401(k) Savings Plan
At State Farm, we know its never too early to begin thinking about retirement and recognize the importance of planning for life after work. Your Total Rewards retirement package is made up of two distinct plans: the defined benefit pension plan and the defined contribution 401(k) savings plan. While many companies are moving away from providing traditional pension plans, State Farm continues to offer both a pension plan and a 401(k) plan to assist its employees in planning and saving for retirement. While the pension plan is offered at no cost to you, the 401(k) plan represents your opportunity to save additional funds for retirement.
Most full and part-time employees, age 18 or older, are eligible to participate in the 401(k) plan on their date of hire. Eligible employees are 100% vested in their account, which means the account cannot be forfeited or reduced (other than with respect to market fluctuations).
New employees are automatically enrolled in the 401(k) plan. The default is a before-tax contribution rate of 3% of your gross bi-weekly income amount and includes an automatic increase of 1% each year (up to a maximum limit of 10%) generally corresponding with your annual merit increase timing. The default investment fund is the Target Date investment option based on the year you will attain age 65. New hires may opt out of automatic enrollment within 30 days of their hire date. They may also change their contribution levels and/or investment options at any time.
If you want to take a more active role in your 401(k) planning, you can choose your own contribution rate based on either a dollar amount (e.g., $50 per pay period), or a whole percentage of pay (e.g., 3% of pay). These contributions can be made with before-tax dollars, after-tax dollars through the Roth 401(k) contribution option, or a combination of before-tax and Roth 401(k) contributions. Should you elect to contribute a percentage of pay, the percentage you elect will apply to all pay, including overtime, performance awards, and bonus payments. These contributions will be taken out of your paycheck every pay period. The maximum dollar amount you will be allowed to contribute to the plan each year is set by the Internal Revenue Service (IRS).
IRS 2015 maximum contribution limits are:
Note: All of your contributions to the 401(k) Savings Plan count towards the limit set by the IRS.
Your 401(k) plan also includes an optional, automatic contribution increase feature which allows you to increase your contribution amount annually without taking any additional action.
In addition to the money you contribute to your 401(k), State Farm assists you in saving for retirement by contributing a $300 Non-Elective Contribution (NEC) annually into the account of each eligible employee. In addition, if State Farm realizes a sufficient consolidated profit for the year, the Company will match employee contributions to their 401(k) accounts on a dollar-for-dollar basis up to $900.
For added flexibility, several investment options are available for you to choose from. You have the ability to allocate your contributions among:
The State Farm 401(k) Savings Plan accepts rollover contributions to the plan as well. If you previously participated in another employers qualified retirement plan or a traditional Individual Retirement Account (IRA), you may be able to move some, or all, of your money from your previous plan into your State Farm 401(k) Savings Plan account. You have the ability to choose how best to invest your rollover contributions within the plans available investment options.
While the primary purpose of the plan is to save for retirement, you also have the ability to take a loan against your account balance should you need to.
The 401(k) plan is just one of the many rewards available to employees here at State Farm. You can learn more about your retirement package and other financial benefits offered by watching Charting your Financial Future financial education workshops while employed with State Farm.
Disclaimer: This brief overview of the State Farm 401(k) Savings Plan is not intended to be a complete explanation of plan features. For more detailed information, please refer to the Summary Plan Description found within the online Human Resources Policy Manual for U.S. employees.