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Is a Rollover into an IRA the Right Move for You as a CarMax Employee?

Healthcare Provider Update: Healthcare Provider for CarMax: CarMax partners with UnitedHealthcare as its primary healthcare provider. This partnership allows CarMax employees to access a variety of health insurance options tailored to meet their healthcare needs. Potential Healthcare Cost Increases in 2026: As we look ahead to 2026, CarMax employees may face significant healthcare cost increases due to rising premiums driven by several factors. The anticipated expiration of enhanced federal premium subsidies, combined with aggressive rate hikes from major insurers, could see some enrollees facing premium increases of up to 75%. This perfect storm of higher medical costs and regulatory changes indicates that families may need to brace for a substantial financial impact, making navigating healthcare options more critical than ever for employees. Click here to learn more

Choosing an IRA rollover means that your money remains tax-advantaged and capable of growth, as in a CarMax-sponsored plan. You may also gain more investment options than what may have been available in your CarMax-sponsored plan. You may also gain oversight of managing these important retirement assets from your trusted Advisor.

If you roll your retirement plan assets over into an IRA account that you already own through your Advisor, you also receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.

'Receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.'

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Some of the benefits of rolling your money into an IRA include:

Tax-deferred growth potential: This generally avoids current income tax and distribution penalties when removed from a CarMax-sponsored retirement plan.

More investment choices: This allows for additional contributions, if eligible. IRAs can be combined and handled by one provider, thereby reducing trustee costs and consolidating statements. Protection from creditors in federal bankruptcy proceedings. The combined amount of your required minimum distributions (RMDs) can be taken from any of your Traditional, SEP or SIMPLE IRAs.

However, there are also some important considerations that CarMax should make before rolling over their money into an IRA, these include:

Internal management fees might be higher than in a CarMax-sponsored retirement plan.
Fees and expenses depend largely on the investments you choose.
Loans from an IRA are not allowed.
Early distributions may be subject to a 10% IRS tax penalty in addition to income tax.
RMDs begin April 1 following the year you reach 70½ and annually thereafter; leaving the money in the former Fortune-500 plan may allow RMDs to be delayed until separation from service.
IRAs are subject to state laws governing malpractice, divorce, creditors (outside of bankruptcy), and other lawsuits; leaving the money in the former CarMax-plan may provide additional protection against creditors.
Net unrealized appreciation (NUA) is the difference between what you paid for employer securities and their increased value. You lose favorable tax treatment of NUA if the funds are rolled into an IRA.

Hopefully, these insights will be helpful as you plan your retirement from CarMax.

For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/will-your-retirement-plan-retire-with-you-e-brochure-offer

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What is the 401(k) plan offered by CarMax?

The 401(k) plan at CarMax is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out, helping them prepare for retirement.

Does CarMax match contributions to the 401(k) plan?

Yes, CarMax offers a matching contribution to employees' 401(k) plans, which helps employees grow their retirement savings even faster.

How much can I contribute to my CarMax 401(k) plan?

Employees at CarMax can contribute up to the IRS annual limit, which is adjusted each year. For 2023, the limit is $22,500, with an additional catch-up contribution for those aged 50 and older.

When can I enroll in the CarMax 401(k) plan?

New employees at CarMax are typically eligible to enroll in the 401(k) plan after completing a waiting period, usually within the first few months of employment.

What investment options are available in the CarMax 401(k) plan?

The CarMax 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to help employees diversify their portfolios.

How does CarMax's matching contribution work?

CarMax matches a percentage of employee contributions to the 401(k) plan, up to a certain limit, which helps employees maximize their retirement savings.

Can I take a loan from my CarMax 401(k) plan?

Yes, CarMax allows employees to take loans from their 401(k) accounts under certain conditions, providing a way to access funds in case of emergencies.

What happens to my CarMax 401(k) if I leave the company?

If you leave CarMax, you have several options for your 401(k), including rolling it over into an IRA or a new employer's plan, or leaving it in the CarMax plan if permitted.

Is there a vesting schedule for the CarMax 401(k) matching contributions?

Yes, CarMax has a vesting schedule for matching contributions, meaning employees must work for a certain period before they fully own the matched funds.

How can I check my CarMax 401(k) balance?

Employees can check their 401(k) balance through the CarMax benefits portal or by contacting the plan administrator for assistance.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Name of Pension Plan: CarMax does not offer a traditional defined benefit pension plan. Instead, CarMax provides retirement benefits primarily through a 401(k) plan. Years of Service and Age Qualification: CarMax does not have a traditional pension plan, so there are no specific qualifications for years of service or age for a pension plan. Pension Formula: There is no pension formula as CarMax does not offer a traditional pension plan. 401(k) Plan Details: Employee Contributions: Employees can contribute a portion of their salary up to the annual IRS limit. Employer Match: CarMax offers a company match up to a certain percentage of the employee's contributions.

Restructuring and Layoffs: In recent months, CarMax has announced a significant restructuring plan, including layoffs across various departments. This move is part of a broader strategy to streamline operations and improve efficiency amid changing market conditions. The layoffs are aimed at reducing overhead costs and reallocating resources to more profitable areas of the business. This restructuring is crucial to address the shifting economic landscape and maintain the company's competitive edge. It’s important for employees and investors to stay informed about these changes due to the current economic volatility, investment uncertainties, and evolving tax and political environments.

CarMax Stock Options (SO) and Restricted Stock Units (RSU): Acronyms: CarMax uses SO for Stock Options and RSU for Restricted Stock Units. Specifics: In 2022, CarMax provided stock options and RSUs to eligible employees, primarily focusing on senior management and key contributors. Availability: Both stock options and RSUs are typically granted as part of the compensation package to high-level executives and sometimes to other employees based on performance and tenure. Acronyms: For CarMax, the acronyms SO and RSU remain consistent. Specifics: In 2023, CarMax continued to offer stock options and RSUs. The grants were aligned with industry standards, aiming to attract and retain talent. Availability: Stock options and RSUs were granted to select employees, with an emphasis on roles critical to the company's strategic goals.

Benefits Overview: CarMax provides a comprehensive benefits package, including medical, dental, and vision insurance. They offer health plans that cover preventive care, medical visits, prescription drugs, and other essential health services. Healthcare Terms/Acronyms: HDHP (High Deductible Health Plan): A plan with higher deductibles and lower premiums, paired with Health Savings Accounts (HSAs). HSA (Health Savings Account): A tax-advantaged savings account used to pay for qualified medical expenses. FSA (Flexible Spending Account): An account allowing employees to use pre-tax dollars for out-of-pocket health expenses.

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For more information you can reach the plan administrator for CarMax at 12800 Tuckahoe Creek Parkway Richmond, VA 23238; or by calling them at +1 800-519-1511.

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