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Nike’s 401(k) Plan


Nike is one of the largest sportswear companies in the world and employs nearly 75,000 workers in the United States. And like many companies, Nike offers a variety of benefits to its employees, including a 401(k) plan and a profit-sharing plan.

Keep reading to learn more about Nike’s 401(k) plan and how you can use it to save for retirement.

What Is Nike’s 401(k) Plan?

Like most employers, Nike offers a 401(k) plan to help its employees save for retirement. The company’s plan is managed by one of the top brokerage firms. The company allows employees to contribute up to 75% of their pre-tax income to the plan. They also offer the option of either traditional or Roth contributions, meaning employees can choose the tax advantage they prefer.

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Nike’s 401(k) Contribution Matching

Nike also contributes to its employees’ 401(k) accounts in the form of an employee match. In other words, for Nike to contribute to your account, you must first contribute. Nike matches its employees’ contributions dollar for dollar up to 5% of salary. So if you earn $100,000 per year, Nike will match your contributions up to $5,000.

So how does Nike’s employer match compare with other companies? Well, according to a recent study, the average employer match is 4.7%, and most companies fall between 3% and 5%. As we can see, Nike’s promised match is slightly better than the average.

Another benefit of Nike’s 401(k) plan is that employees are 100% vested in both their own contributions and the company’s contributions as soon as they start participating in the plan. Unlike many other companies, Nike doesn’t require that employees work there for a certain number of years before becoming fully vested.

Nike’s Profit-Sharing Plan

In addition to its 401(k) plan, Nike also offers its employees participating in a profit-sharing plan. A profit-sharing plan is a type of retirement plan in which an employer uses some of its profits for the year to save for its employees’ retirement.

It’s different from a 401(k) plan in a couple of ways. First, only the company contributes to a profit-sharing plan. Employees can’t contribute. The other difference is that contributions are entirely optional. Nike can decide each year if it wants to share its profits with employees.

Employees are eligible to participate in the plan once they’ve completed one year of employment with at least 1,000 hours of work. While employees can participate in the plan after their first year of service, they aren’t fully vested in the plan until they’ve been with the company for five years. The company uses a graded vesting schedule where employees become 25% vested each year, starting with their second year of service.

In a profit-sharing plan, companies can choose whether employees can direct their own account investments or whether the company will direct the investments for all employees. In Nike’s case, the company directs the investments and puts them in various fixed income and equity funds similar to those available under the company’s 401(k) plan.

How Much Should You Contribute?

Wondering how much you should contribute to your Nike 401(k) plan? There’s no one right answer, unfortunately. First, it’s worth it to contribute at least 5% of your salary to take advantage of the full employer match that Nike offers. It’s literally a guaranteed 100% return on your investment.

But for many people, investing 5% and collecting a 5% match may not be enough to fund a comfortable retirement. Luckily, the IRS allows you to contribute up to $19,500 to a 401(k) plan each year, and Nike allows its employees to contribute up to 75% of their income.

Not sure how much you should be saving each month for retirement? The Personal Capital Retirement Planner can do the math for you based on your desired income during retirement.

How Should You Invest?

Nike gives its employees several options to choose from for investing the money in their 401(k) plan accounts. Nike’s plan includes the following participant-directed investments:

Nike Class B common stock
NT Collective Aggregate Bond Index Fund
NT Collective All Country World Ex-US Index Fund
NT Collection Government STIF
NT Collective Russell 2000 Equity Index Fund
NT Collective S&P 500 Equity Index Fund
Morley Stable Value Fund

In addition to the specific investments that Nike offers, participants can also take advantage of Fidelity’s BrokerageLink service. This allows participants of the 401(k) plan to choose from an even wider range of investments. Employees essentially link your 401(k) plan with a brokerage account and can choose from even more investments, including target-date funds.

With so many investments to choose from, it can be confusing to decide where to start, especially if you’re new to investing.

A target-date fund can be an excellent option for anyone who wants to invest for retirement without having to choose their own investment. You simply choose a fund that corresponds with the year you plan to retire. Then a fund manager chooses investments that are appropriate for the time horizon of the fund.

If you decide to choose your own investments from those Nike offers, be sure to consider your time horizon and risk tolerance when building your portfolio. In general, the further you are from retirement, the more aggressive you can afford to be with your investments. But you must also weigh that with your own comfort with risk. Risk-averse investors may not be entirely comfortable with a portfolio built of only stock.

While most of the funds that Nike offers provide some diversification already, consider investing in a variety of funds to create even more diversification in your portfolio.

Traditional vs. Roth 401(k)

As we mentioned earlier, Nike allows its employees to choose between traditional and Roth 401(k) contributions. Traditional contributions are made pre-tax, and then you’ll pay income taxes on the distributions you take during retirement. Roth contributions are made after-tax and allow you to withdraw the money tax-free during retirement.

Choosing between the two contributions primarily comes down to estimating whether your tax rate will be higher or lower during retirement. If you expect your tax rate to be higher during retirement, you would choose to pay the taxes now with Roth contributions. But if you expect your tax rate to be lower, you would choose to defer the taxes with traditional contributions.

And remember that if you decide to make traditional 401(k) investments, you aren’t necessarily locking in your decision. A Roth conversion is a tool you can use down the road to convert your traditional 401(k) contributions to Roth assets to reduce your tax burden during retirement.

What Happens to Your 401(k) If You Quit?

If you leave your job at Nike, you might be wondering what happens to your 401(k) plan. The good news is that thanks to Nike’s generous vesting schedule, 100% of the money in your account is yours to keep, and you have a few options for what to do with it.

First, you may choose to simply leave the money where it is. Though you can’t contribute anymore — and neither will Nike — your money can continue to grow in its investments.

Another option is to roll over your 401(k), either into another 401(k) plan or into an individual retirement account (IRA). Rolling over your 401(k) may help simplify your finances since you don’t have to keep track of multiple retirement accounts. It can also open up your investment options beyond what Nike offers.

Finally, you can choose to cash out your 401(k) plan by taking a lump-sum distribution. Most financial professionals advise against this since you’ll be subject to income taxes on your withdrawal, as well as a 10% penalty. Additionally, if you withdraw the money in your 401(k) plan, it will no longer be growing to fund your retirement.

Can You Roll Over an Old 401(k)?

If you have a 401(k) plan with a former employer, you may wish to roll that over into your Nike 401(k) so your money is all in one place. This type of rollover is simple. To get started, simply contact your new plan administration — in this case, Fidelity — to let them know you’d like to move money over. They’ll direct you from there and help you handle it.

Preparing for retirement is part of your overall financial plan. You can take a few actions now to get yourself on the right track.

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Author is not a client of Personal Capital Advisors Corporation and is compensated for the content contained in this article.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. Compensation not to exceed $500. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Third party data is obtained from sources believed to be reliable; however, Personal Capital Corporation (“PCC”) cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Personal Capital of the contents on such third party websites. Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

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