Which Contribution Options Are Right for Me?

You have three great ways to save within the ITW 401(k) Retirement Plan. It’s up to you decide which option — or combination of options — gives you the biggest tax advantage.

Where to Start

Review the following chart to see which of these descriptions best matches your situation.

Before-TaxRothAfter-TaxCombination
  • You think your tax rate will be lower in the future.

  • You want to reduce your taxable income today.

  • You plan to retire in less than five years.
  • You think your tax rate will be higher in the future. Or you think tax rates will increase overall in the future.

  • You’re just starting your career.

  • You have more than five years to save.

  • You want to be able to withdraw the earnings on your contributions tax-free.
  • You’ve maxed out both before-tax and Roth contributions.

  • You plan to withdraw your money in less than five years.
  • You’re not sure about future taxes and you want to diversify your tax obligations — pay some now, pay some later.

How Do You Know What Your Future Tax Rate Might Be?

Your current tax rate versus your future tax rate may be one of the most important factors when deciding what type of contributions to make. You’ll pay taxes on the money in your account either now or in the future when you withdraw your money.

No one can predict with certainty what tax rates will be in the future. However, if you’re just beginning your career, you may be taxed at a lower rate now than you will be later when you’re likely to earn more. If you’re in your peak earning years, your tax rate is more likely to be lower in retirement than it is now. And other issues can factor in — for instance, you may believe that tax rates will increase in the future.

Be sure to talk with a qualified financial advisor and/or tax specialist about your retirement savings.

Want to Change Your 401(k) Contributions? Here’s How.

You can change the amount you contribute to the ITW 401(k) Retirement Plan at any time.

Simply log on to ITW Employee Self-Service and click on the 401(k) Retirement Plan icon. Or call the ITW Employee Service Center at 1.866.489.2468, Option 3, and then Option 1. Changes will typically be effective with the next available pay period after your request is processed or as soon as administratively possible.

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