Are you looking to save for your future and take control of your finances this year? You’re not alone. A recent survey by Statista reveals that saving more money is the top New Year’s resolution for U.S. adults.

One of the easiest ways to get started is by taking full advantage of your workplace retirement plan. Offered as part of your employee benefits package, these plans, such as 401(k)s or 403(b)s, help you prepare for your future while enjoying valuable tax perks. Plus, with the potential for employer contributions, your workplace retirement plan can give your savings an extra boost toward achieving your goals.

In this article, we’ll explore the five main benefits of enrolling and saving in your workplace retirement plan so that you can start this year’s savings journey strong.

1. Control Your Financial Future

When you participate in your employer’s retirement plan, you are in control. You can decide how much you’d like to contribute annually, subject to plan and Internal Revenue Service (IRS) limits. You also have the flexibility to change your contributions at any time, tailoring your savings rate to your current needs or future financial goals.

Additionally, you can select your investments from a list provided by your employer. Choosing your investments allows you to build the right investment mix for your personal risk tolerance—ranging from riskier stocks to more conservative bonds.

For example, when you’re younger, time is on your side when it comes to investments. So, you may have a higher investment risk tolerance and prefer to invest in a greater percentage of stocks. On the other hand, if you’re nearing retirement, your primary goal may be to preserve your retirement plan account balance. In this case, you may prefer less risky investments, such as bonds or stable-value funds. Choosing your own investments in your workplace retirement plan empowers you to have more control over your financial journey.

No matter how much you contribute or how you decide to invest, enrolling in your plan helps you save consistently for retirement and optimizes your plan benefits.

2. Automatically Participate

You can easily contribute to your workplace retirement plan via automatic payroll contributions each payday. Through payroll deduction, your employer automatically reduces your wages by the amount of your chosen contribution and adds that money to your plan. If you change your savings rate, your payroll deduction will be adjusted without any additional effort. It only takes seconds to enroll by logging into your Vestwell account portal.

3. Enjoy Tax Savings Now or Later

Your pre-tax or Roth (after-tax) contributions offer tax savings—now or later.

Pre-Tax Employee Contributions

Pre-tax contributions lower your taxable income since they reduce your wages before taxes are withheld. Depending on your situation, this may mean you owe less income taxes come filing time.

Your pre-tax contributions will continue to grow tax-deferred until you withdraw them during retirement. At that time, you’ll be taxed on your withdrawals and any investment earnings, but possibly at a lower tax bracket than you had during your working years.

Roth Employee Contributions

If your employer offers Roth contributions, then your contributions are funded with after-tax dollars (meaning they are not tax-deductible).

Your Roth contributions will continue to grow tax-free, meaning you don’t pay any taxes on the money you withdraw from your account. However, to enjoy these tax benefits, your distributions must meet the following criteria:

• Any withdrawal must happen five years or more after January 1st of the year you made your initial Roth contribution.
• You must be at least age 59 1/2.

Alternatively, these withdrawals are tax-free if they're due to death or disability.

Retirement Savings Contribution Credit

Finally, you may also take advantage of the retirement savings contribution credit, which is a non-refundable tax credit of up to $1,000 (or $2,000 if married and filing jointly).

4. Partner With Your Employer

Your employer can partner with you in your retirement savings beyond simply offering a plan. If your plan permits matching contributions, then your employer may contribute a specific amount of money to your retirement plan account on your behalf.

Matching contributions are directly related to the amount you contribute to the plan, while employer non-elective contributions are set at a fixed amount, regardless of whether or in what amount you contribute to the plan.

You definitely don’t want to leave this “match” on the table!

5. Take Your Money With You

If you change jobs, you can take your vested retirement balance with you.

Any amount you contributed—whether through pre-tax or Roth contributions—always belongs to you. You can roll this money to your new workplace retirement plan or an individual retirement account (IRA).

If your employer made contributions to your plan, such as matching contributions, those funds may be subject to a vesting schedule. This is a timeline that outlines when you’ll own any employer contributions made on your behalf to your workplace retirement plan. There are three common vesting options:

1. Immediate vesting, where the amount your employee contributed immediately belongs to you
2. Cliff vesting, where your plan may require you to reach a certain number of years of service with your employer, at which time you’ll become fully vested in your employer contributions
3. Graded vesting schedule, where employees begin to own a percentage of employer contributions over time based on their length of service

Any vested percentage of your retirement plan belongs to you, and you can take it with you if you leave your employer. If you do change jobs, you can roll your own contributions and the vested percentage of your employer contributions to your new employer’s retirement plan or an IRA.

Conclusion

The new year is the perfect time to take control of your financial future, and your 401(k) or 403(b) plan is a powerful tool to help you build wealth. Whether you’re setting your first financial resolution or revisiting your long-term goals, it’s never too early (or too late!) to enroll and save in your workplace retirement plan. From the ease of participation to partnering with your employer on retirement plan savings, there’s nothing but upside when it comes to enrolling and saving in your workplace 401(k) or 403(b) plan.

Ready to take action? Log in to your Vestwell account now to set your savings rate and start building your future.

All investments have risks, including the possible partial or total loss of principal. All information provided to you by Vestwell, including through use of the Advisor Managed Accounts Feature or on our Help Center, is for general information purposes only and is not intended and should not be interpreted as legal, tax, investment, or other professional advice on any matter. None of the information provided to you regarding the Advisor Managed Accounts Feature should be construed as a solicitation, recommendation, or endorsement of any strategy to buy, hold, or sell any securities or make any investments. We do not make any guarantee or other representation in any way regarding the future value or investment performance of your account. The output of any tool provided to you is a general estimate only, it is hypothetical in nature, it represents one of potentially many different outcomes relating to your retirement plan account, and the actual results, performance, or events relating to your retirement plan account may differ materially from the general estimate. Individual participants should consider engaging their own financial professional before making any investment or other decisions relating to their retirement plan. Please refer to the prospectus, plan communications and notices, and other information provided to you for more information about other risks relating to the investments available to your plan.