401k for Nonprofit Retirement Plan
Tax-exempt nonprofit organizations in Massachusetts have the ability to choose the Massachusetts Defined Contribution CORE Plan as their nonprofit retirement plan.
The Massachusetts Defined Contribution CORE Plan (CORE Plan) is a powerful tool to help your employees reach their retirement goals. Through the CORE Plan, employees can save for their future retirement needs in a convenient, uncomplicated and tax-advantageous way.
A Retirement Plan for Nonprofit Organizations
What is the CORE Plan?
The CORE Plan is a 401(k) retirement planning solution that leverages the knowledge and best practices used today in many large retirement plans while striving to keep costs low for employers and employees.
What is a 401(k)?
A 401(k) plan is a defined contribution program established and offered by many employers. It provides employees with the opportunity to save, invest and potentially grow money for retirement. Participating individuals can defer a specific percentage of their paychecks into their account.
What are the retirement plan advantages of before-tax savings?
With before-tax savings, your employees pay no income taxes on any contributions or any earnings until they withdraw the money. This leads to the benefit of compounding — that is to say, potentially generating returns on money that they would pay in taxes if those taxes were not deferred. Any earnings are reinvested in the employees' account, where they have the potential for continued growth because they are not reduced by taxes each year.
What are the retirement plan advantages of Roth 401(k) savings?
The Roth 401(k) option may allow employees to make after-tax contributions to their retirement savings plan now and enjoy tax-free withdrawals later.
- It essentially "locks" in today's tax rate on all contributions.
- If an employee expects to be in a higher tax bracket when they retire, the Roth option allows them to pay taxes on their contributions when they are contributed (presumably at a lower tax rate than they would expect to pay at retirement).
- Distributions are withdrawn on a tax-free basis as long as the employee began Roth contributions at least five years prior and they have reached age 59½, or they were made a beneficiary on or after the death of the participant, or because they have a qualifying disability.
How do I enroll in in the CORE Plan?
If you are not currently a participating employer, please complete the form on this website to learn more about how to enroll your organization in the CORE plan.
How do my employees enroll in in the CORE Plan?
All common-law employees of a participating employer are eligible to participate in the CORE Plan. Unless they elect otherwise, they will be automatically enrolled in the Plan no sooner than 60 days after receiving the CORE Plan's auto-enrollment notice. Specifically, they will be automatically enrolled to defer 6% of their pay on a pretax basis into the CORE Plan, with annual increases of 1% or 2% (based on the election you choose) up to a maximum contribution rate of 15%. Employees can increase or decrease their savings rate at any time. They do not need to wait 60 days and can activate their CORE Plan account as soon as they receive their enrollment notification letter.
What are the CORE Plan contribution limits?
In 2023, the maximum total contribution into either a before-tax or Roth account (or a combination of both) is 90% of a person's gross income (for federal income tax purposes) or $22,500, whichever is less.
Also, if an employee is age 50 or older in 2023, they may contribute an additional $7,500.
Can employees rollover their other retirement plans into the CORE Plan account?
Yes, rollovers from a 401(k), 401(a) or 403(b) plan; an eligible governmental 457(b) plan; or a Traditional IRA may be rolled over to the CORE Plan.
Governmental 457 funds rolled into another type of plan or account may become subject to the 10% early withdrawal penalty if taken before age 59½.
Employees should consider all their options and the different features and fees before moving money between accounts.
What's Next?
Retirement plan services you can count on! CORE Plan participants can access account information 24 hours a day, seven days a week via the website or by phone. The CORE Plan's approach to service is based on convenience — service is a call or click away.