A Complete Guide to 401(k) for Multiplier Employees

A 401(k) is a U.S. employer-sponsored retirement savings plan that helps employees save for retirement while offering tax advantages. Contributions can be made either before or after taxes, depending on the type of plan selected.

Types of 401(k) plans

Plan Type

When You Pay Taxes

Tax Treatment at Withdrawal

Traditional 401(k)

Contributions are made pre-tax, lowering your taxable income now.

Withdrawals during retirement are taxed as ordinary income.

Roth 401(k)

Contributions are made after-tax.

Qualified withdrawals are tax-free in retirement.

Plan administration and enrollment

  • Provider - Multiplier partners with Betterment to administer 401(k) plans.

  • Automatic Enrollment - Eligible employees are automatically enrolled when added to Multiplier’s payroll.

  • Default Contribution - 3% of your salary (modifiable anytime via Betterment’s portal).

Contribution details

  • Annual Contribution Limit (2024)

  1. Up to $23,500

  2. Additional $7,000 catch-up for employees aged 50+

  • Rollover Support - You can transfer existing 401(k) accounts into Multiplier’s plan via a guided rollover process.

Employer contribution policy

Multiplier currently does not offer employer contributions to 401(k) plans. This gives employees the flexibility to manage their own retirement strategy and tailor savings according to personal goals.

Withdrawals and taxation

  • Withdrawal Eligibility - Funds can typically be accessed at age 59½. Early withdrawals may be allowed for hardship or disability, subject to IRS rules.

  • Tax Implications -

  1. Traditional 401(k): Withdrawals are taxed as income.

  2. Roth 401(k): Qualified withdrawals are tax-free.

Competitor comparison

Some competitors (e.g., Deel, Remote) offer employer-matched contributions, typically a percentage of the employee’s salary. Multiplier’s approach emphasizes self-directed savings and flexible contributions.

FAQs - 401(k)

What is a 401K plan?

A 401(k) plan is a retirement savings plan sponsored by an employer. It allows employees to contribute a portion of their salary on a pre-tax basis, which grows tax-deferred until withdrawal during retirement.

Who is our 401K provider?

Multiplier has partnered with Betterment as its service provider to administer 401K plans for its members and employees.

What are the types of 401K funds I can invest in?

Multiplier supports both traditional 401K accounts as well as Roth 401K accounts. Employees are free to choose their desired account.

What is the difference between a traditional and Roth 401K account?

Feature

Traditional 401(k)

Roth 401(k)

Contribution Type

Pre-tax dollars

After-tax dollars

Tax Benefit at Contribution

Reduces taxable income for the year

No immediate tax benefit

Growth of Contributions

Tax-deferred

Tax-free

Taxation at Withdrawal

Taxed as ordinary income

Qualified withdrawals are tax-free

Best for Individuals Who...

Expect to be in a lower tax bracket at retirement

Expect to be in a higher tax bracket at retirement

For more info on how Traditional 401k is different from Roth 401k, refer to Betterment’s official page.

Which is better: a traditional or Roth 401(k) account?

The decision between a traditional and Roth 401(k) account depends on your individual circumstances and financial goals. If you anticipate being in a higher tax bracket during retirement or prefer tax-free withdrawals, a Roth 401(k) may be advantageous. A traditional 401(k) can provide tax savings upfront if you expect to be in a lower tax bracket during retirement. It's recommended to consult with a financial advisor to assess your specific situation.

How can one get enrolled in a 401K plan?

As per US compliance, Multiplier US is required to enroll all its employees and members in 401K plans without any discrimination. As soon as employees are registered on the Payroll software, Gusto, there is an automated email from Betterment that will be shared at the employee’s registered email address.

I have an existing 401K account, can I roll over my account here?

This entails your current provider sending us a check of your funds directly, for your benefit. Get started today. You'll answer a couple of questions and receive an email with the full, personalised instructions (how the check should be issued and where it should be sent) to complete your rollover. Please note that Traditional funds must be rolled over into a Traditional IRA, and Roth funds must be rolled over into a Roth IRA.

What is the default Employee contribution and how do I change the contribution amount?

Each employee is enrolled in a 401K plan through a 3% Employee contribution. This can, however, be changed by logging on to Betterment.

Refer to Employee Contribution for more details.

When does a 401K contribution reflect on the Betterment portal?

The contribution starts appearing once the payroll has been run.

How can I check the contribution amount?

You can log in to your Betterment portalto see your YTD contributions.

What happens to my 401(k) if I leave the company?

Yes, the IRS sets annual contribution limits for 401(k) plans. For the year 2023, the elective deferral limit is $22,500. If you are 50 years or older, you may be eligible for catch-up contributions of an additional $6,500. These limits are subject to change, so it's important to stay updated on any new guidelines.

What happens to my 401(k) if I leave the company?

If you leave the company, you have several options for your 401(k) account. You can choose to leave it with Multiplier, roll it over into an Individual Retirement Account (IRA), roll it over into a new employer's 401(k) plan (if allowed), or cash it out (subject to taxes and penalties). Consider consulting a financial advisor to determine the best option for your specific situation.

When can I start withdrawing funds from my 401(k) account?

401(k) withdrawals are generally allowed after reaching age 59½, although there may be exceptions for certain circumstances, such as financial hardship or disability. Early withdrawals before the age of 59½ may be subject to income taxes and early withdrawal penalties. Contact Betterment for more information on withdrawal rules and exceptions.

How are 401(k) withdrawals taxed?

Withdrawals from a traditional 401(k) plan are generally subject to income tax. The amount of tax owed depends on your tax bracket at the time of withdrawal. Roth 401(k) contributions, on the other hand, are made with after-tax dollars, and qualified withdrawals are tax-free. Consult a tax advisor for more information.

What should I do if I am unable to log in to my Betterment account?

You should contact Betterment to restore your password. You can also vist Betterment’s online help center.

How do I contact Betterment?

You can reach out to Betterment by calling (855) 906-5281 or emailing [email protected]; Monday–Friday: 10:00 am–6:00 pm (ET).

What is the employer's contribution to a 401K?

Multiplier US does not have any employer contribution to your 401K funds at this time. This is in compliance with anti-discrimination laws. By not offering an employer contribution, we provide employees with greater flexibility and choice in managing their retirement savings. This allows you to take full control of your financial decisions and tailor your contributions based on your individual circumstances and goals. It enables you to personalise your retirement strategy according to your unique needs and aspirations.

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