You’re probably aware of the importance of having a 401K plan in place. The Safeway 401K Plan and Trust is a popular defined contribution plan that now manages nearly $2 billion for its clients. The Trust is made up of ESOP, 401K, and profit-sharing features. This plan is sponsored by Safeway, Inc. and now has over 127,000 active participants. Employees of Safeway, Vons, Randalls, Pavillion, and Tom Thumb are all eligible for participation.
The Company Does Not Match Employee Contributions
Even though this plan is available to Safeway employees, Safeway does not match employee contributions at all. The lack of matching is a common complaint for those who work at or have worked at, Safeway. Matching contributions are one of the fastest ways for employees to build wealth. Employees also mentioned that they did not receive a lot of feedback or engagement from Safeway on this plan.
The Plan Is a Way to Build Wealth over Time
Like all 401K plans, the Safeway 401K Plan and Trust offers the advantage of creating a long-term savings plan that can result in a large amount of capital over time. There’s a lot of power in a plan that allows for consistent withdrawals of small amounts of money to be deposited and invested over a lengthy period of time. The plan has a large range of investment options for participants. Participants can invest by sector or by investment goal.
The Safeway Plan Has Many Tools for Participants
Plan participants are given enough tools with their accounts to help them achieve their retirement goals. The best thing to do is to use the retirement calculators to run a few projections about future income needs. Plan participants also have access to a wide variety of educational tools about investing and investments. It’s important to avail yourself of all the latest information because knowledge is needed to make informed decisions. People who put the maximum amount of contributions into plans tend to do very well over time. Investments are always subject to market moves, but since many of the investment objectives used indexes or baskets of stocks to grow the fund. Since this is a defined-benefit plan, the employee will get a specific amount of money paid out at a specific age. Any employee can elect to put $18,000 a year or 100% of their compensation into a plan.
Planning for retirement tends to be a straightforward activity. Systematic deposits add up over long periods of time. Investments receive the benefit of dollar cost averaging. When stocks are down, the fund buys more of them. When they’re up, fewer shares are purchased. This averaging has the effect of evening out the prices paid over a long period of time. This is a benefit of long-term, systematic savings. 401K savings also have a number of tax advantages that must be taken into account. Anyone who reaches the age of 59 1/2 can tap their 401K with no tax consequences. If a participant takes out a loan against their 401K, they will have to pay it back with interest. Cancelling the entire plan will pay off the loan and cancel all benefits. The money is best used for retirement. Anytime a participant can put in the maximum amount allowed and actually not tap the fund until retirement, the chance to really create a large income stream at retirement exists.
Employees of Safeway would be well served to participate in this plan, despite the lack of matching funds from the company. They will still get all the benefits from their consistent investments. All participants should take the time to go through the educational and promotional material so they’re totally sure of what they’re investing in. It doesn’t take long to get a solid handle on the ins and outs of the plans. This plan can end up helping people when they need it most.