If you work at one of the 2,200 dialysis clinics in the U.S.A., you should be eligible to contribute into your Wells Fargo sponsored 401(k) plan.
Our team works with many Fresenius healthcare professionals throughout the country. Many are unaware of how this 401(k) works and how to best utilize for their future golden years.
Common questions we receive include: How does the employer match work? How much should I save into my 401(k)? Which funds do I select?
I cover all this and more in this short article exclusively for Fresenius Medical Care employees. As an independent CERTIFIED FINANCIAL PLANNER™ I help healthcare professionals successfully retire to enjoy their golden years without financial headaches.
1. 401(k) Basics
As a refresher, the Fresenius 401(k) is an employee benefit to you that allows
the worker to contribute pre-tax dollars towards their own retirement account. Money inside the 401(k) grows tax-deferred meaning you do not pay tax each year on the gains. Taxes are due upon withdrawals from this account and taxed as ordinary income.
One must wait until they reach the age of 59 ½ years old to take qualified withdrawals and not be penalized early.
401(k) owners are required to withdraw money (aka RMDs) from their account starting at age 70 ½ years old unless they meet the “still-working” exception. More info on these required distributions can be found on our website blog titled, “401k & IRA Owners – Avoid these RMD Mistakes”.
2. Fresenius 401(k) Specifics
The FMC 401(k) if used properly can be a key retirement asset for a FMC employee.
Fresenius currently offers an employer match of 50% on the first 6% of employee contributions. This means FMC will match you 50 cents on each $1 the employee saves up to 6% of your pre-tax contributions.
(Example – RN Salary of $60,000, 6% 401(k) contribution = $3,600 employee savings + $1,800 Fresenius match)
Those that contribute less than 6% into this 401(k) are making a HUGE mistake. If not saving at all into the 401(k), potentially an $1,800 mistake or even more.
An employer match can be looked at as “free money”. It is unwise to leave this money on the table.
Each January, FMC will lump sum your matched funds into your account.
There are approximately 18 investment options you may select ranging from Blackrock stock funds to Fresenius Target Retirement Date funds. Investing directly into FMC stock has been eliminated.
3. How We Add Value
Our team helps FMC employees with their 401(k) and other employee benefits by making recommendations on how much to contribute into their Wells Fargo 401(k), which funds to select and explaining how their other FMC benefits like disability and life insurance work.
Since the FMC 401(k) only allows pre-tax contributions, all withdrawals will be taxed as ordinary income in retirement. It is highly recommended in retirement to have both tax-deferred accounts (401(k)’s, IRAs) and tax-advantaged accounts (Roth 401(k)’s, Roth IRAs) to diversify your sources of withdrawals and mitigate taxes.
One way we have helped employees fill this need is by using an outside Roth IRA to generate tax-free withdrawals after 59 ½ years old.
With only 18 funds available to select, it may be difficult for soon-to-be retirees to diversify their 401(k) portfolio properly as they look to conservatively invest.
The FMC 401(k) plan also currently has an “in-service distribution” option available to those over 59 ½ years of age. This provision permits an individual who is still an employee the option to rollover a portion of the 401(k) into an IRA held at another custodian such as Charles Schwab or Fidelity.
Rolling over to an IRA at a larger custodian could provide you with more investments to choose from. However, there are other points to consider and we can help you determine if this option may be advantageous for you.
As you can tell by now, there are dozens of things to consider regarding your Fresenius 401(k) plan.
Many other FMC employees find it useful to get professional advice on how to best use your Federal benefits. As the old saying goes, “having no plan is planning to fail.”
As an independent CERTIFIED FINANCIAL PLANNER™ that is legally obligated to act as a fiduciary for your best interest, I am glad to provide that much needed second opinion over a no-cost review.
The above article is informational in nature only. Individuals should always consult with their tax advisor regarding their personal tax situation.
This publication is no way affiliated with nor endorsed by Fresenius Medical Care. Employees should consult with their Human Resources Department for further information on plan details including eligibility and questions regarding any additional benefits not covered in this article.
More about the Author
As an independent CERTIFIED FINANCIAL PLANNER™ in Bartlett, IL (a western suburb of Chicago) my practice serves three specific professions:
Healthcare professionals, Federal employees and Business owners.
My team and I help grow your retirement nest egg and solve for ways to best withdraw it tax-efficiently throughout retirement. We do this through comprehensive financial planning which includes evaluating your specific employee benefits, tax implications, RMDs and more.
Our goal is to save you precious time, stress and your hard-earned money versus tackling this all alone. Let a skilled team of experts like us, already familiar with your employer benefits, unique needs and goals guide you through the constant changes in your life towards financial independence.
Dustin Javier, CFP® AWMA®
CERTIFIED FINANCIAL PLANNER™
President | Dean Johnson Advisory, LLC
[Email] [email protected]
Securities and investment advisory services offered through Ausdal Financial Partners, Inc. Member FINRA/SIPC. 5187 Utica Ridge Rd., Davenport, IA 52807. (563) 326 2064. www.ausdal.com Dean Johnson Advisory and Ausdal Financial Partners are independently owned and operated.