Catch-Up Contributions and the Boeing VIP
As you near retirement age, using catch-up contributions can help you speed up the growth of your Boeing 401(k). In this guide, we’ll look at what you should know to make the most of your retirement savings. Let’s get started!
Key Takeaways
Catch-up contributions are available to employees aged 50 and older.
Using catch-up contributions, you can invest an additional $7,500 into your Boeing 401(k) on top of the standard $23,500 limit.
These contributions can significantly boost retirement savings and offer potential tax advantages.
Understanding Catch-Up Contributions
Catch-up contributions are additional investments that employees aged 50 or older can make in their 401(k) accounts. This is especially useful for Boeing employees who only started saving for retirement later in their careers. However, everyone can benefit from this opportunity to kick their investment growth into overdrive. In essence, it will let you “catch up” on your 401(k) investments in the years leading up to retirement.
Boeing 401(k) Contribution Limits
For employees under 50, the standard 401(k) contribution limit is $23,000 per year. Once you turn 50, you can make additional catch-up contributions of up to $7,500. This brings the total annual limit to $30,500.
PRO TIP: Exceeding IRS limits can result in penalties and additional taxes. To ensure compliance, regularly monitor your contribution amounts and make adjustments as needed. Your financial advisor can help you keep track of your contributions.
Eligibility Rules
To be eligible for catch-up contributions, you must meet the following criteria:
Age requirement: You must be at least 50 years old by the end of the calendar year in which the contributions are made.
Employment status: You must be a Boeing employee and enrolled in the Boeing Voluntary Investment Plan (VIP).
You can start making catch-up contributions at any point during the year you turn 50.
PRO TIP: If you aren't sure if you’re eligible for catch-up contributions, check your status through Boeing’s Worklife portal or contact Boeing’s HR department for confirmation.
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Benefits of Catch-Up Contributions
1. Increased Retirement Savings
Catch-up contributions allow employees aged 50 and above to significantly boost their retirement savings. For 2024, the standard 401(k) contribution limit is $22,500, with an additional $7,500 permitted for catch-up contributions, totaling $30,000.
Over time, these additional contributions can substantially enhance the value of your retirement portfolio. For instance, if you start making catch-up contributions at age 50 and continue until age 65, you could accumulate an additional $198,000 or more, depending on your investment returns.
2. Compounding Interest
By contributing more to your 401(k) through catch-up contributions, you take full advantage of the power of compounding interest. Over time, the interest earned on your contributions can significantly increase the total value of your retirement savings.
Starting these contributions at age 50 and continuing until retirement can result in substantial growth, especially if your investments perform well.
3. Tax Advantages
Depending on the type of contributions (pre-tax, Roth, or after-tax), you can enjoy various tax benefits:
Pre-tax contributions: These reduce your taxable income now, lowering your current tax bill. This can be particularly beneficial for those in higher tax brackets, as the immediate tax savings can be significant.
Roth contributions: Made with after-tax dollars, these contributions grow tax-free, and qualified withdrawals in retirement are also tax-free. This can be advantageous for those expecting to be in a higher tax bracket in retirement.
After-tax contributions: These contributions allow for additional savings beyond the pre-tax and Roth limits, with the potential for tax-free growth on earnings.
PRO TIP: When planning your contributions, consider a mix of types (pre-tax, after-tax, etc.) to balance your tax burden. Consult a financial advisor to learn how you can optimize your contributions for your unique needs and goals!
4. Diversification and Investment Options
Boeing’s VIP offers various investment options, including:
Index funds
Target-date funds
Managed funds
Diversifying your investments helps manage risk and improve returns. Additionally, access to retirement and financial advisors at no additional cost can help you make informed decisions about your investment choices and retirement planning.
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How to Make Catch-Up Contributions to Your Boeing 401(k)
Log in to your Boeing TotalAccess account. This portal provides access to all employee benefits and retirement plan information.
Within TotalAccess, go to the My Retirement Income section. This is where you can manage your contributions and investments for the Boeing VIP.
Follow the instructions to adjust your existing contribution levels to include catch-up contributions. You will need to specify the amount you wish to contribute up to the catch-up limit. (If you are not already enrolled in the Boeing VIP, now is the best time to sign up!)
Specify how you want your contributions to be deducted from your paycheck. You can choose to make pre-tax, Roth, or after-tax contributions.
And that’s it! You’re ready to invest more in your retirement savings.
Get Help from TrueWealth!
Catch-up contributions can be a major help for anyone’s retirement planning. By taking advantage of these additional investments, you can significantly enhance your retirement savings during your peak earning years.
How about some help?
At TrueWealth Financial Partners, we give Boeing employees the personalized support they need to make the most of their finances. Schedule a quick introductory call today, and we’ll be happy to help you in any way we can.
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Boeing Catch-Up Contributions FAQs
What are catch-up contributions?
Catch-up contributions are additional contributions allowed for individuals aged 50 and above to help boost their retirement savings. These contributions are designed to allow older workers to make up for any shortfalls in their retirement savings by contributing beyond the standard limits.
How much can I contribute as a catch-up contribution in 2024?
In 2024, you can contribute an additional $7,500 as catch-up contributions on top of the standard $23,000 limit for 401(k) plans. This means the total contribution limit for eligible employees is $30,500.
Am I eligible for catch-up contributions?
If you are 50 years or older and employed by Boeing, you are eligible for catch-up contributions. You must also be enrolled in the Boeing Voluntary Investment Plan (VIP) to make these contributions.
Does Boeing match catch-up contributions?
No, catch-up contributions do not qualify for Boeing’s matching contributions. However, standard contributions are matched dollar-for-dollar up to 10% of your salary.
How does the SECURE 2.0 Act impact catch-up contributions
Starting in 2026, higher earners (those making over $145,000) will be required to make catch-up contributions as Roth contributions. This means that contributions will be made with after-tax dollars, though withdrawals in retirement will be tax-free. Plan ahead to accommodate this change and consult with financial advisors to optimize your strategy.
Can I change my catch-up contribution amount during the year?
Yes, you can adjust your catch-up contribution amount at any time during the year. This flexibility allows you to modify your contributions based on changes in your financial situation or retirement goals.
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