Retirement401(k)

401(k) Eligibility and Participation

You are eligible to participate in the Discover 401(k) Plan on your first day of work. You can enroll or make changes at any time. But if you don’t take action and enroll, Discover will enroll you automatically at 3% of your eligible base salary on a pre-tax basis. Why? Because this is an important benefit and we don’t want you to miss out on company matching contributions — free money. Remember, if you are enrolled automatically, you can make changes or opt-out at any time.

Employee Contributions

You may elect to contribute from 1% to 75% of your eligible base salary, commissions and bonus on a pre-tax basis, up to IRS limits every year. If you are age 50 or older (by December 31 of the plan year), you are also eligible to make catch-up contributions. You may elect to contribute 1% to 75% of your eligible pay; however, the catch-up contribution when combined with the highest pre-tax contribution election applicable to base salary, commission and bonus cannot exceed 75%.

Company Matching Contributions

Discover matches you dollar for dollar up to 5% of the pre-tax contributions you make to the 401(k) Plan. Here’s how it works:

  • You contribute 1% to 5% of eligible pay
  • Then, Discover matches that contribution dollar for dollar up to 5%

Make sure you are contributing the full 5% so you don’t leave any free money on the table. The more you contribute now, the more you have when you retire.

Company Fixed Contributions

Discover also makes a fixed contribution of 3% of eligible pay to your 401(k) account. You don’t need to contribute your own pay to receive the fixed contribution, but you must be employed on December 31. The fixed contribution is added to your account annually as soon as administratively possible after December 31.

If you leave Discover during the year for certain reasons, including death, total and permanent disability (as determined by Discover’s LTD administrator), retirement on or after reaching age 55 with 5 years of service, or certain terminations due to a reduction in force, you are generally eligible for a prorated fixed contribution.

Vesting

You are always 100% vested in your own contributions to the plan. Company contributions (fixed and matching) are 100% vested after two years of service.

Learn More About the 401(k) Plan

To enroll, make changes or get answers to your questions about the Discover 401(k) Plan, visit myHR (click on Savings and Retirement) or call a myHR Representative.

Get advice on how to manage your 401(k) or investments with help from Edelman Financial Engines®. This resource has a team of professionals available to help you with any questions you may have about your account.

Edelman Financial Engines®

Get help managing your 401(k) and reach your retirement goals with advice from professional investment advisors. Edelman Financial Engines® provides objective, independent retirement investing services to Discover 401(k) Plan participants. Choose from two levels of service:

  • Create your own retirement investment strategy using Edelman Financial Engines’ free online planning tools and resources, or
  • Get personalized, objective investment advice and have Edelman Financial Engines manage your retirement account for you for a fee.

For more information, visit myHR or call Edelman Financial Engines.

Additional Retirement Resources

For more information about the 401(k) Plan, read the 401(k) SPD and SMMs on myHR.

Ten Tips About Saving in the Discover 401(k) Plan

  1. Enrollment is automatic. Once you become eligible, Discover will automatically enroll you in the 401(k) Plan at an initial contribution rate of 3% of pay on a pre-tax basis. You can contribute more or less or opt out — the choice is yours.
  2. Discover makes a fixed contribution of 3% of pay each year. You’ll get a fixed contribution of 3% of eligible pay from Discover. The fixed contribution is made annually to participants employed on December 31, and is yours even if you don’t contribute on your own. When you contribute as well, you could reach your savings goal that much faster.
  3. Discover also makes a matching contribution of up to 5% of pay if you contribute. In addition to the Discover fixed contribution of 3%, the company matches your contributions dollar for dollar up to 5%. True, you have to contribute to get the company match, but you should save for retirement anyway, so why not take advantage of the free money from Discover?
  4. The sooner you start saving, the better. Thanks to the Discover fixed and matching contributions and compound growth, you could reach your savings goal with a lot less of your own money than if you start saving later and try to catch up. You’ll also lower your taxable income while you save.
  5. You can gradually save more using auto escalation. This feature lets you increase the amount you contribute from each paycheck to fit your budget. By building up slowly, you’ll hardly notice that you’re saving more.
  6. You can save different amounts of your pre-tax pay. If your Discover pay includes bonus or commissions or both, you can choose to contribute different amounts from each, and then another amount from your base pay. That can help smooth out your budgeting during the year.
  7. You decide how to invest your money. Choose from target date funds that automatically rebalance to a more conservative asset mix the closer you get to retirement, or create your own portfolio from funds that match your tolerance for risk.
  8. Expect the value of your 401(k) account will change daily. It will go up and down with the financial markets. Making investment decisions in response to daily fluctuations could reduce the amount you save over the years.
  9. Your 401(k) is not a bank account. You can borrow from your account if you need to, but there are certain rules you must follow. Financial experts generally agree it’s not a good idea to withdraw money because when you do, it can’t grow through compounding. Over time, compound growth can increase your savings by thousands — even tens of thousands — of dollars.
  10. You have help. Discover gives you access to free resources to help you make smart decisions about saving and investing for retirement: 401(k) learning clips, articles, savings calculators and more on myHR, as well as expert financial education and online advice and, for an additional fee, 401(k) account management from Edelman Financial Engines. The more you know about saving for retirement, the more likely you are to reach your goal.

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Edelman Financial Engines®

Assistance for 401(k) Management