Employer-based retirement plans

Participating in your employer's 401(k), 403(b), SEP IRA or SIMPLE IRA plan can help you make the most of your retirement. The better prepared you are, the more fulfilling retirement is likely to be for you.¹

Get the facts on contributions, rollovers and more

Working with an Ameriprise financial advisor can help you determine how much to contribute to your employer's plan and whether to supplement this savings with another type of retirement savings account such as an IRA.

401(k) retirement plans

A 401(k) plan lets employees save for retirement with pre-tax dollars withdrawn directly from their paycheck, and also allows employers to contribute to the employee's account.

1. Employees may select investments offered through the employer plan.
2. If an employee leaves the organization, he or she can transfer or rollover the vested balance of the 401(k) into another employer's plan or an IRA.
3. Some 401(k) plans allow contributions to designated Roth accounts in the plan. These Roth contributions are after-tax, but qualifying distribution are tax-free.
4. Funds in a designated Roth account in a 401(k) can be rolled to Roth IRAs or to another employer's designated Roth account if the plan will accept the rollover. Funds in a Roth IRA may not be rolled to a designated Roth account in an employer's plan.

403(b) retirement plans

A 403(b) plan is a retirement savings plan that's similar to a 401(k) plan, but only available to employees of tax-exempt organizations such as charities or schools.

• Like a 401(k), employees make contributions on a pre-tax basis, and the employer may also make contributions.
• 403(b) plan investments are generally limited to mutual funds or annuities.
• Also, like a 401(k), if an employee leaves the organization he or she can roll the vested balance into another eligible retirement plan or IRA.
• Some 403(b) plans allow contributions to designated Roth accounts in the plan. These Roth contributions are after-tax, but qualifying distribution are tax-free.
• Funds in a designated Roth account in a 403(b) can be rolled to Roth IRAs or to another employer's designated Roth account if the plan will accept the rollover. Funds in a Roth IRA may not be rolled to a designated Roth account in an employer's plan.

If products from Ameriprise Financial and/or RiverSource Investments are available through your employer's 403(b) plans, contact your local Ameriprise financial advisor to find out how you can take advantage of our financial planning services.

SEP IRAs

A SEP (simplified employee pension) IRA plan is typically offered by employers with fewer than 50 employees and is funded by employer contributions. Some SEP plans, called salary reduction simplified employee pensions (SAR-SEPs²) do allow employee salary deferrals. You can also make traditional IRA contributions to a SEP IRA.

SIMPLE IRA

A SIMPLE IRA is a tax-deferred retirement plan available to self-employed individuals or small businesses (those with fewer than 100 employees) that have no other retirement plan. You and your employer can make contributions. Unlike a SEP IRA, Traditional IRA contributions are not allowed to be made to a SIMPLE IRA.

How do employer-based retirement plans work?

When employees contribute to a 401(k), 403(b), SEP IRA plan or SIMPLE IRA plan pre-tax, they can save on current taxes.

• Tax-deferred growth. Funds grow tax-deferred in these accounts until withdrawn.
• Largely self-directed. Each employee can generally select the investments within his or her plan. SEP and SIMPLE IRA provide more investment options than most other employer plans.
• Portable. Employees can generally take the funds from their plans with them when changing employers.

In-service distribution

Some employer plans may allow you to take a distribution or do a rollover while you are still working for the company. Typically you must be age 59 1/2 or older to take advantage of this. Your plan administrator can tell you if your plan has an in-service distribution option. SEP assets can be moved at any time. SIMPLE IRA assets can only be moved to a different plan type if it has been 2 years since you first contributed to the plan.

Leave it or roll it?

One of the biggest decisions to make about an employer-based plan is what to do with your savings after you leave your job. Have you saved money for retirement in a plan through your current employer? Or, do you still have money in a plan with a previous employer? If so, one option is to roll your savings into a Rollover IRA.

Find out whether a rollover might be a good option for you. Talk to an Ameriprise financial advisor near you.