By Ruthann Yamanaka and Dr. Chuck Kelley
Dr. Richard Kelley is traveling. His column will return next week.
We can all be very proud of the many benefits that Outrigger offers employees, including a 401(k) plan, which is a great way to save for retirement. Starting at the beginning of 2011, there will be some positive changes to our 401(k) plan, otherwise known as the Outrigger Hotels Hawaii Profit Sharing and Retirement Savings Plan, as T. Rowe Price becomes the new plan record keeper.
Historically, 401(k) plans became popular after 1978, when Congress amended the Internal Revenue Code by adding section 401(k), which allows employees to avoid being taxed right away on income they choose to receive as deferred compensation. From a practical standpoint, this meant that employees could place pre-tax earnings into an investment account and watch it grow, usually resulting in greater long-term rewards.
Once the law was fully implemented, the benefits of 401(k)s for both the employer and the employee were substantial, so most large companies either created new plans or converted old plans to 401(k)s. Today, company-sponsored 401(k) plans remain popular for many reasons.
Outrigger has been helping employees save for retirement since 1967. We sponsor a 401(k) plan, which is an excellent way to save; employees elect to participate by having a percentage of each paycheck, which they themselves determine, deposited into their account to grow tax-free and be saved for retirement.
The plan itself hires a professional record keeper to administer the plan, answer employee questions about it, maintain a website with a variety of helpful resources, provide regular statements, and conduct employee education to help employees make informed choices about how best to invest their 401(k) dollars.
This year, our Retirement Committee team conducted a review of record keepers to determine which one would provide employees with the most comprehensive and competitive services going forward. It was decided that T. Rowe Price could best provide services and opportunities to plan participants.
T. Rowe Price is an investment management firm, established in 1937, and headquartered in Baltimore, Maryland. The company is a recognized leader in retirement plan services and currently helps more than 1.8 million people save and invest through their employers’ retirement plans. T. Rowe Price also provides a wide range of personalized services to help plan for retirement, including award-winning participant statements and free Morningstar guidance tools. Today, T. Rowe Price is one of the nation’s most respected leaders in retirement plan services and investment management.
Our Human Resources team is currently working with T. Rowe Price on the details of the transition which will be effective December 30, 2010. You should have received a letter about the conversion process and important dates of key activities. That letter informs you of a period during which you will not be able to make changes to your 401(k), which is necessary so that the conversion can be processed. T. Rowe Price and HR will hold meetings next month for current Plan participants to review the conversion timeline and the new investment options available. You are encouraged to attend and ask any questions that you may have. Please be on the lookout for more information about these meetings.
This transition period is an excellent time for each of us to ask ourselves important questions. For example: Am I on track to achieve my long-term goals? Am I fully taking advantage of the pre-tax saving opportunity? Am I deferring enough of my wages? Am I selecting the best investment funds for me to meet my goals and retirement needs?
Remember, it is up to you to decide which investments best meet your needs and goals, and you have the option to modify the amount of salary being deferred and placed into your 401(k) plan account. While HR and T. Rowe Price cannot provide investment advice, there are many resources available to you – the upcoming employee meetings, the T. Rowe Price website, and the opportunity to talk to a T. Rowe Price representative to learn more about each investment option. There are even translators available if you wish to request one. This is an excellent opportunity to be even more proactive in managing your financial future.
We encourage all plan participants to take full advantage of the opportunity to save with pre-tax dollars. These enhancements are just another reason why Outrigger is A Great Place To Work and Grow!