In 2018, you will see a change in the 401(k) plan as Pearson will provide you with the opportunity to enjoy additional company matching funds.
The new enhanced employer match will replace the discretionary, annual company contribution typically paid each spring. Currently, the plan offers a match on the first 6% of compensation that you contribute on a pre-tax basis. Beginning in 2018, you will have the opportunity to receive an additional 1% in employer match if you contribute up to 8%, which is the current average across the company.
The following is a side-by-side comparison of the current and new matching opportunities:
|If you contribute…||The company contributes…|
|1, 2, or 3%||1, 2 or 3%, respectively|
Although Pearson will discontinue the discretionary, annual company contribution that is typically paid in the spring, through the increased company match, you will be able to realize the benefits of increased pre-tax savings immediately without waiting until the spring. In other words, you can put more money to work (based on your investment strategy) in real time.
So, mark your calendars to increase your payroll contributions to your 401(k) in January of 2018. Get the earliest start possible on enjoying the additional matching funds.
Each year around this time brings news from the Internal Revenue Service about certain limits related to your 401(k) plan. Here’s what you need to know for 2018:
- In 2018, there is a change in the limit on pre-tax deferrals, the amount you can contribute from your own salary. It is $18,500.
- The amount of catch-up contributions you can make in 2018 if you are age 50 or older is $6,000, which is the same as last year.
- This year the maximum compensation taken into account for purposes of employee pre-tax deferrals and the employer match is $275,000, an increase of $5,000 from the previous year.