A Guide to Roth 401(k) Contributions

The Lubrizol Corporation Employees' Profit Sharing and Savings Plan

A Guide to Roth 401(k) Contributions

How they work side-by-side with regular 401(k) contributions to help you reach your goals.

Take Control of Your Wealth

You can make Roth 401(k) after-tax contributions to The Lubrizol Corporation Employees' Profit Sharing and Savings Plan

Is this the right direction for you?

Roth 401(k) contributions offer additional flexibility to customize your long-term investment strategy based on your individual preferences and tax situation. You can use this guide to decide whether Roth 401(k) contributions are the right choice to help you move steadily toward your long-term goals.

How do Roth 401(k) contributions differ from regular pre-tax 401(k) contributions? With 401(k) pre-tax contributions, your money goes into your account before that money is taxed, and it grows tax-deferred. This means you do not pay taxes on your pre-tax contributions and their earnings until they are withdrawn. At that time, you pay taxes on them just as you would with any other form of income. With Roth 401(k) contributions, you put in money after it is taxed. As long as you keep that money in your account for at least five years and don't withdraw it before age 59? (or upon death or disability), you won't pay any more taxes on those contributions or earnings. As a result, Roth 401(k) contributions allow you to build a nest egg of tax-free retirement income.

How much can I contribute? Roth 401(k) contributions can either replace or complement your regular pre-tax contributions, subject to Plan and IRS limits. In 2014, employees under age 50 can contribute a total of $17,500. For example, if you make $11,000 in pre-tax 401(k) contributions, you can also make up to $6,500 in Roth after-tax contributions. Employees age 50 and over can add $5,500 more in catch-up contributions (pre-tax or Roth), for a combined total of $23,000.

Once contributions are made to a Roth 401(k) account, can they be shifted over to a pre-tax account? No. You cannot move money between your accounts.

Into what fund options can I invest my Roth 401(k) contributions? Whether you make pre-tax or Roth 401(k) contributions, your core investment options under the Plan are the same.

Can I direct the investment of my Roth 401(k) contributions differently than my other contributions? No. All Plan contributions are directed according to the same investment election you have made for your pre-tax contributions.

Will Roth contributions affect any company matching contributions I may be eligible for? Both pre-tax and Roth 401(k) contributions are match eligible. Any matching contributions and associated investment earnings will continue to be tax-deferred. This means that the tax-free benefits of a Roth distribution will not apply to any company matching contributions and associated earnings.

How long will I be able to make Roth 401(k) contributions? You may make Roth 401(k) contributions to the Plan as long as you remain an active U.S. employee of Lubrizol Corporation. Since tax considerations can be complex, it's always a good idea to consult with an independent qualified tax advisor before making a decision.

Comparing Contribution Options: Two Routes to Long-term Security You can contribute to the The Lubrizol Corporation Employees' Profit Sharing and Savings Plan using any combination of pre-tax and/or Roth 401(k) contributions.

Here's a look at the benefits and restrictions of each contribution type.

For more information or to access your account, use the Participant website or Information Line

Participant website Information Line 1-866-LZs-401k (1-866-597-4015)

If you need assistance, Customer Service Associates are available weekdays from 8:00 a.m. to 8:00 p.m. ET except on days the New York Stock Exchange is closed.

Contribution Type Contribution tax treatment

Contribution limits1

Employer match

Pre-tax

Roth 401(k)

Contributions reduce taxable income dollar-for-dollar, which may lower the taxes you pay today

No current tax savings; contributions are made when taxes are paid

Not more than IRS limit of $17,500 ($23,000 for age 50 and over), including Roth 401(k) contributions

Not more than IRS limit of $17,500 ($23,000 for age 50 and over), including pre-tax contributions

Pre-tax and Roth 401(k) contributions are match eligible.

Loans permitted

Yes

Yes

Withdrawal tax treatment

Contributions and investment earnings are taxed as ordinary income

Contributions and investment earnings may be withdrawn tax-free for qualified withdrawals

Qualified withdrawal requirements

Age 59? or older (or upon your death or disability) for contributions and investment earnings

Age 59? or older (or upon your death or disability) plus Roth 401(k) contributions must remain invested for at least a 5-taxable-year period, beginning with the year of your first Roth 401(k) contribution

Early withdrawal penalties

10% early withdrawal penalty plus ordinary income taxes on contributions and earnings

10% early withdrawal penalty plus ordinary income taxes on investment earnings only

Age 70? distributions

Regardless of contribution source, you are required to take distributions upon reaching age 70?, unless you choose to roll over your balance2

Rollovers permitted with To an IRA or other employer

no taxes due

qualified retirement plan 3

To a Roth IRA or other employer qualified retirement plan 3, so long as that plan accepts Roth 401(k) balances

Advantages

? Reduce current income taxes

?Allows taxes on qualified withdrawals to be deferred until retirement

? No taxes on qualified withdrawals

?Allows for rollover to a Roth IRA where minimum distributions are not required in your lifetime

1.Contribution limits apply to combined total of all contribution types; IRS limits reflect the 2014 limits and are subject to change annually.

2.There are no minimum required distributions for Roth money that is rolled over to a Roth IRA.

3.Rollovers to qualified retirement plans are subject to the rules and restrictions of the receiving plan. The Lubrizol Corporation Employees' Profit Sharing and Savings Plan does not accept rollovers of Roth Contributions from other qualified plans.

LZ_RothGuide_0114 ? 2014 ING North America Insurance Corporation. All Rights Reserved

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download