Your 401(k) Quick tips

Transcription

1 Your 401(k) Quick tips The 401(k) plan offers you an easy way to prepare for retirement, and provides great benefits that help you boost your savings, including: Company matching contribution of up to 5% 2%-3% automatic annual company contributions Convenient payroll deductions A broad range of investment options Tax-advantaged savings Take a few minutes to learn how the plan works to be sure you re taking full advantage of all the benefits available to you. Your financial wellness. Beyond the 401(k) plan, you have access to a wealth of financial resources and guidance to help you achieve your goals at each stage of life. See page 6 for an overview of these services. This guide provides an educational summary of the 401(k) plan. It is not meant to provide full details of the plan provisions. For additional information, see the Investment Guide and Summary Plan Description. The information in this guide applies to both The Bank of America 401(k) Plan and The Merrill Lynch & Co., Inc. 401(k) Savings & Investment Plan. 1

2 Tax advantages You can choose pre-tax contributions, Roth (after-tax) contributions or both. Each type of contribution has certain tax advantages: Pre-tax contributions Your 401(k) savings are deducted from your pay before federal and, in most cases, state taxes are applied, reducing your tax bill for the current year. Roth contributions Because these are after-tax contributions, you don t save on taxes in the year you make contributions. But your contributions and investment earnings could be tax-free when you withdraw money from your account in retirement, if you meet certain criteria. Flexible savings You decide how much to contribute to the plan each pay period. You can contribute up to the following amounts: Plan limit Up to 75% of your eligible pay* Current IRS limit $18,000 If you re age 50 or over You can contribute a higher amount (currently up to $24,000) to help make up for years that you might not have saved as much. Automatic increases Give your saving a regular boost by increasing your contributions automatically. You can choose to increase your contribution rate by 1%, 2% or 3% every 1, 2 or 3 years. * Eligible pay includes base pay, overtime, shift differential, vacation and holiday pay, short-term disability benefits, and any bonus, commission, or incentive you receive. (It does not include any stock-based compensation or deferrals to the nonqualified 401(k) plan.) 2 For more details about the plan, see the Investment Guide and Summary Plan Description.

3 Employer contributions After you complete a full year of service, we boost your retirement savings with company matching contributions and the annual company contribution. Company matching contributions These are dollar-for-dollar matching contributions of up to 5% of your eligible pay*. Matching contributions are credited to your account each pay period that you contribute. Annual company contributions At the beginning of each year, you also get an automatic contribution of 2% of your eligible pay* (3% if you have at least 10 years of vesting service). Janice s eligible pay: $50, (k) contribution: 5% each pay 401(k) periodcontribution: 5% each pay period Company match: 5% each pay Company period match: Annual company 5% each pay period contribution: 2% Company contribution: 2% annually It really adds up These employer contributions could really make a big difference over time. Janice contributes 5%, or about $100 every two weeks. When you factor in employer contributions, it starts to add up. After 10 years, her total contribution of $25,000 could become as much as $79,000 with earnings. The story could get even better after 20 and 30 years. $500,000 $400,000 $300,000 $200,000 $100,000 * The maximum amount of eligible pay that will be considered for when calculating your matching contributions and annual company contributions is $250,000 if you were hired prior to July 1, 2012; for all other employees the limit is $150,000. Years: Assumes a 6% rate of return compounded annually. This example is for illustrative purposes only. Results are not guaranteed. For more details about the plan, see the Investment Guide and Summary Plan Description. 3

4 Three ways to invest The 401(k) plan offers three investment approaches and a variety of investment choices. Make sure to review your options to determine the best fit for you. Invest for me Give me help Do it yourself Access to your savings You can withdraw all or part of your vested account balance after age 59½. If you need to access your savings sooner, the following options are also available: LifePath Fund Use a professionally managed, diversified LifePath Fund that automatically adjusts to a more conservative mix of investments over time. Simply choose the fund that corresponds to the year you plan to retire. For additional information on LifePath funds and Advice Access, see page 7 of this guide. Advice Access Get personalized recommendations to guide your investments with these three options. PersonalManager monitors and adjusts your account regularly. Portfolio Rebalancing maintains your investment mix until you make a change. One-Time Implementation puts the recommendations to work for you. Build your portfolio Select from among the available investment choices, including fixed income, equity and specialty investments. You will need to monitor your investments over time and make any necessary adjustments. Loans: You can borrow up to $50,000 of your account balance, and repay the amount over time through after-tax payroll deductions with interest. Hardship withdrawals: If you need money to pay for certain unexpected or major expenses like unpaid medical bills, college tuition, funeral expenses or to prevent foreclosure, you may be able to access a portion of your account to help meet those financial needs. Before you take a loan or withdrawal, it s important to consider the advantages and disadvantages of each one. 4 For more details about the plan, see the Investment Guide and Summary Plan Description.

5 About Benefits OnLine Option 1: Express enrollment Online enrollment Go to Benefits OnLine ( and set up a user name and password. Choose Enroll Now to get started. Express Enrollment makes enrolling in the plan fast and easy by limiting your decisions: Choose 3%, 5%, 10% or another amount up to plan and IRS limits. Consider automatic contribution increases of 1% annually. Confirm the LifePath Fund that corresponds to the year you plan to retire. Option 2: Full enrollment You can choose from the full range of options offered by the plan: Select pre-tax and/or Roth contributions, up to plan and IRS limits. Set automatic increases of 1%, 2% or 3% every 1, 2, or 3 years. Choose your investments. Questions If you have any questions about enrolling in the 401(k) plan, contact: Employee Retirement Savings Center a.m. to 8 p.m. Eastern Monday-Friday, except certain holidays Enjoy easy access to your 401(k) when it s convenient to you. At Benefits OnLine you can: Keep track of your account balance and investments. Change your contribution rate and how your account is invested. Get personalized contribution and investment recommendations from Advice Access. Choose paperless delivery for your plan communications. Learn about investing and planning for retirement. Consolidate your balances Make it easier to keep track of your savings from a prior 401(k) plan. You can roll over to the 401(k) plan or to an IRA if eligible. Consider all of your choices*, including a Merrill Edge Rollover IRA. Learn more: * You have choices for what to do with your 401(k) or other type of plan-sponsored accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over a 401(k) from a prior employer to a 401(k) at your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care. For more details about the plan, see the Investment Guide and Summary Plan Description. 5

6 Help is available We ve provided access to resources and support to help you make decisions about your retirement savings. One-to-one guidance Education Bank of America Banking Bank of America Borrowing Investing bettermoneyhabits.com Benefits Education & Planning Center (BEPC) Speak by telephone to a licensed EY counselor to help you build a plan to achieve your goals. Available at no cost Merrill Edge Advisory Center TM Merrill Edge Financial Solutions Advisors streamline investing by working with you one-on-one so you can make more informed investment decisions. Better Money Habits TM Build your financial know-how with tools and information to help you make more confident decisions. Learn about budgeting, credit, debt, home buying and more. Bank of America partnered with not-for-profit Khan Academy to build this free resource. Preferred Rewards Get more rewards with your everyday banking TM. Bank of America Interest Checking Get the optimal checking account setup, including an interestbearing account and tools to help you manage your money. Savings, CDs and IRAs Put your money to work in a time frame that works for you. Credit Cards Employee pricing on select BankAmericard credit cards. Auto Loans Enjoy discounted rates when purchasing a new or used car, refinancing a car or buying out a lease Mortgage and Home Equity Line of Credit Find a loan that s right for you. Merrill Edge Easy-to-use tools and resources to help you make more informed investment decisions. Merrill Lynch Wealth Management Get investing services and guidance from a local, dedicated Merrill Lynch Financial Advisor. Appropriate for those with $250,000 or more to invest. Merrill Lynch Financial Advisors For those with more complex needs, a Merrill Lynch Financial Advisor will design a customized plan and optimize your portfolio to help you reach your financial goals. 6 Investment products: Are not FDIC insured Not Bank Guaranteed May Lose Value

7 Disclosures LifePath Funds. The retirement date for the LifePath Funds is the approximate date when an investor plans to start withdrawing the assets from their retirement account. The principal value of these funds is not guaranteed at any time, including at the target date. These funds are designed to become more conservative over time as the target date approaches. The hypothetical illustration on page 3 assumes a salary of $50,000, a 5% pre-tax contribution rate (a $96.15 contribution at the end of every two weeks) and a 6% rate of return compounded annually. It also assumes a company match of 100% for every dollar contributed up to 5% of eligible pay, and an annual contribution of 2% of eligible pay. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost. Taxes are due upon withdrawal. If you take a withdrawal prior to age 59, you may also be subject to a 10% additional tax. The Advice Access service uses a probabilistic approach to determine the likelihood that you may be able to achieve your stated goal and/or to identify a potential wealth outcome that could be realized. Additionally, the recommendations provided by Advice Access may include a higher level of investment risk than you may be personally comfortable with. You are strongly advised to consider your personal goals, overall risk tolerance, and retirement horizon before accepting any recommendations made by Advice Access. You should carefully review the explanation of the methodology used, including key assumptions and limitations, which is provided in the Advice Access disclosure statement. It can be obtained through Benefits OnLine or through a participant service representative. IMPORTANT: The projections or other information shown in the Advice Access service regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Banking, mortgage, home equity products offered by Bank of America, N.A., and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Equal Housing Lender. Credit and collateral subject to approval. Terms and conditions apply. Not a commitment to lend. Programs, rates, terms, conditions subject to change without notice. The employee auto loan discount can be combined with the Preferred Rewards auto loan interest rate discount up to a maximum of 0.50%. To receive this discount, you must be enrolled in Preferred Rewards at the time of the auto loan application and identify yourself as an employee on the loan application. This discount is not reflected in the published rates on our website but will be reflected in the interest rate quoted upon loan approval. Employee discount is 0.25% and is subject to change without notice. No prepayment penalty, except in Ohio. Standard underwriting guidelines and credit policies apply. Employee pricing is only available to active employees and retirees. For more information, see Employee and Retiree Offers document on Flagscape > Employee Banking & Investments. Employee Banking & Investments is offered through Bank of America, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered broker-dealer and Member SIPC. Merrill Edge, available through Merrill Lynch, Pierce, Fenner & Smith Incorporated, consists of Merrill Edge Advisory Center (investment guidance) or self-directed online investing. Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith, Incorporated and other subsidiaries of Bank of America Corporation. Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any decisions. Ernst & Young and Khan Academy are not affiliated with Bank of America Corporation. Bank of America Preferred Rewards are trademarks and Merrill Edge, Merrill Lynch, We re better when we re connected, BankAmericard, Bank of America and the Bank of America logo are registered trademarks of Bank of America Corporation. This communication provides information about certain Bank of America benefits. Receipt of this document does not automatically entitle you to benefits offered by Bank of America. Every effort has been made to ensure the accuracy of this communication. However, if there are discrepancies between this communication and the official plan documents, the plan documents will always govern. Bank of America retains the discretion to interpret the terms or language used in any of its communications according to the provision contained in the plan documents. Bank of America also reserves the right to amend or terminate any benefit plan in its sole discretion at any time for any reason Bank of America. All rights reserved. ARQ4QG9F NHPrimer 07/2015 7