More reasons to save.
When you make contributions in the 401(k) Plan, it actually doesn’t cost you a dollar to save a dollar. (To see how it works, refer to the chart above.)
What's the message here? You are paying fewer taxes because your contribution is pre-tax – that is, before taxes are taken out. As a result, your withholding is lower. Your $100 contribution to the 401(k) Plan costs you only $72!
NOTE: Assume a federal income tax rate of 28%. In some states, 401(k) Plan participants may benefit from state tax savings, also. Numbers shown in the example are not intended to represent a specific employee but are shown only for illustrative purposes.
So, in this example, it’s easy to see how it does not cost you a dollar to save a dollar.
Your contributions are taken out of your paycheck on a pre-tax basis, which means those contributions are not subject to federal income tax or most state and local income taxes when made. As a result, your take home pay is reduced by less than the amount of your contribution. NOTE: Any withdrawals or distributions you receive from the 401(k) Plan will be included in your taxable income when distributed to you.
The Path to Your Retirement Guide
Please select your operating company from the list below:
- Federal Express Corporation
(includes employees residing in Puerto Rico)
- FedEx Corporate Services, Inc.
- FedEx Corporation
- FedEx Freight Corporation
(holding company employees only)
- FedEx TechConnect, Inc.
- FedEx Trade Networks, Inc.
- FedEx Trade Networks Trade Services, Inc.
- FedEx Trade Networks Transport & Brokerage, Inc
- World Tariff, Limited
- FedEx Custom Critical, Inc.
- FedEx Truckload Brokerage, Inc.
- FedEx Freight, Inc.
- FedEx Ground Package System, Inc.
(excluding employees classified as package handlers)
- FedEx SmartPost, Inc.
(excluding employees classified as parcel assistants)
- FedEx SupplyChain Systems, Inc.
Terms to Know
The accumulation or addition of specific benefits over time, usually based on a set formula(s) as in a defined benefit pension plan.