What is the
401(a) Retirement Plan?
The 401(a) Retirement Plan is a multiple employer defined contribution, money purchase pension plan that also qualifies as a church plan. In simple terms, your retirement benefits are based on the contributions made to your account during your career at the Y, along with the interest those contributions earn over time.
This page provides an overview of the eligibility, vesting, and contribution structure. For a deeper dive, we recommend reviewing the Summary Plan Description Booklet.
What are the Eligibility and Vesting requirements?
Your YMCA will automatically enroll you in the 401(a) Retirement Plan once you meet specific age and service requirements. These requirements may vary depending on your Y, so it’s best to check with your Human Resources department to understand which eligibility and vesting rules apply to you. Generally speaking though, there are two options that Ys can choose from.
Two-Year Eligibility, Two-Year Vesting (“2-2”)
- Age Requirement: You must be at least 21 years old.
- Service Requirement: You must complete 1,000 hours of service in each of two 12-month periods (they do not need to be consecutive) starting with your date of hire or anniversary of that date.
- Vesting: You are immediately vested in all contributions and interest credited to your YMCA Account upon enrollment.
One-Year Eligibility, Three-Year Vesting (“1-3”)
- Age Requirement: You must be at least 21 years old.
- Service Requirement: You must complete 1,000 hours of service in a single 12-month period starting with your date of hire or anniversary of that date.
- Vesting: You become vested in YMCA Account contributions and interest after 36 months of employment at a participating YMCA.
Note: Any contributions you make to your Personal Account, along with the interest earned in that account, are immediately vested, regardless of your length of employment.
How are contributions made to the 401(a) Retirement Plan?
Contributions to the 401(a) Retirement Plan are based on your gross pay. Your YMCA adopts a total contribution rate—typically between 8% and 12%—and determines whether employee contributions are required. Contributions made by your YMCA and the interest credited to those contributions are reflected in your YMCA Account. If you are required to make contributions to your 401(a) Retirement Plan, then those contributions and any interest earned are reflected in your Personal Account.
Let’s say your Y chooses a 12% contribution rate and your paycheck is $2,500. Here are two possible scenarios:
| Contribution Rate and Model | YMCA Account | Personal Account | Total Contribution |
|---|---|---|---|
| YMCA Pays full 12%, You Pay 0% | $300 | $0 | $300 |
| YMCA Pays 7% + You Pay 5% | $175 | $125 | $300 |
YMCA Pays full 12%, You Pay 0%
YMCA Pays 7% + You Pay 5%
In both cases, a total of $300 is contributed to your retirement savings each pay period. The difference lies in how the contribution is split between your YMCA and you.
Do contributions to the 401(a) Retirement Plan earn interest?
You bet they do! Contributions to the 401(a) Retirement Plan grow with daily compounding interest. This means your contributions and the interest they earn continue to generate more interest over time.
Depending on when the contributions are made, they are guaranteed a rate at which interest is credited—we call it an interest credit rate or ICR—and for a specified period of time, your contributions receive that rate.
Without getting too technical, think of it like this—if the market dips today, your interest rate stays the same. Account balances have never gone down at Y Retirement.
How is the 401(a) Retirement Plan different from a traditional retirement plan, like a 401(k)?
In addition to the fact that account balances have never gone down, there are a lot of differences—too many to list here—but let’s hit the highlights.
- The 401(a) Retirement Plan is not structured like a typical retirement plan “match.” The majority of participating Ys contribute the full rate to the 401(a) Retirement Plan on behalf of their eligible staff, which means employees don’t contribute anything.
- Some Ys do require that employees contribute part of the rate, but in those instances, the Y must always contribute more than you—it’s a Plan rule!
- Y Retirement manages the investment risk so you don’t have to! We have a dedicated team whose job is to ensure the stability of your retirement savings for the long term. Learn more about our Investment Strategy and Team.
- You may be able to turn your Plan balance in retirement into monthly annuity payments for the rest of your life (even if you live well beyond your savings). We’ve never missed an annuity payment either—another reason to rest assured that your savings are safe and secure at Y Retirement.
For more differences between the 401(a) Retirement Plan and other retirement plans, visit our Learning Center.
How are the different Accounts within the Plan taxed?
The accounts within your 401(a) Retirement Plan balance are taxed differently.
- YMCA Account: Contributions and interest are tax-deferred. You won’t pay federal taxes until you begin withdrawing funds or receiving annuity payments when you retire.
- Personal Account: Contributions are made after-tax, meaning federal taxes are applied when deducted from your paycheck. When you withdraw funds, only the interest earned is subject to federal tax.
State and local tax rules may vary. Consult a tax advisor for personalized guidance.
How and when can savings in the 401(a) Retirement Plan be withdrawn or annuitized?
Generally speaking, your 401(a) Retirement Plan balance cannot be accessed until you reach age 55 and you are ready to retire from the Y. If you’re at this place in your journey, congrats! Learn more about the annuitization process.
If you’re not ready to annuitize your savings, there are a few instances where you may be able to access all or part of your balance. Read more about withdrawing or rolling your money out of Y Retirement.