GM salaried employees that are eligible under the teamGM Performance Plan (formerly EVP) may defer up to 100% of their teamGM payout on a pre-tax basis only, to the RSP in 1% increments. After-tax contributions, including the Roth 401(k), are not allowed under the teamGM Performance Plan.
Any amount of the teamGM Performance Plan payout that is deferred to the RSP will be combined with the pre-tax and Roth contributions already made this year. The annual IRS limit on these pre-tax and Roth contributions for 2013 is $17,500 (or $23,000 if age 50 or older). It is important to remember that contributions, up to 4% of eligible pay for salaried employees, are matched by GM per pay period. Therefore, in order to maximize the company’s matching contribution, it is essential to elect at least a 4% payroll contribution throughout the year. Participants can continue to contribute to the RSP in order to take advantage of the company match even after the pre-tax limit has been reached.
For those eligible executive level employees under the General Motors 2009 Long-Term Incentive Plan (the "Plan"), GM granted Restricted Stock Units (RSUs) on March 15, 2010. The awarded RSUs become unrestricted on March 15, 2013. If you are eligible under the Plan, there are several tax implications to consider upon payment of the RSUs. Importantly, a tax optimization strategy should be incorporated into your financial plan.
Those receiving RSUs also need to consider what impact this holding may have on their current investment strategy and portfolio diversification. A comprehensive review of your tolerance for risk, time horizon, and investment goals may be in order to successfully integrate this award within your overall investment portfolio.
If you have questions on the teamGM Performance Plan payout or the Restricted Stock Units, contact Mainstay Capital Management toll-free at 1-866-444-6246 to speak with one of our Certified Financial PlannersTM.