By Mike Gibbons, RICP®
One of the most common reasons employers match 401(k) contributions is to attract and retain talent. And the statistics back this up. One survey found that 81% of employees say that retirement benefits make up a major portion of a job search. (1) Another survey found that 80% of workers would keep a job with benefits rather than take one that offered more pay and no benefits, and a 401(k) match was the most highly valued benefit among respondents. (2) Abbott Laboratories offers a generous 401(k) match as part of its excellent benefits package.
Plan Basics
The Stock Retirement Plan (SRP) is Abbott’s 401(k). Under the SRP, employees who contribute 2% of their gross pay to the 401(k) will receive a 5% company match. We generally recommend taking advantage of company matching for 401(k) plans, and Abbott Laboratories offers a particularly generous matching amount. Some employees may benefit from making additional contributions, depending on a variety of factors. Employees become eligible immediately upon hire, and pre-tax contributions can be rolled over from prior company 401(k) plans.
Freedom 2 Save
One unique benefit offered to Abbott employees is the Freedom 2 Save program, which will contribute 5% of your gross salary to your 401(k) plan as long as you contribute at least 2% of your income to student loan repayment. The program is designed for employees who have traditionally been unable to save for retirement due to carrying a heavy student loan debt burden. (3)
Contribution Options
Abbott employees can elect pre-tax, Roth, or after-tax contributions. Contribution limits are set annually by the IRS. Pre-tax contributions for 2021 cannot exceed $19,500 (plus an additional catch-up contribution of $6,500 for employees over 50). Roth contributions are subject to the same annual limits as pre-tax contributions. You can combine pre-tax and Roth contributions, and both types count toward the limit. You can make additional contributions above the limit (“after-tax contributions”), which are different from Roth contributions in that you will be taxed on the growth of these funds. Total deposits to your 401(k) account cannot exceed $58,000 for 2021 (or $64,500 if you make catch-up contributions). (4)
We’re Here to Help
We specialize in creating strategies to retire early in the pharmaceutical, biotechnical, and healthcare industries. We enjoy working with Abbott Laboratories and AbbVie employees. If you are a current Abbott employee, plan to retire soon, or would like our expertise to help you navigate your retirement benefits, call 224-419-5550 or email me at Mike@gibbonsfinancialgroup.com to schedule a complimentary consultation. Be sure to join our free webinar, Retiring Early From Pharma.
About Mike
Michael J. Gibbons is founder and president of Gibbons Financial Group, an independent advisory firm providing custom-tailored financial planning and investment management services to pharmaceutical and healthcare professionals and their families. Mike has over 25 years of experience and spends a significant portion of his day working with pre-retirees and retirees, focusing on asset management, Social Security and pension planning, as well as retirement income preparation.
Mike has degrees in both business and psychology from Lake Forest College and currently holds his Retirement Income Certified Professional (RICP®) designation from the American College. Mike was named a Five Star Wealth Manager for 2016 and 2018* Mike is heavily involved in his community, having served on the Village of Gurnee Police Pension Board as a Community Volunteer and the St. Patrick’s Parish Financial Board. When he’s not working or volunteering, Mike loves playing golf and spending his time with his wife and children. To learn more about Mike and how he can help you, connect with him on LinkedIn, visit his website, and register for his free webinar, Retiring Early From Pharma, created specifically for professionals retiring from the pharmaceutical, biotechnology, and healthcare industries.
*Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2016/2018 Five Star Wealth Managers.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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(1) https://www.hrdive.com/news/employers-and-workers-at-odds-over-retirement-preparation/530631/
(3) https://www.abbott.com/corpnewsroom/strategy-and-strength/company-student-loan-perk.html