How AT&T Employees Can Catch Up for Retirement in a Hurry

How AT&T Employees Can Catch Up for Retirement in a Hurry

By Henry Zupko, MBA, CFP®

AT&T retirement considerations can play a big role in financial planning as the telecommunications giant offers its employees generous benefits packages. 401(k) retirement accounts are common components of these packages, allowing employees to save up for their retirement years with a few bonuses kicked in.

However, some employees, especially older ones, may feel they aren’t maximizing their retirement plans due to certain contribution limits. Fortunately, there are a few ways these individuals can fund their AT&T retirement plans and better prepare for the future.

Maximize 401(k) Employer Matching

Most corporations, including AT&T, offer to match a sizable portion of their team members’ contributions to their 401(k) retirement funds. Doing so gives employees an incentive to stay with the company.

AT&T retirement plan contributions work somewhat differently for managers and non-managers. After a manager has been with the company for one year, the company matches 80% of their basic contribution (the first 6% of their salary) to the AT&T retirement plan. Non-managers receive matches of a certain dollar amount based on their banded pay.

In a sense, employer matching is free money for your AT&T retirement— this is part of your overall compensation package. Contributions are also tax-deferred, which means you don’t owe taxes when you contribute.

To take advantage of AT&T’s employer matching plan, you’re best served by saving as much as you can up to your basic contribution limit. The more you contribute, the more the company puts up, and that money can compound greatly over time.

Use Catch-Up Contributions While You Can

Employees 50 years or older can make “catch-up” contributions to their 401(k) plans so they can invest more as they near retirement. Currently, the maximum allowable catch-up contribution is $7,500 beyond the standard contribution limit of $23,000 for each employee, bringing the total contribution to $30,500.

However, the SECURE 2.0 Act of 2022 imposed new rules for highly compensated employees (HCEs) who earn more than $145,000 in Social Security wages. Beginning in 2026, catch-up contributions from HCEs can only be made in the style of Roth IRAs, meaning pre-tax contributions shall no longer be available.

Although non-taxable catch-up contributions for HCEs won’t be an option, there are still benefits to having a Roth. In a ROTH, tax-deferred contributions before retirement are off the table, but withdrawals or distributions from your account after you retire are tax-free. This can lighten your financial burden a bit while you enjoy retirement.

High-earning employees can still make catch-up contributions using pre-tax dollars to 401(k) plans until that time, although it may be worth it to convert to a Roth plan before then. Employees who don’t fall into the highly compensated category are still allowed to make pre-tax catch-up contributions after the provisions of the SECURE 2.0 Act take effect.

The Age 59½ Option

If you are still working at age 59½ or later, you may have the option to roll over or withdraw from your retirement account without having to pay penalties for early withdrawal.

If you withdraw money from a 401(k) or IRA before you turn 59½, you’ll face a financial penalty (usually 10%) on top of your regular income tax charges. After 59½, however, you can take money out of the account without the 10% penalty, although you’ll still be on the hook for income tax.

In some circumstances, rolling over funds to other options outside of your 401(k) could positively impact your retirement plan.

A Financial Advisor Can Help Shape Your AT&T Retirement Plan

Tranquility Path can help you refine your retirement plan so you can maximize its benefits after you’ve left the workplace. We’re happy to answer whatever questions you may have about the process or your overall financial situation. Schedule a no-obligation conversation or reach us at (908) 759-6322.

About Henry

Henry Zupko is founder and president at Tranquility Path Investment Advisors, LLC, an independent Registered Investment Advisor firm dedicated to putting their clients first, always. With over 30 years of experience, Henry sets the direction of the firm, manages, and in many cases personally interacts with clients to help develop financial strategies that set them on a tranquil retirement path. He is passionate about being a trusted partner to his clients, developing long-lasting relationships so he can guide them through life’s milestones, twists, and turns. In all he does, Henry strives to make a positive impact on others and help change their lives for the better. 

Henry is a CERTIFIED FINANCIAL PLANNER™ professional and holds an MBA from the University of Massachusetts and a bachelor’s degree in electrical engineering from the New Jersey Institute of Technology. Henry is a proud Eagle Scout who loves traveling the world and spoiling his grandchildren. To learn more about Henry, connect with him on LinkedIn.

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