Deseret 401(k) Plan
The Deseret 401(k) Plan is a traditional safe harbor defined contribution plan offered to all eligible BYUH employees. You can contribute a percentage of your gross income each pay period on a Before-tax or After-tax basis. Brigham Young University–Hawaii will make a matching contribution of up to 4% into your account.
You are eligible to begin participating in the Deseret 401(k) Plan on your hire date if you are:
- At least 21 years old
- Scheduled to work at least 1,000 hours per calendar year
- Employed by a participating employer, and
- Not hired into an excluded class
BYU–Hawaii Matching Contributions
All eligible university personnel are eligible to receive BYU–Hawaii matching contributions according to the schedule below:
|5% or more||4%||9% or more|
Vesting means ownership of the funds in your account. You are always 100% vested in the value of your contributions to the Deseret 401(k) Plan, including BYU–Hawaii’s employer match contributions. This means that if you terminate your employment with the University you will receive not only your own contributions but also the University's matching funds and all earnings.
There are two account types to which an employee may make contributions: the before-tax 401(k) and after-tax Roth 401(k).
- You can deposit all your contributions into one or more options. However, only one employer matching contribution will be made, and it will be deposited into your account on a before-tax basis.
- The total annual employee 401(k) contribution must not exceed $19,500 for 2020. (Eligible participants age 50 or over can also make catch-up contributions up to $6,500 for a total of $26,000 for 2020.)
- The total before-tax 401(k), after-tax Roth 401(k), EDRC, and employer match may not exceed $57,000 ($63,500 if over age 50).
- Please be aware contributions to other retirement accounts such as the TIAA 403(b) would also count toward these limits.
- Click here to visit the irs.gov webpage for more contribution limit information.
Contributions and Earnings
Changes can be made to contribution percentages at any time. The percentage must be in one percent increments; no fractional percentages are allowed.
The tax treatment of contributions and earnings are detailed in the following table:
|401(k) Before Tax||401(k) After Tax|
|Employee Contributions||Taxed when withdrawn||Taxed before contribution|
|Employee Contribution Earnings||Taxed when withdrawn||Tax free (if you meet qualifications)|
|Employer Match||Taxed when withdrawn||Taxed when withdrawn|
|Employer Match Earnings||Taxed when withdrawn||Taxed when withdrawn|
The Deseret 401(k) Plan offers eleven individual funds and five pre-set mix options for the allocation of your contributions. You are allowed to change the investment mix once every 15 days. Before-tax and after-tax funds are combined for investment purposes.
The preset mixes are designed to match your general investment horizon until you begin to significantly use your money:
- Stock-only preset mix: 12+ years
- Long-term preset mix: 12+ years
- Intermediate preset mix: 5 to 11 years
- Short-term preset mix: 0 to 4 years
- Specialty income preset mix: 0 to 15 years
Funds may only be withdrawn if there is one of the following distributable events:
- Age 59½
- Permanent disability
- Early retirement (age 55+)
- Termination of employment
- Financial hardship
Before-tax funds that you withdraw are subject to federal and state income taxes. Tax laws require a mandatory 20% withholding. Also, an additional tax penalty equal to 10% of the taxable portion of your withdrawal will be imposed on withdrawals made prior to age 59½.
Deseret 401(k) Plan Loan Program
To have more access to your 401(k) savings while employed, a loan program is available. The loan provision enables you to:
- Borrow up to 50% of the total account value.
- Have interest credited back to your account.
- Repay the loan through payroll deductions.
- Avoid withdrawal restrictions, taxes, and penalties incurred when making a withdrawal.
You can only have one 401(k) loan at a time. Loan payoff is only allowed in full; no partial payoff payments are allowed. After one loan is paid off, there is a 45-day waiting period to apply for another loan.