If the employee does not elect otherwise, the employee’s payroll deduction contributions will be deposited into a Roth IRA. The Program will also offer traditional IRAs so the employee can elect to contribute on a pre-tax basis, and the contributions will be deposited into a traditional IRA.
Roth IRA contributions are made with after tax dollars and neither the contributions or the earnings on those contributions will be taxed when withdrawn if the account has been established for at least five years and the employee is over age 59 ½.
Employees will be able to withdraw their funds from their IRA in the Program prior to retirement. Whether the withdrawal will be taxed depends on whether the IRA is a Roth IRA or traditional IRA, the age of the employee, and other considerations. The Program will handle all withdrawals and provide tax information regarding the withdrawals.
The Board of Directors is proposing an initial contribution of 5%, with annual automatic escalation of 1% until it reaches 8%. Employees will be able to lower or increase contributions at any time.
