Are there tax consequences for employees when they withdraw?
Yes, withdrawals are subject to federal income tax and a 10% early distribution penalty if under age 59¬Ω, unless they qualify for penalty exemptions. However, withdrawals are not subject to FICA taxes and may not be subject to state and local taxes.
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How do employees earn contributions?
Contributions are 100% performance-based and tied to whatever performance standards the employer wants to establish safety goals, on time deliveries, customer satisfaction, attendance, productivity metrics, etc.
At what point can money be transferred for investment growth?
The employer can set the threshold amount at which money can be transferred to other plans for investment growth. This allows employees who accumulate significant amounts to move money for longer term retirement planning.