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Employer Sponsored Plans

Your workplace plan (401(k), 403(b), SIMPLE, SEP, cash balance) is a powerful tool—but only when coordinated with taxes, outside accounts, and future withdrawal strategy. This page gives a concise framework. The real value comes from a tailored discussion.

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What Is an Employer-Sponsored Retirement Plan?

A tax-advantaged account offered through your employer to accumulate and invest for retirement—often with payroll deferrals, potential employer match, and tax deferral (pre‑tax) or tax‑free growth (Roth) depending on the option.

Why These Plans Matter

  • Automated saving discipline
  • Possible “free money” via match / profit share
  • Tax bracket management (pre‑tax vs. Roth mix)
  • Creditor and ERISA protections (in many cases)
  • Platform for structured long-term allocation

Tax Strategy Alignment Coordinating plan deferrals with HSAs, IRAs, Roth conversions, and taxable accounts can help smooth lifetime effective tax rates—NOT just optimize the current year.

Core Plan Types (High-Level)

  • 401(k): Standard corporate plan; may include Roth, after‑tax, profit share, in‑plan conversion options.
  • 403(b): Similar to 401(k), often for non-profits/education; investment choices can vary.
  • SIMPLE IRA / SEP IRA: Streamlined employer options for small businesses; different contribution rules.
  • Cash Balance / Pension Hybrid: Employer-funded “defined benefit feel” with lump-sum portability at separation.

Asset Location & Integration Equities vs. fixed income placement, Roth vs. pre‑tax growth emphasis, and aligning rebalancing triggers across accounts helps to reduce drift and tax drag over decades.

Contribution Buckets

  • Pre‑Tax: Lowers current taxable income; future withdrawals taxed.
  • Roth: No current deduction; qualified withdrawals tax‑free.
  • Match / Employer Money: Usually pre‑tax; vesting schedules may apply.
  • After‑Tax (if available): Enables potential mega backdoor Roth strategy (plan dependent).

Portability & Career Changes Upon separation you may (a) leave assets in plan, (b) roll to new employer plan, (c) roll to IRA, (d) partial strategies. Each affects fees, investment menu quality, backdoor Roth viability, and creditor protection.

Common Pitfalls

  • Blindly “maxing” without multi-account tax planning
  • Overconcentrated company stock / RSUs inside and outside plan
  • Ignoring vesting cliffs or forfeiture risks
  • Underutilizing Roth or after‑tax buckets when future brackets likely rise
  • Taking a loan prior to potential job transition

Plan Loans & Access Loans can offer liquidity—but introduce job separation risk, opportunity cost, and repayment friction. Evaluate alternatives before borrowing.

Key Decisions We Help You Model

  • Pre‑tax vs. Roth deferral mix
  • Whether to use after‑tax contributions (if plan allows)
  • Optimal rollover timing vs. keeping assets in-plan
  • Asset allocation / rebalancing guardrails
  • Coordinating with outside IRAs, brokerage, HSA
  • Roth conversion windows (gap years / early retirement)
  • Loan vs. alternative liquidity strategies

Things to Consider

  • Should I contribute more than the company match—or route excess to Roth IRA, HSA, or taxable?
  • What is my long-term tax strategy (future bracket, Roth mix, conversion windows)?
  • If I leave my employer, is a rollover to new plan, IRA, staying put, or partial split best?
  • How should my employer plan and IRAs work together (asset location, sequencing)?
  • Should I take a plan loan—or are cheaper/more flexible alternatives available?
  • If I take a plan loan, how is it treated for tax—what creates a deemed distribution?
  • If I take a loan, what are the repayment rules—and what if I separate before paying it back?