Matt Nelson  0:00  
Medtronic has an excellent company contribution level, but do you know if you'll be able to keep all that money when you leave? In this video, I'm going to break down the time triggers you need to be aware about and how much it's going to cost you if you leave ahead of time.

Welcome back to the channel, everybody. If you participate in the Medtronic 401, K plan, you already know, you get a great company contribution, but do you know if you'll be able to keep it? Hi, I'm Matt Nelson. I'm with perspective six group, and we work with a lot of med tech industry professionals and get a lot of questions about the Medtronic plan. So I wanted to break down exactly how the vesting schedules work, the time triggers you need, and be sure to look for our other videos on other tips and tricks to maximize your Medtronic plan. If you want to download a paper we wrote, go to the comments below. I'm going to cover two main areas, the vesting schedule and the end of plan year rule. Now, as a quick recap, let's review how the company contributions get made in the first place. Remember, you've got your own contribution that's based on your salary, then you get a match based on how much you're contributing. Remember, it's 50% up to 6% of your compensation. There's the core contribution, which is three to 5% depending on your hire date, and then the company makes a discretionary match based on company performance, but it's historically been about one and a half percent. Okay, so now, how do you know that you'll keep those contributions? The good news is that your contributions are always yours to keep. Don't have to worry about any vesting schedule, or time based triggers for that, but there's a three year Cliff vest that will apply to the core contributions and the discretionary match. The cliff vesting version is actually less common than what's called a graded schedule that could take as long as six years. That's what I see out in the marketplace, quite a bit more. And I think this is this is actually kudos to Medtronic. You do have to wait a full three years to get any of the company contribution, but after that, it's all yours to keep. Now, there are some exceptions to this three year vest rule. If you're employed after age 62 or if you die or disabled while on the job, for the most part, you meet the exception. You don't have to worry about the three year vesting schedule, so the second main time trigger you have to pay attention to is being employed through the end of the plan year, which is April 30, and that's going to be the key for you to get that year's core contribution and discretionary match, as well as what's called a matching adjustment, or true up, as it's commonly referred to. So let me go into that for a second. What the true up has to do with is your contributions go in every payroll period. In each payroll period, you get the base match on that contribution. Remember the 50% up to 6% but if you're contributing at a higher level or have a higher salary, you could easily max out before the end of the calendar year. So let what I mean by that for 2025 the maximum you can put into the plan is 23,500 so if you're contributing a significant amount each payroll period, you could maybe max out, let's say by the end of june 30. If you did that, that would mean you'd missed the last six months of payroll contributions that Medtronic would be matching you on. So the way they solve for it is, by the time the plan year comes around that April 30, they'll calculate whether you got all of your matching amount, and they'll add that additional in along with the core contribution and the discretionary and it could work out to a significant amount depending on your salary level and how early you maxed out in the year. Now, again, with this plan year rule, there are some exceptions, primarily death, but the big one for most of you that you're concerned about is the retirement date. If you retire on or after age 62 or after age 55 but you at least have 10 years of service, then this rule gets waived, and you'll at least get that year's contributions. Okay, so how much does this really mean you could miss out on I just did some basic examples, so we could get an idea of it. But let's just assume that you earn $100,000 compensation. You've been contributing 6% to the 401, K, and you leave before meeting that full three year mark. Okay, well, if you add up the core contribution, $3,000 for three years, you would have missed out on the base match is another 3000 and then the discretionary match, assuming that continues to occur, would be another 4500 so as much as 22,500 could be lost if you didn't quite make that three year Cliff number. Okay, so let's say you met the three year vesting rule, but you didn't quite make. It to the end of the plan year, so you've been there maybe five years, but you do move on for another opportunity, maybe in January. So you would keep the bulk of the company contributions, but you might miss out on that last plan year's company contributions. And let's see how much that's worth, assuming that same $100,000 salary, again, that could be as much as 5250. If you were hired after 2016 or 7250 if you were hired before 2016 and of course, at higher salary levels, is just going to be that much more painful if you leave before the end of the plan year. Now it might not be enough to change your direction if you're moving on to another opportunity, but it could be enough that you want to delay your start date or ask for a sign on bonus just to make up for what's lost. Okay, so to recap, we just covered make sure you stay at least three years, and make sure you stay through the end of the plan year, which is April 30, if you want to keep all of the company contributions that Medtronic has been making for you. If you want to get access to my report again on how to maximize your Medtronic 401, K plan, look in the comments for the link. So until next time, remember, financial freedom takes more than money. So find your purpose and make a plan to live your life well. If you need any guidance, we're here for you. Take care of each other out there you.

Transcribed by https://otter.ai