From pretax contributions and a generous company match to Roth and after-tax options, the Lam 401(k) Plan can help you build the retirement savings you need to meet your goals.
Maximize Your Savings
Learn how to get the most from your money through the Lam 401(k) and other plans.
What You Need to Know
- You can grow your savings with free money from Lam. Lam Research contributes a match of up to 3% annually. The company will match half of the first 6% of your regular pay or bonus that you defer to the plan as pretax or Roth contributions.
- Take advantage of your annual bonus to save for your future. In addition to making 401(k) contributions through regular payroll deductions, you can, with a separate election, contribute from 1% to 75% of your annual bonus, including any advance bonus payment. Lam will match half of the first 6% of your bonus that you defer to the plan as pretax or Roth contributions. That can give your retirement savings a big boost!
- The bonus contribution percentage is calculated based on the gross amount of your bonus; however, Roth and after-tax contributions are deducted from your check after the bonus tax rate—which is higher than your regular tax rate—is applied. If your contribution election exceeds available pay, no deduction will be taken.
- For example, in California, the bonus tax rate is approximately 45%, so your maximum Roth or after-tax bonus contribution to your 401(k) cannot exceed approximately 55%. You may want to look at how your last bonus payment was taxed to estimate how much tax you can expect on future bonus payments.
- You choose how to invest your 401(k) balance. You have the flexibility to diversify your portfolio and select from investment options that range from more conservative to more aggressive, depending on your savings goals and risk tolerance.
- You can take your 401(k) with you. It’s portable. If you leave Lam Research, you can take your account balance with you.
- You can consolidate old 401(k) accounts. You can roll over any eligible savings from a previous employer into this plan to make managing your retirement savings a lot easier.
- You can make “catch-up” contributions. If you make the maximum contribution to your 401(k) and are age 50 or older during 2021, you can make additional “catch-up” contributions of up to $6,500.
- Fidelity Investments administers the Lam Research 401(k) Plan. You can stop or change your contributions or change beneficiaries at any time by contacting Fidelity through netbenefits.com or by calling 800-835-5095.
Understanding Your Options
The Lam Research 401(k) Plan offers you three ways to build your savings, allowing you to choose when and how to pay taxes on your contributions and earnings, depending on your individual financial needs.
1. Pretax contributions
Your contributions come out of your pay before taxes, so you have more take-home pay than you would if you saved the same amount on an after-tax basis. However, all pretax contributions and earnings are subject to income tax when you make a withdrawal in the future.
- This may be a good option if you expect to be in a lower tax bracket after you retire, or if you want to pay lower taxes now by reducing your current taxable income.
- Maximum annual contribution (combined with Roth contributions): For 2021, $19,500 if under age 50 or $26,000 for age 50 and over.
2. Roth contributions
Your contributions come out of your pay on an after-tax basis. You’ll have a little less in your paycheck than you would if you contributed the same amount on a pretax basis. Roth contributions offer the potential for tax-free income at retirement. You won’t pay taxes on the value of your contributions or any investment earnings, as long as it has been five years since your first Roth contribution and you are at least age 59½ or disabled.
- This may be a good option if you expect to be in a higher tax bracket in retirement, or if you are young and have more time to accumulate tax-free earnings.
- Maximum annual contribution (combined with pretax contributions): For 2021, $19,500 if under age 50 or $26,000 for age 50 and over.
3. After-tax contributions
Like with Roth contributions, you pay taxes up front at your current tax rate. But with after-tax contributions, when you withdraw money at retirement, you pay taxes on the value of any investment earnings on your contributions.
- This may be a good option if you’re already contributing the pretax/Roth maximum and want to have after-tax income you can count on in retirement.
- Maximum annual contribution: $28,500.
- To build more tax-free retirement income, you can convert your after-tax contributions to Roth through a Roth In-Plan Conversion.
The IRS sets limits on how much you can contribute to your 401(k) each year.
|Contribution Type||2021 Limit||2022 Limit|
|Overall||1%–75% of your pay||1%–75% of your pay|
|Pretax and/or Roth (combined)||$19,500||$20,500|
|Over age 50 catch-up:
Pretax and/or Roth (combined)
Choose your funds. Fidelity provides a number of investment funds so you can build a portfolio that meets your needs. If you’re not sure where to begin, consider the target-date funds. With a target-date fund, you select a fund named for a year close to when you expect to retire, and that fund’s mix of stocks, bonds, and other investments automatically becomes more conservative as the target year approaches.
Get professional help. Fidelity’s Personalized Planning & Advice service lets you delegate the day-to-day management of your 401(k) to professional investment managers. With a managed account, you can take advantage of Fidelity’s resources and experience to help ensure that:
- Your investments are managed through the ups and downs of the market.
- You’re keeping your accounts aligned with your goals through annual reviews and check-ins.
- Your account is actively managed to create an opportunity for long-term gains while managing the risk associated with investing.
Managed account fees are based on a percentage of your 401(k) account balance.
Do it yourself. Through Fidelity’s BrokerageLink, you can invest in an expanded range of investments beyond those in your plan’s standard lineup. You pay all of the associated costs and bear the risks related to making your own investment decisions.
To review your investment options and determine which approach is right for you, visit netbenefits.com or call 866-811-6041.