401(k)

Overview

401(k) plans are defined contribution plans and are the most common plans offered by employers today. 

• Employees defer a percentage of their pre-tax compensation for retirement. 
• Employers can match some, or all, of the contributions made by employees.
• Earnings grow on a tax-deferred basis until withdrawn.

The employee's ultimate retirement benefit is determined by the total contributions plus the results of the investment performance.

Features and Benefits

• Employees may contribute a portion of their current compensation up to a maximum annual deferral rate (subject to legislated increases).
• Employee contributions are made with pre-tax dollars.
• The employer can match employee deferrals but is not required to contribute. 
• For tax purposes, the employer can deduct both the employee deferrals and employer matching amounts.
• The IRS sets limits on the total amount that can be contributed to a 401(k) plan each year.
• Employers can give employees the option to direct plan contributions to several investment fund choices.
• In-service and hardship withdrawals are permitted at the employer's discretion, subject to IRS penalties, where applicable.
• By law, any employee at least 21 years old with 1,000 hours of service per year must be eligible.

HSBC Services

• Full spectrum of investment choices from nationally recognized fund families.
• Trustee and custodial services.
• Administrative services.
• Participant recordkeeping.
• Employee education and enrollment support.
• Plan compliance monitoring and government reporting

To find out more about the options available to you and your business, contact one of our Retirement Services specialists.