Q:

How does a Mercer 401k retirement plan work?

A:

Quick Answer

A Mercer 401(k) retirement plan generally includes standard 401(k) benefits and employee contributions, according to 401kCalculator.org. Other features include employer matching and the maximum yearly contributions allowed by IRS regulations.

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Full Answer

Many employers choose to offer 401(k) plans through Mercer because Mercer’s 401(k) offerings are diverse, and it is possible to customize plans to a very high degree, reports 401kCalculator.org. However, like all 401(k)s, Mercer plans are subject to federal regulations about contributions and withdrawing money.

Like other 401(k)s, it is possible to withdraw money from a Mercer plan, usually with a 10 percent early distribution penalty if the participant isn’t yet 59 1/2 years of age, according to 401kCalculator.org. However, in certain circumstances, a participant can take a distribution from a Mercer 401(k) before age 59 1/2 in the even that: 1) the participant becomes disabled; 2) the participant makes an allowable medical expense deduction; 3) the participant terminates employment and is over the age of 55; or 4) the account pays out to beneficiaries in the event of the participant’s death. In addition to incurring the 10 percent penalty, withdrawals from Mercer accounts often are taxable as income and must be reported on the participant’s federal income tax return.

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