This Week's Hotel Voice

Members Can Enroll in 401 (k) Plan from November 28 Until December 16

Hotel Voice - November 21, 2016 Share/Save/Bookmark

One of the two annual enrollment periods for the Union's 401 (k) program is taking place between Monday, November 28 and Friday, December 16, and members looking for a more secure retirement are urged to consider joining this benefit. As of this quarter, there were already more than 13,000 members participating in the 401 (k) plan benefit with a total of over $413 million invested.

As we have reported often in the past, the 401 (k) plan and home ownership are two of the very few investment tax shelters available to working families. In fact, many financial advisors consider a 401 (k) account it to be one of the smartest investments workers can make.

If you don't know much about this tax shelter, there is plenty of information available to help you decide if they would like to participate in the 401 (k) plan. To assist members who are thinking about enrolling in the program, the Benefit Funds Office will be conducting meetings in the Union’s auditorium and in many of the hotels. At these meetings members can learn more about this excellent benefit, receive enrollment forms, and submit enrollment forms. The meetings that are scheduled for the Gertrude Lane Auditorium (305 West 44th Street) will take place on Friday, December 9, from 7:30 a.m. through 7:00 p.m., and Friday, December 16, from 7:30 a.m. through 5:00 p.m. Members may come to the auditorium any time between the listed hours on those dates. Bilingual people will be conducting the meetings. Members from any eligible shop can also come to the Funds Office at 305 West 44th Street any weekday between November 28 and December 16 to enroll for the January 1, 2017 start date.

Why are 401 (k) accounts such good investments for workers? Well, for starters, they are one of the few investments with a guaranteed high earnings the first year. We can say that because contributions to 401 (k) accounts are not subject to any federal or state income taxes. Contributions from participating members are deducted from paychecks (without taxes) and directly deposited into 401 (k) accounts. For many workers, that income would be subjected to up to 33% combined federal and state income tax. But it is tax free when deposited in a 401 (k) account,

That’s not all. The money in 401 (k) accounts is allowed to grow without being taxed! Money in 401 (k) accounts is only taxed when it is withdrawn.

You can learn information like this by attending one of the enrollment meetings in your hotel or those scheduled for the Union’s auditorium on December 9 or December 16. If you attend one of these meetings, you will also be given descriptions of the various funds available to invest in through the program, including a thorough explanation of risks and returns.

We would also like to remind members that to enroll in the 401 (k) benefit you must have all your beneficiary information readily available to complete the forms of enrollment. No enrollments can be accepted without information like your beneficiaries’ names, addresses, Social Security Numbers and dates of birth. Married members must have their spouses sign and notarize the beneficiary designation form if the money in their 401(k) plan is to be left to someone other than their spouses or even if any portion of the money is to be left to someone else. Obviously, the purpose of this is to ensure that any money in your 401(k) account is left to the person(s) you designate in the event of your death.

There are some other important things you should know about the 401 k) program. For example, if you change employment you are usually permitted to roll over your 401(k) account to an IRA (individual retirement account) or to your new employer’s 401 (k) plan. In either case, you will not suffer a tax penalty. And, yes, just like our Union’s pension benefit, the 401 (k) plan is portable. That means that if you change employment from one Hotel Trades Council shop to another you will be able to continue your 401 (k) plan without penalty.

You should also know that since 401 (k) plans are tax shelters designed to help fund your retirement, there are usually tax consequences if you withdraw your money earlier than age 59½. Moreover, money withdrawn before age 55 will usually result in a 10% tax penalty. There are some exceptions to these rules.

Finally, it is difficult if not impossible to find an investment that guarantees working Americans the income tax savings that a 401 (k) plan can. So if you would like to enroll in the 401(k) benefit in time for the next start date (January 1, 2017), please remember that you must do so between November 28 and December 16.