Does Boeing Have a Pension Plan? [2024]
Boeing does not currently have a traditional pension plan. Instead, employees can use the Boeing 401(k) plan to invest and save for retirement.
Here’s what you need to know.
Key Takeaways
Boeing no longer offers traditional pensions to most employees.
Many Boeing employees want to see a return to a defined benefits pension plan.
The current Boeing 401(k) plan can be an excellent way to save more for retirement — arguably better than a traditional pension.
The Transition from a Boeing Pension to 401(k)
In 2014, Boeing discontinued its defined benefits pension plan for non-union employees and new hires. Since then, Boeing has transitioned from a traditional pension plan to a company 401(k) as the primary option for employees saving for retirement.
Boeing was far from alone in this. Many companies have introduced 401(k) plans to avoid making traditional pension payments to retired workers. This allows them to control costs more effectively.
The good news is that the transition from a traditional pension to a 401(k) doesn’t just benefit the company. A 401(k) plan can give employees more flexibility in managing their retirement funds, too. It can also help grow your retirement funds over time through smart investments.
However, not all employees are happy about the change. Many Boeing workers have voiced their dissatisfaction at not having the option of a defined benefits pension plan. In fact, one of the factors leading up to the 2024 Boeing strike was the International Association of Machinists (IAM) demanding that traditional pensions be reinstated.
Still, Boeing has resisted all calls to return to a traditional pension — and so far, they show no sign of budging.
Traditional Pension vs. 401(k): Understanding the Differences
Defined benefits pensions and 401(k)s are both common options for retirement savings, but with some key distinctions. Here’s a breakdown of how these two types of retirement plans work.
Traditional Pension (Defined Benefit Plan)
A traditional pension, also known as a defined benefit plan, guarantees employees a fixed monthly income during retirement. The per-month amount can vary based on several factors, such as:
Salary
Years of service
Age at retirement
With this type of plan, the company is responsible for funding and managing the pension, and employees typically don’t have to contribute from their own salaries.
Traditional Pension Plan: How It Works
Enrollment: Most companies automatically enroll employees in the pension plan when they meet eligibility requirements (e.g., completing a certain number of years of service).
Company contribution: In a pension plan, the employer makes all contributions to the pension fund. Employees don’t need to contribute their own money to this plan.
Vesting: To receive the pension benefits, employees typically need to be vested, meaning they’ve worked for the company long enough (usually five years or more). Once vested, employees are guaranteed to receive pension benefits, even if they leave the company before retirement.
Guaranteed payments: Once the employee retires, the pension plan provides regular payments (usually monthly) for the rest of the retiree’s life. Some plans also offer spousal benefits, ensuring the spouse receives a portion of the pension if the retiree passes away.
Benefits of a Traditional Pension Plan
Guaranteed income: Employees receive a pre-determined payout for life, which is not dependent on investment performance.
Employer responsibility: The company bears the investment risks and must ensure there are sufficient funds to meet future obligations.
Security: Pensions provide stability, as retirees know they will have a consistent income stream during retirement.
401(k) (Defined Contribution Plan)
A 401(k) is a defined contribution plan, meaning employees contribute a portion of their salary to their own retirement accounts, often with matching contributions from their employer. These contributions are then invested in various stocks and funds, helping employees grow their retirement savings over time.
401(k) Retirement Plan: How It Works
Enrollment: Employees are typically offered the opportunity to enroll in the company’s 401(k) plan.
Employee contributions: Employees decide how much of their salary they want to contribute to their 401(k). The IRS sets limits on this. For 2024, the 401(k) contribution limit is $23,000 for employees under 50 and $30,500 for employees 50 and older (through catch-up contributions).
Employer matching contributions: The employer will often match the employee’s contributions up to a certain rate. For example, Boeing will make matching contributions up to 10% of the employee's salary.
Investment choices: Once contributions are made to a 401(k), employees can invest their savings into various stocks and funds. This will help them grow their nest egg over time.
Withdrawing in retirement: When employees retire, they can begin taking withdrawals from their 401(k). The amount available depends on how much was contributed and the success of their investments.
Benefits of a 401(k)
Employee control: Employees choose how much to contribute and where to invest their money.
Flexibility: Employees have control over how their retirement funds are invested, with options ranging from conservative funds to more aggressive growth stocks.
Return on investments: If employees make smart investments, they can grow their savings over time. This will give them more money to use during retirement.
On the other hand, a 401(k) can be seen as having some serious drawbacks, namely:
Employee contributions: Unlike a traditional pension, employees must contribute a portion of their own salary to a 401(k). This puts the responsibility for funding retirement on the employee rather than the company.
Investment risk: Unlike pensions, the 401(k) plan does not guarantee a specific payout. Instead, the amount available at retirement depends on the total contributions made over time — and how well the investments performed.
Defined Benefits Pension vs. 401(k): Which Is Better?
Ultimately, there is no one-size-fits-all answer for which is better between a traditional pension plan and a 401(k). Each has its benefits and drawbacks.
For employees who prefer stability, a traditional pension might feel more secure. However, the flexibility and control offered by a 401(k) can be attractive for those who are willing to take on some investment risk to potentially grow their retirement savings more aggressively.
The main concern for many Boeing employees is that the company only offers a 401(k), with no option for a traditional pension plan. This denies workers the right to opt for the security of a defined benefits retirement account, even if they would prefer it.
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Understanding Your Boeing 401(k)
For most Boeing employees today, the 401(k) plan is the primary tool for saving for retirement. Here’s how it works.
Enrollment and Contribution Rate
When you start at Boeing, you are offered the chance to enroll in the company's 401(k) plan. You can decide how much of your salary you want to contribute as pre-tax, after-tax, or Roth contributions.
Boeing’s Matching Contributions
One of the major advantages of Boeing’s 401(k) plan is its generous employer matching policy. Boeing will match your contributions dollar-for-dollar, up to 10% of your eligible pay. This means that for every dollar you put into your 401(k) up to 10% of your salary, Boeing will contribute an equal amount. This can double your retirement savings for free.
For example, if your salary is $80,000 and you contribute 10% ($8,000), Boeing will match that by contributing an additional $8,000 to your 401(k) account.
Immediate Vesting
Another standout feature of the Boeing 401(k) plan is its policy of immediate vesting. This means that as soon as you or Boeing make a contribution to your 401(k), it is 100% yours. There is no waiting period. This means that you can take your 401(k) funds with you at any time if you leave the company.
At many other companies, employees may have to wait several years before the money in their retirement account is truly theirs. Boeing guarantees that whether you work there for one year or 20, the money in your account is always yours.
Investment Options
After you contribute to your 401(k), you’ll need to decide how to invest your money. Boeing’s 401(k) plan offers a range of investment choices, including:
Target-date funds: These funds automatically adjust their mix of stocks and bonds as you approach retirement.
Index funds: These track major stock market indices like the S&P 500, offering low-cost, diversified exposure to the stock market.
Bonds and conservative funds: These options are typically lower risk but may offer lower returns.
You can customize your choices based on your risk tolerance and retirement timeline. For example, if you’re young and have many years until retirement, you might invest more aggressively to grow your wealth faster. As you get closer to retirement age, you might shift to more conservative options to protect your savings.
PRO TIP: A fiduciary financial advisor can create a personalized investment strategy for you, helping you maximize your savings for retirement. To learn more, check out this guide: What Is a Fiduciary Financial Advisor?
Compound Interest
Your Boeing 401(k) has the potential to grow significantly over time due to the power of compound interest. This means taking the additional income you receive from your investments and reinvesting it. That way, you can grow your savings exponentially over time.
Withdrawing Your Funds in Retirement
When you retire, you can start withdrawing money from your 401(k). The amount you have available will depend on the total contributions made over your career and how well your investments performed.
When and how you withdraw your savings is largely up to you. However, the IRS requires that you start taking required minimum distributions (RMDs) at age 73. You’ll want to manage your withdrawals carefully to ensure your savings last throughout your retirement.
Early Withdrawals
While your 401(k) is designed to help you save for retirement, there may be circumstances where you need to access that money before reaching retirement age (59½). If you do make early withdrawals, you will generally face a 10% penalty in addition to paying regular income taxes on the amount withdrawn.
There are some exceptions to the early withdrawal penalty, such as hardship withdrawals. These are allowed under certain circumstances to help cover immediate and heavy financial needs like medical expenses, disability, or avoiding foreclosure.
Even if you qualify for an exception, any money you withdraw from your 401(k) will still be subject to income taxes, which could significantly reduce the amount you receive. It’s important to weigh the long-term impact of early withdrawals on your retirement savings before taking this step.
Note: This applies to standard pre-tax 401(k) contributions. If you make after-tax contributions to your Boeing 401(k), you can withdraw those funds penalty-free at any time.
Loans
Boeing’s 401(k) plan allows employees to borrow from their 401(k) funds. You can typically borrow up to 50% of your vested balance, with a maximum limit of $50,000. This allows you to access a portion of your retirement savings without having to pay an early withdrawal penalty.
If you do borrow from our Boeing 401(k), you will need to repay the loan within five years. (This deadline extends to 20 years if you’re using the loan to buy a house.) If you fail to repay the loan on time, the outstanding balance could be considered a taxable withdrawal and therefore subject to taxes and penalties.
Rollover Options
When you leave Boeing, you have several choices for rolling over your 401(k).
Rollover to a traditional IRA: This option allows you to continue deferring taxes until you withdraw in retirement while giving you broader investment options.
Rollover to a Roth IRA: You can roll your 401(k) into a Roth IRA for tax-free growth. However, taxes on your pre-tax contributions and earnings will be due upon conversion.
Rollover to a new employer’s plan: If you start a new job, you can transfer your Boeing 401(k) into your new employer’s plan to keep your retirement savings consolidated.
PRO TIP: The Boeing Mega Backdoor Roth program allows you to contribute significantly more to your retirement savings by making after-tax contributions to your 401(k) and converting them to a Roth IRA or Roth 401(k). To learn more, see this guide: Boeing Mega Backdoor Roth — Retire with More.
The Future of Retirement Benefits at Boeing: What to Expect
The future of Boeing’s retirement benefits, particularly the Boeing 401(k) plan, continues to be a subject of debate. This is especially true in light of the 2024 Boeing strike, which revolves heavily around Boeing’s lack of a defined benefits pension plan. So what should Boeing employees expect moving forward?
401(k) Enhancements
Boeing has consistently improved its 401(k) offering, adding features like the Mega Backdoor Roth and maintaining generous employer matching contributions. It's likely that Boeing will continue to expand investment options and offer more personalized financial planning tools to stay competitive with other top-tier companies.
Union Influence
The 2024 Boeing strike, led by the International Association of Machinists (IAM), highlighted employees’ dissatisfaction with the lack of traditional pension plans. While Boeing has resisted reinstating pensions, the outcome of negotiations could influence future benefit structures, especially for unionized workers.
A Return to a Traditional Pension Option?
One of the major questions on employees’ minds is whether Boeing will ever bring back the traditional pension option. The IAM union has been vocal in its demand to reinstate pensions for union workers.
Unfortunately for employees who support that demand, the broader trend across industries shows a continued shift toward 401(k) plans as the new norm. Boeing is unlikely to make a full return to defined benefit pensions. However, the company might consider alternative solutions, such as hybrid plans or enhanced employer contributions. This could allow the company to manage costs while maximizing the potential of its 401(k) plan.
To learn more about what to expect from your Boeing retirement plan, see this guide: Boeing Retirement Changes in 2024.
Make the Most of Your Boeing Retirement Benefits
While Boeing no longer offers a traditional pension plan, the company’s 401(k) plan remains a strong tool for retirement savings. With features like a 10% employer match, immediate vesting, and the ability to take advantage of the Mega Backdoor Roth for additional savings, the Boeing 401(k) can be the perfect option to grow your nest egg.
However, planning for retirement is always complex, especially when making risky decisions with your 401(k) investments. That’s where we come in.
At TrueWealth, we specialize in helping Boeing employees make the most of their retirement benefits. Whether you're nearing retirement age or decades away, we can give you a personalized financial plan based on your unique needs and goals.
Are you ready to kick your retirement savings into overdrive? Schedule a free consultation today so we can help make your golden years truly golden. We’re ready to answer any questions you have!
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Boeing Pension FAQs
Does Boeing still offer a pension plan?
No, Boeing no longer offers a traditional pension plan for most employees. Starting in 2014, the company transitioned to a 401(k) plan for new hires and non-union employees.
Can I still get pension benefits if I was hired by Boeing after 2014?
No, new employees hired after 2014 are not eligible for Boeing’s pension plan. However, you can participate in the company’s 401(k) plan.
What happens to my pension if I was hired before 2014?
If you were hired before 2014, you may still be covered under Boeing’s traditional pension plan. As long as you were vested (typically after five years of service), you are entitled to receive pension benefits even if Boeing no longer offers this plan to newer employees. The exact amount depends on factors such as your age, salary, and length of service at Boeing.
How much does Boeing contribute to my 401(k)?
Boeing matches your 401(k) contributions dollar-for-dollar up to 10% of your salary.
What happens to my 401(k) if I leave Boeing?
You can roll your Boeing 401(k) into another qualified retirement plan, such as a traditional IRA, Roth IRA, or your new employer’s 401(k) plan. The right choice will depend on your unique situation. Regardless, you will always retain your retirement funds since they are immediately vested.
How does the Boeing 401(k) compare to other companies?
The Boeing 401(k) has several key benefits that put it above many competitors.
Generous employer matching: Boeing matches all employee contributions up to 10% of their salary, which is higher than the industry standard.
Immediate vesting: Employees own 100% of Boeing’s contributions immediately. Many companies follow a vesting schedule of three to five years.
Broad investment options: Boeing offers a wide range of funds and stocks to invest in, giving employees greater control over their retirement savings.
Loan options: Employees can borrow up to 50% of their vested balance (or up to $50,000) without early withdrawal penalties.
Mega Backdoor Roth: Boeing provides the option for employees to contribute after-tax dollars through the Mega Backdoor Roth program, allowing for significant additional savings. This is not a common feature in other 401(k) plans.
Is Boeing back to a traditional defined benefits pension?
Boeing has not reinstated its traditional pension plan, and it is not likely to. While union workers under specific agreements may still have access to certain pension benefits, Boeing has resisted calls for a broader return.
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