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October 7, 2022

Open Enrollment Season: Employer-Sponsored Retirement & Savings Plans

Financial Planning Committee

It is that time of year again – the leaves are starting to fall, the air is getting cooler, and open enrollment season is upon us for the new year. Your open enrollment period is a good time to review your annual benefits and employer retirement plans in order to make sure you are maximizing the benefits received through your employer.

There are many types of employer-sponsored plans that assist employees in achieving retirement savings goals. Common employer offered retirement plans include Traditional and Roth 401(k), 403(b), and 457(b) plans in addition to Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), cash balance plans, and employer stock purchase plans. Your enrollment period is a great opportunity to review the plan options and make any changes to maximize your benefits.

If your employer offers matching contributions, be sure to contribute the amount that would allow you to receive the full match (typically a percentage) and check maximum contribution amounts, as these typically change each year. You may need to adjust the percentage you are contributing to each plan for the new tax year to ensure you are making the maximum contribution amount.

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While reviewing your employer-sponsored plans, it is also important to review the benefits of contributing to a Roth 401(k) (if offered). By contributing to a Roth 401(k), you can create a pool of tax-free assets that will not only grow tax-free, but also be free of tax upon distribution in retirement. However, you do not receive the pre-tax savings benefit you would receive today if you contributed to a Traditional 401(k).

Now is also a good time to review the investment options that your employer-sponsored plan offers and confirm your current allocation is still appropriate to reach your financial goals. If your plan changed custodians this year, you should review the plan details to understand all options that are available to you on the new platform.

If you elected to enroll in a high-deductible health plan for the year, you may be eligible to contribute to a Health Savings Account. If offered, this is one of your best savings vehicles for health expenses both today and in the future. The contributions to HSAs are pre-tax and can be tax-free upon withdrawal if used for qualified health expenses for your family. Another benefit of an HSA is that funds carry over from year-to-year, in other words you do not lose any unused funds in the account at the end of the year.

Lastly, open enrollment is a good time to think about how your family has changed over the past year or if you anticipate any changes in the coming year. When doing so, you should confirm your life insurance coverage, beneficiary designations, and health care coverage are still appropriate.

Should you have any questions about how to optimize your employee benefit elections, please contact your JNBA Advisory Team.

JNBA is neither an insurance agent nor an accountant and no portion of the above should be construed as insurance or accounting advice. All insurance and accounting issues should be addressed with the insurance and accounting professional of your choosing. JNBA nor its employees sell insurance products.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.

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