KC 401(k) & Profit Sharing Deep Dive — KCCU Financial Wellness

The Two-Part KC Match

KC's 401(k) match has two components that work together:

3% Flat Contribution: KC deposits 3% of your gross pay into your 401(k) every pay period, regardless of what you contribute. This is free money — you get it whether you contribute $0 or $25,000.
Dollar-for-dollar match up to 2%: For every dollar you contribute (up to 2% of your pay), KC matches it. Contribute at least 2% to unlock this fully.

The magic number is 5%. Contribute at least 5% of your gross pay, and KC adds another 5% (3% flat + 2% match). That's a 100% return on the matched portion before a single market gain. If you contribute less than 5%, you're leaving KC's money on the table.

What the Match Looks Like in Dollars

Let's run through some real numbers at different salary levels. These assume you contribute exactly 5% — enough to capture the full match.

Annual Gross Pay	Your 5% Contribution	KC 3% Flat	KC 2% Match	Total to Your 401(k)
$45,000	$2,250	$1,350	$900	$4,500
$60,000	$3,000	$1,800	$1,200	$6,000
$75,000	$3,750	$2,250	$1,500	$7,500
$90,000	$4,500	$2,700	$1,800	$9,000

Figures are illustrative estimates. Verify current match terms in your KC benefits portal.

Profit Sharing: KC's Bonus to Your Retirement

Beyond the regular match, KC has historically provided discretionary profit sharing contributions to employee 401(k) accounts. This is separate from your regular paycheck bonus — it goes directly into your retirement account.

Historical range: 2–6% of base pay annually
When it's deposited: Typically in the first quarter following the plan year
Who receives it: Eligible employees who meet service and employment requirements at year-end
Is it guaranteed? No — profit sharing is discretionary and depends on KC's financial performance

Example: If you earn $60,000 and KC deposits a 4% profit sharing contribution, that's an additional $2,400 going into your 401(k) — on top of your own contributions and the regular match. Over a 30-year career, with compounding, that matters enormously.

Roth vs. Pre-Tax: Which Should You Choose?

Most KC employees can choose to contribute to a traditional (pre-tax) 401(k), a Roth 401(k), or split between both. Here's the core tradeoff:

	Traditional (Pre-Tax)	Roth (After-Tax)
Contribution	Pre-tax dollars (reduces taxable income now)	After-tax dollars (no immediate deduction)
Growth	Tax-deferred	Tax-free
Withdrawals in retirement	Taxed as ordinary income	Tax-free (if rules met)
Best if...	You expect to be in a lower tax bracket in retirement	You expect to be in a higher tax bracket in retirement

For most early-career KC employees — especially hourly workers at lower tax brackets — Roth contributions often make more sense. You pay tax now at a lower rate, and all future growth is tax-free. For higher earners, traditional contributions provide meaningful near-term tax relief. Many financial planners recommend splitting: contribute enough pre-tax to reduce your tax bill, and direct the rest to Roth for tax diversification in retirement.

Contribution Limits (2025)

Employee contribution limit: $23,500
Catch-up contribution (age 50+): Additional $7,500, for a total of $31,000
Total limit including employer contributions: $70,000

The 3% flat KC contribution and any profit sharing count toward the $70,000 total limit — not your personal $23,500 limit. In practice, very few employees hit the combined cap.

Vesting Schedule

The 3% flat contribution and profit sharing are subject to a vesting schedule — meaning you have to stay long enough to keep KC's contributions. Employee contributions are always 100% yours immediately. KC's contributions typically vest on a graded schedule (verify your specific plan document):

Less than 1 year: 0% vested
1 year: 20% vested
2 years: 40% vested
3 years: 60% vested
4 years: 80% vested
5+ years: 100% vested

If you're thinking about leaving KC before you're fully vested, factor in the unvested employer contributions you'd forfeit. It can be a significant number.

Three Actions to Take Now

Log into the KC benefits portal and confirm your current contribution rate. If it's below 5%, increase it to capture the full match.
Check your fund allocation. If you've never changed it, you may be in a default money market or stable value fund that won't grow enough over time. A target-date fund (e.g., "2055 Fund" if you retire around 2055) is a reasonable default that adjusts automatically.
Update your beneficiary designation. This is separate from your will and overrides it. Make sure it reflects your current wishes.

This article provides general educational information about retirement accounts. It is not financial advice. Benefit details, contribution limits, vesting schedules, and match formulas are subject to change. Verify all figures in your official KC plan documents and benefits portal.