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 you reach your retirement goals. Through the CORE Plan, you can save for your 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 tax-before savings?

With before-tax savings, you pay no income taxes on any contributions or any earnings until you withdraw the money. This leads to the benefit of compounding — that is to say, potentially generating returns on money that you would pay in taxes if those taxes were not deferred. Any earnings are reinvested in your 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?

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.

  • It essentially "locks" in today's tax rate on all contributions.
  • If you expect to be in a higher tax bracket when you retire, the Roth option allows you to pay taxes on your contributions when they are contributed (presumably at a lower tax rate than you would expect to pay at retirement).
  • Distributions are withdrawn on a tax-free basis as long as you began Roth contributions at least five years prior and you have reached age 59½, or you were made a beneficiary on or after the death of the participant, or because you have a qualifying disability.

How do I enroll in in the CORE Plan?

All common-law employees of a participating employer areeligible to participate in the CORE Plan. Unless you elect otherwise, you will be automatically enrolled in the Plan no sooner than 60 days after receiving the CORE Plan's auto-enrollment notice. Specifically, you will be automatically enrolled to defer 6% of your pay on a pretax basis into the CORE Plan, with annual increases of 1% or 2% (based on your employer's election) up to a maximum contribution rate of 15%. You can increase or decrease your savings rate at any time. You do not need to wait 60 days and can activate your CORE Plan account as soon as you receive your enrollment notification letter.

What are the CORE Plan contribution limits?

In 2022, the maximum total contribution into either a before tax or Roth account (or a combination of both) is 90% of your gross income (for federal income tax purposes) or $20,500, whichever is less.

Also, if you turn age 50 or older in 2022, you may contribute an additional $6,500.

Can I rollover my other retirement plans into my 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.

Consider all your options and their 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.