Membership response to the new Seafarers 401(k) Plan has been plentiful and positive, according to Seafarers Plans Administrator Maggie Bowen.“We have received encouraging feedback from eligible members and we are optimistic that a large cross-section of the membership will participate in the Seafarers 401(k) Plan and enjoy all the benefits it offers,” Bowen noted.
Based on initial feedback, the Seafarers Plans in conjunction with the SIU team of financial advisors at Smith Barney put together a summary of some of the most frequently asked questions about the new plan, as follows:
What is the contribution limit for 2008?
The contribution limit for 2008 is $15,500 (or $20,500 if you are 50 or older). You may make your contributions as traditional pre-tax contributions, Roth after-tax contributions or a combination of both. However, the total amount of contributions (pre tax + Roth) cannot exceed the dollar limits referenced in this paragraph.
What is the difference between a traditional 401(k) contribution and a Roth 401(k) contribution?
A traditional 401(k) contribution reduces your current income for tax purposes (“pre-tax”). Your contributions and investment earnings grow tax deferred. In the future, when you receive distributions from the Plan, those distributions will be taxable as ordinary income. A Roth contribution does not reduce your current income for tax purposes (“after-tax”). Your contributions and investment earnings grow tax deferred. In the future, when you receive “qualified” distributions from the Plan (meaning you are at least 59 ½ years old and commenced Roth 401(k) participation at least 5 years earlier), your distributions will be received free of federal income tax. If you think your tax bracket in retirement may be higher than your tax bracket while you’re working, you may be a good candidate to make Roth 401(k) contributions.
Who is eligible for the Plan and what is the process for enrolling in the Plan?
You are eligible to participate if you are working under the standard freightship or standard tanker agreements as well as many other SIU contracts. (Please check with your port agent to see if your company participates.) As contracts are renegotiated in 2008, additional SIU members will become eligible to participate. Everyone who is eligible should have received an enrollment kit.
The kit includes a DVD introducing the Seafarers 401(k) Plan, which we encourage everyone to watch. Also in the kit are the enrollment forms. There are three simple forms you must complete.
■ Enrollment Form - This form asks for your personal information such as name, address and date of birth. This is also the form where you specify the percentage of your pay you wish to contribute pre-tax, and/or the percentage you wish to make as an after-tax Roth contribution. Please note that any time you change employers, you must complete a new enrollment form.
■ Investment Election Form - You may put together your own portfolio by picking a combination of funds from the 20 available investment options. Or, you may simply choose from one of four risk-based model portfolios (conservative, moderate, moderate aggressive or aggressive).
■ Beneficiary Election Form - Note that if you are married and wish to designate someone other than your spouse as beneficiary, your spouse must consent in writing, and that consent must be notarized. Once you have completed and signed these forms, please return them to your ship’s captain.
The captain will then forward the forms to your employer’s HR department for further processing. Also please note that the aforementioned forms (and other information) are available in the “Member Benefits and Resources” section of the SIU web site, www.seafarers.org.
How can I get additional investment guidance and/or financial planning assistance?
Call Smith Barney at 800-421-5127.
Larry Goldstock, vice president and financial planning specialist at Smith Barney, described the Seafarers 401(k) Plan as “a potentially great way to accumulate a portion of the personal savings that may be needed to fund a financially secure retirement. Our approach to investing is based on our time-tested way of doing business. We offer our clients intelligent counsel based on our research, intellect and hard work. It’s an approach that has helped our clients work toward their financial goals since Smith Barney was established over a century ago.”
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