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Are Nordstrom Employees Consistently Making These 401(k) Mistakes?

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Healthcare Provider Update: Healthcare Provider for Nordstrom For its healthcare needs, Nordstrom partners primarily with Aetna, Premera, and Kaiser Permanente to provide health insurance plans to its employees. Each of these insurers offers various options, including high-deductible plans accompanied by Health Savings Accounts (HSAs), allowing employees to manage their healthcare expenses more effectively. Potential Healthcare Cost Increases in 2026 In 2026, healthcare costs for Nordstrom employees may see significant increases due to projected hikes in Affordable Care Act (ACA) premiums. Many states are anticipating rate increases of over 20%, with places like New York facing hikes exceeding 66%. The expiration of enhanced ACA subsidies will exacerbate these financial pressures, with projections suggesting that more than 22 million enrolled individuals could see their premiums surge by over 75%. This perfect storm of rising medical costs and subsidy losses will require employees to prepare for a substantial rise in their out-of-pocket healthcare expenses. Click here to learn more

This paper is for Nordstrom employees who will have to know the basics of their 401(k) plans, including the role of the company's contributions and the way the assets are invested in order to understand the basics of the retirement planning process.'

'['Free' means that, as a Nordstrom employee, you can optimize your retirement savings and, thus, your future financial independence by frequently checking and changing your 401(k) contributions, as well as by consulting for a Roth 401(k)].

In this article, we will discuss:

1. How to increase your chances of retirement savings by taking advantage of employer contributions.

2. What are the conditions under which you own the company contributions? Do not miss the money! A simple guide to the basics of stock investing within your 401(k) plan.

3. It is not intended to be an exhaustive treatment of the subject, but rather a general introduction that will help you understand the basics and consider whether or not to participate.

In a time of increasing financial complexity, it is essential to know how to make the most out of your savings, especially when you are planning for your retirement. The 401k plan has been and will be one of the best ways to build wealth over the long term. However, as with any instrument, its effectiveness depends on the user’s understanding of its capabilities and potential risks.

Harnessing Matching Contributions:

Most of the Nordstrom companies provide for matching schemes under which they pay for a certain percentage of the amount an employee places into a 401k. On average, companies match 4.5% of employee contributions, as per Vanguard’s annual report. Although this percentage may not be very high, it can amount to a lot of money over the years. When you include the interest that is charged on the account, this can make for a good retirement portfolio.

Vesting Requirements - Patience Pays:

Vesting refers to the conditions under which an employee is entitled to the company contributions to a 401(k) plan. Two main types are:

Cliff Vesting: Contributions are fully vested at the end of the set period, which is usually three years.

Graded Vesting: The employer’s contributions become vested at 20% annually from the second year and at 100% by the end of the sixth year.

Thus, if you change jobs before your contributions become vested, you will deny yourself access to the money. So, it is important to know your company’s vesting policy.

The Risk of Company Stock:

While it may be tempting to invest in your company’s stock, it’s wise to limit such investments to 5-10% of your total 401(k) assets. This is because too much money is at risk in the event the company is not doing well.

The Dual-Edge of Stock Investments:

Equities, or stocks, shouldn’t be avoided entirely. Although they are risky, very conservative products may not perform well versus inflation, and, thus, reduce your buying power in the future. This is where balanced equity investments come in to help with this.

Sources:

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1. Internal Revenue Service (IRS). 'Matching Contributions Help You Save More for Retirement.'  IRS,  https://www.irs.gov/retirement-plans/matching-contributions-help-you-save-more-for-retirement . Accessed 17 Feb. 2025.

2. Internal Revenue Service (IRS). 'Retirement Topics - Vesting.'  IRS,  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-vesting . Accessed 17 Feb. 2025.

3. Empower. 'What is 401(k) Matching & How Does It Work?'  Empower,  https://www.empower.com/the-currency/work/how-does-401k-matching-work . Accessed 17 Feb. 2025.

4 Investopedia. '401(k) Vesting Rules.'  Investopedia,  https://www.investopedia.com/401-k-vesting-rules-5323652 . Accessed 17 Feb. 2025.

5. National Council on Aging (NCOA). 'Leverage Employer Matching Contributions to Your 401(k).'  NCOA,  https://www.ncoa.org/article/matching-contributions-101-how-to-maximize-your-retirement-savings-now . Accessed 17 Feb. 2025.

What is the Nordstrom 401(k) plan?

The Nordstrom 401(k) plan is a retirement savings plan that allows eligible employees to save for their future by contributing a portion of their earnings before taxes.

How can I enroll in the Nordstrom 401(k) plan?

You can enroll in the Nordstrom 401(k) plan by accessing the employee benefits portal or contacting the HR department for guidance on the enrollment process.

What is the employer match for the Nordstrom 401(k) plan?

Nordstrom offers a matching contribution to your 401(k) plan, which typically matches a percentage of your contributions up to a certain limit, helping you save more for retirement.

When can I start contributing to the Nordstrom 401(k) plan?

Eligible employees can start contributing to the Nordstrom 401(k) plan after completing a specified waiting period, usually within the first few months of employment.

What types of investments are available in the Nordstrom 401(k) plan?

The Nordstrom 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to choose investments that align with their retirement goals.

Can I change my contribution rate for the Nordstrom 401(k) plan?

Yes, you can change your contribution rate for the Nordstrom 401(k) plan at any time, subject to certain limits and guidelines set by the plan.

Is there a vesting schedule for Nordstrom's 401(k) matching contributions?

Yes, Nordstrom has a vesting schedule for its matching contributions, meaning that you must work for the company for a certain period before you fully own the employer contributions.

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

If you leave Nordstrom, you can choose to roll over your 401(k) balance to another retirement account, cash it out (subject to taxes and penalties), or leave it in the Nordstrom plan if eligible.

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

Yes, Nordstrom allows employees to take loans from their 401(k) plan, subject to certain terms and conditions outlined in the plan documents.

Are there hardship withdrawal options available in the Nordstrom 401(k) plan?

Yes, Nordstrom offers hardship withdrawal options for employees facing financial difficulties, allowing access to funds under specific circumstances defined by the plan.

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: Nordstrom offers a defined benefit pension plan named the Nordstrom Retirement Plan. Years of Service and Age Qualification: Employees are eligible for the Nordstrom Retirement Plan after 5 years of service, and they must be at least 55 years old to start receiving benefits. Pension Formula: The pension benefits are calculated based on years of service and average salary. Specific formulas and details are outlined in the plan document. Name of 401(k) Plan: The 401(k) plan offered by Nordstrom is named the Nordstrom 401(k) Savings Plan. Qualification for 401(k) Plan: Employees are eligible to participate in the Nordstrom 401(k) Savings Plan from their first day of employment. Company Match: Nordstrom provides a company match up to a certain percentage of the employee’s contributions.
Restructuring and Layoffs: In 2023, Nordstrom announced a restructuring plan aimed at streamlining its operations and improving profitability. This included a significant reduction in workforce, with several hundred employees being laid off as part of a broader strategy to reduce costs and enhance efficiency. The company stated that these changes were essential to adapt to shifting market conditions and consumer behavior. 2. Changes to Benefits and Pension Plans: In response to economic pressures, Nordstrom has made adjustments to its employee benefits and pension plans. The company has introduced changes to its 401(k) matching contributions, reducing the amount of company contributions to employee retirement accounts. Additionally, modifications were made to health benefits to control costs, affecting the coverage levels and out-of-pocket expenses for employees.**
Nordstrom offers stock options and RSUs as part of its employee compensation package. These benefits are available to various levels of employees, often including executives and key staff members. Stock options at Nordstrom give employees the right to purchase shares at a set price, while RSUs are company shares granted to employees after meeting certain conditions.
2022-2023: Nordstrom updated its healthcare plans to include enhanced mental health services and telehealth options. They also introduced flexible spending accounts (FSAs) and health savings accounts (HSAs) to provide more financial flexibility for employees. 2024: There have been announcements of new partnerships with healthcare providers to improve access to quality care and reduce costs for employees. Nordstrom is focusing on preventive care and wellness programs.
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