Retirement Savings Plan: Principal

 

Did you know that Second Harvest offers both a Traditional and Roth 401(k) plan to all employees starting on their first day of employment? Second Harvest also matches up to 4% beginning on your one-year anniversary. 

 

Your 401(k) is not tied to open enrollment, so you can login to your account at any time on www.principal.com to view or make changes to your contributions. Their website also has tools to assist with financial wellness, including helping you plan your retirement and creating a budget. 

 

First-time Users

If you have not already set up your account, at the login page select “New User: Create an Account.” Then select “Individual User.” Once you populate your personal information, you will be able to see the contributions you’ve made to date, change your contributions.

 

Traditional 401(k)

With a traditional 401(k), employee contributions are deducted from gross income. This means the money comes from your paycheck before income taxes have been deducted. As a result, your taxable income is reduced by the total amount of contributions for the year and can be reported as a tax deduction for that tax year. No taxes are due on either the money contributed or the investment earnings until you withdraw the money, usually in retirement.

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Roth 401(k)

With a Roth 401(k), contributions are deducted from your after-tax income. This means contributions come from your pay after income taxes have been deducted. As a result, there is no tax deduction in the year of the contribution. When you withdraw the money during retirement, though, you don't have to pay any additional taxes on your contribution or on the investment earnings.

 

Note: Even though contributions to a Roth 401(k) are made with after-tax money, generally, if withdrawals are made prior to the age of 59 1/2, it could trigger tax consequences. Always check with an accountant, or qualified financial advisor prior to withdrawing money from either a Roth or Traditional 401(k).

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