions and account growth when you take money out for an eligible distribution. | Tax-free for eligible distributions since taxes are paid before contributions are made. | Tax-free but taxes will be paid on account growth when you take money out for an eligible distribution. |
| When You Take Money Out for an Eligible Withdrawal* at Retirement | You will pay taxes on your and Latham’s contributions and investment growth. | You will not owe taxes on your contributions or on investment growth. | You will pay taxes on earnings. |
| If You Withdraw Money for a Loan* | You will not owe taxes on money taken out for a loan. You will pay any associated fees and interest on the loan amount. | ||
| Why It Might Be Right for You | You think you'll be in a lower tax bracket when you retire. You're OK not knowing exactly what you’ll owe when you retire. | You think you'll be in a higher tax bracket when you retire. You want the certainty of knowing exactly how much you'll have in retirement. | You have available funds. You want your retirement savings to grow faster than it would with just pre-tax and/or Roth after-tax contribution limits. |
* Go to Taking Money Out for more details on account withdrawals and loans.
Invest
Investing is how you help your savings grow. Depending on how involved you want to be, you can create your own investment strategy or let the professionals handle it for you. Several resources are available that will offer as much help as you’d like. Then, once your investment choices have been made, there are some important things to know about managing your account.
Fund Choices
There are three categories of investments you can choose from when deciding the best portfolio for you. These choices are available for both pre-tax 401(k) and Roth after-tax 401(k) contributions.
Core Funds
You can create your own diversified portfolio that matches your investment goals and style with the Plan’s core funds. These are mutual funds and investment trusts that Latham has pre-screened and selected for the 401(k) Plan. As you decide on your investments, keep in mind asset category, risk rating and historical performance for each of the funds.
Personal Choice
You have a wider selection of investment funds including common stock and individual bonds to choose from as you create your investment mix with a Schwab Personal Choice Retirement Account (PCRA). This category is meant for hands-on investors. Additional fees may apply for investment trades. And remember to pre-clear all stock and bond purchases through the Latham Personal Trading site.
Target Retirement Trusts
Your investment decisions will be made by the investment experts with the Target Retirement Trust. Your contributions will be invested in a fund that is closest to the year you’ll reach age 65 (when withdrawals are typically expected to begin). You select one fund and the experts do the rest.
Manage Your Account
Watching how your investments perform is just one way to be an informed investor. To stay on top of your account, log in to Schwab, our 401(k) trustee and recordkeeper, or download the Schwab app.
You can make changes to your investments and contribution amounts at any time through Schwab.
