One of the greatest benefits afforded most employees is access to a 401(k) plan.
But did you know, the NFL 401(k) plan, also called the "NFL Second Career Savings Plan" offers one of the most lucrative in all of professional sports?
Yes, NFL players are employees and have the opportunity to contribute to their team's 401(k) plan.
In this blog, I am going to break down all the things players in the National Football League need to understand about the NFL 401(k) Plan in 2024.
Before diving in, it is important to understand, retirement planning for professional athletes doesn't have to start after you stop playing the game.
In fact, the sooner you start taking advantage of this benefit, the sooner your financial future will take shape.
NFL 401(k) Plan - Second Career Savings Plan
The 401(k) is one of the more traditional benefits a company offers its employees.
In simple terms, a 401(k) plan is a retirement savings plan, sponsored by the employer. This allows employees to save money for retirement.
Said another way, it is a benefit afforded to employees, enticing them to continue working with the company.
Who Can Participate in the NFL 401(k) Plan?
The NFL 401(k) Plan has many benefits. One is, the number of players that can participate.
Players that are eligible to participate include:
Active Roster Players
Inactive Roster Players
Practice Squad Players
Reserve/Injured (IR) Players
Physically Unable to Perform (PUP) Players
Basically, if you are a part of the team as a player for at least one game of the regular or post-season, you are eligible and automatically enrolled.
**Please confirm with your Club that you have been automatically enrolled
How the NFL 401(k) Works
Before we dive into the specifics, it is important to understand how your NFL 401(k) works.
The NFL 401(k), like most 401(k) plans is a three-step process:
1.) Money is Put In - this money comes from your paycheck and is put into your account.
2.) Money is Invested - as the owner of the account, you direct the investment of the money in the 401(k).
3.) You Take the Money Out - Once you reach retirement age, you can take out the money you invested along with its gains. It is important to note, there are penalties for withdrawing early. Currently, if you withdraw before you turn 59.5, you will pay a 10% penalty.
The key to understanding the NFL 401(k) plan is understanding how NFL contributions work.
NFL Player401(k) Contributions
Each NFL player on the eligible participant list above is automatically enrolled in the 401(k) Savings Plan.
That means, beginning with your first paycheck (on or after October 15th), you will automatically start contributing to your 401(k).
With that, it is important to understand your contribution limits and how the contributions work.
First, if you are automatically enrolled, 10% of your pre-tax salary will be contributed to your account.
The current contribution limit in 2024 is $23,000 of "pre-tax" money.
Outside of saving for retirement, this means you would receive a tax deduction for your contribution.
For example, let's say you make a salary of $1,000,000 in 2024 and contribute the max $23,000 into your 401(k) plan. Your taxable income is now $977,000 instead of $1,000,000. This means you have a potential tax savings of more than $8,500 if in the 37% federal tax bracket.
Not bad, huh?
NFL Club 401(k) Contributions
2024 is a big year when it comes to the NFL Club 401(k) contributions.
First, it is important to understand if you have earned a "Credited Season" or earned three "Game Credits" as a Practice Squad Player.
Let's start with earning three (3) "Game Credits" as a Practice Squad Player.
You earn "Game Credits" by being a Practice Squad Player only, or through a combination of being both a Practice Squad Player and an Active player.
If you earn three (3) "Game Credits," you can earn up to $1,500 of matching contributions from the NFL.
These numbers drastically change if you are an active player and earn a "Credited Season."
A Credited Season means you were on one of the following rosters for three or more regular or post-season games:
Active Roster
Inactive Roster
IR (Injured Reserve)
PUP (Physically Unable to Perform)
Similarly, if you are released injured or receive an injury settlement for 3 or more games, you earn a Credited Season.
If you meet the above criteria, you are eligible for the "2-for-1 match."
This means the club you play for will contribute two dollars for every dollar you contribute.
In other words, for every dollar you contribute up to that $23,000 max, the club will contribute an additional two dollars into your account.
That is FREE MONEY!
Here is a breakdown of the matching contributions the NFL has proposed for the upcoming seasons:
What do I Invest in?
Contributing to your 401(k) is step 1.
Step 2 is knowing what to invest in.
The NFL offers a variety of Investment Fund Options.
Before I outline these options, it is important to understand investing as a professional athlete.
Further, consult with a wealth management professional before investing. Our team at Moment Private Wealth specializes in helping professional athletes. We can help you too!
Below are your Investment Fund Options as an NFL Player:
Target Date Retirement Funds - these are age-based funds that help you take more risk when you are young and get more conservative over time.
Index Funds - these are funds that track a market index (a basket of stocks and bonds).
Multi-Manager & Specialty Funds - these funds concentrate on specific markets or industries. These offer less diversification and come with higher potential risks.
Regardless of your thoughts about investing, in order to make money, you have to put your money to work. This starts with investing correctly!
What Next?
Father time is undefeated. Your playing days will come to an end.
When the time comes, your retirement money doesn't just disappear.
You can roll over (move) your 401(k) to an IRA or keep it in your current 401(k).
If invested properly, this money will grow. More importantly, when you reach 59.5, you can start using this money into retirement.
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As an NFL player, establishing your 401(k) early in your career can set you up for future financial success.
It is the difference between 3rd and 8 and 3rd and 2. I may not play the sport, but I know there are way more options in your playbook at 3rd and short.
Approach your 401(k) the same. The sooner you start contributing, the more you gain over time. The more you gain over time, the more options available to you.
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If you are in the National Football League and want to better understand the NFL 401(k) Plan, schedule a call with a Moment Founder.
Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor.
Get in Touch With An Advisor
Frequently Asked Questions
Here are some answers to questions I received frequently about this topic.
Am I already enrolled in the 401(k) Plan as an NFL Player? Yes! Each player is automatically enrolled in the 401(k) Savings Plan.
Can I participate in the 401(k) Plan as a Practice Squad Player? Yes, everyone is eligible. However, there are specific requirements for 401(k) Club contribution limits.
What is the current 401(k) contribution limit? In 2024, the 401(k) contribution limit is $23,000.
At what age can I start taking out my retirement money without paying a penalty? Players can start taking distributions once they reach the age of 59.5.
Is there a 401(k) match provided by the NFL? Yes! If a player contributes to their 401(k), the NFL will contribute a "2-for1- match."
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*Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.
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