How to Maximize Your Boeing 401(k) Benefits
The Boeing 401(k) is a powerful tool to grow your wealth for retirement. This guide will give you the tips and insights you need to take full advantage of your Boeing 401(k) benefits and maximize your savings.
Here’s how it works!
Key Takeaways
The Boeing 401(k) is the primary retirement savings plan for Boeing employees.
Using the Boeing 401(k), you can invest a portion of your salary to grow your wealth for retirement.
The Boeing 401(k) has several major benefits, including tax-advantaged savings and matching employer contributions.
How the Boeing 401(k) Works
The Boeing 401(k) Retirement Plan, also known as the Voluntary Investment Plan (VIP), lets employees invest a portion of their salary in various stocks and funds to grow their savings for retirement.
Eligibility
To qualify for the Boeing 401(k), you must be:
A non-union employee or member of a participating union
Paid directly by Boeing
Not on layoff or unpaid leave
Eligible union employees are subject to different rules than non-union employees. For example, a union employee may not receive the same matching contributions as a non-union worker.
Contributions and Investments
After signing up for the Boeing 401(k), you can set aside a portion of your income to invest in certain stocks or funds. The return on these investments will be added to your 401(k) funds, growing your retirement savings over time.
Employer Matching
Every time you make a contribution to your 401(k), Boeing will automatically contribute the same amount, up to 10% of your salary. This will allow you to double your retirement savings for free!
Immediate Vesting
Boeing gives you ownership of your 401(k) funds — including matching contributions — as soon as they appear in your account. This is known as immediate vesting. Most other companies have a vesting schedule that requires employees to wait at least a few years before taking control of their 401(k) funds.
Withdrawal
Once you reach retirement age, you can begin withdrawing funds from your Boeing 401(k) savings account. If you withdraw money before retirement age, you will typically have to pay an early withdrawal fee. You can borrow from your 401(k) funds at any time, but you will have to pay the loan back with interest. (More on this below.)
Maximizing Your Boeing 401(k) Match
One of the primary benefits of the Boeing 401(k) is the company’s generous matching policy. Boeing will match all your contributions dollar-for-dollar up to 10% of your salary.
For example, if you earn $100,000 per year and invest 10% ($10,000) into your Boeing 401(k), the company will add another $10,000 to your account. This lets you double your retirement savings with no strings attached!
Because the Boeing 401(k) match is so valuable, you’ll want to make sure you take full advantage of it. Here are some tips to help.
Contribute at Least 10% of Your Salary
Boeing offers a 100% match on employee contributions up to the first 10% of your salary. Contributing less than that means leaving free money on the table. If you aren’t already investing at least 10% of your salary in the Boeing 401(k), increase your contribution rate to reach that threshold and get the full employer match.
Make Sure You’re Covered by the Year-End Match True-Up
Boeing offers a match true-up, which ensures that you receive the highest possible match even if your contribution rate fluctuates during the year. At the end of the year, Boeing calculates your total contributions and adjusts the match accordingly, making sure you receive the full match based on your total eligible earnings. This is particularly helpful if your savings rate varies because of bonuses or salary adjustments.
Use the Student Loan Match
If you're paying off student loans, Boeing offers a Student Loan Match program so your qualified student loan payments can count toward the Boeing 401(k) match. This means that even if you can't contribute to your 401(k) due to student loan payments, the company will still make contributions on your behalf, up to the 10% match limit. That way, you pay off your debt without sacrificing your retirement savings.
Start Contributing Early and Consistently
The sooner you start contributing to your Boeing 401(k), the more time your money has to grow. Your retirement savings can increase exponentially through compound interest, giving you more disposable income to play with when you retire.
Leverage Catch-Up Contributions
The IRS sets limits on how much you can invest in a 401(k) per year. For 2024, the standard limit is $23,000. However, if you’re aged 50 or older, you can contribute an additional $7,500 through catch-up contributions for a grand total of $30,500.
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Boeing 401(k) Investment Options
Boeing’s 401(k) retirement plan provides a wide range of investment options. This allows you to plan an investment strategy that suits your personal financial goals and risk tolerance.
Target-Date Funds
One of the most popular investment options for the Boeing 401(k) is target-date funds (also known as lifecycle funds). These funds automatically adjust the mix of stocks, bonds, and other assets you invest in based on your retirement timeline. When you're younger, target-date funds are aggressive, taking more risks to grow your wealth faster. As you get closer to retirement age, the fund will shift to safer investments to protect your savings.
Target-date funds are a great option if you want a hands-off approach to investing.
Index Funds
Index funds are another popular investment option. These funds emulate the performance of a specific market index, like the S&P 500, by investing in the same stocks or bonds. Boeing's 401(k) includes broad-market index funds, which are ideal for low-cost, long-term growth. Index funds also offer lower fees than most actively managed funds.
Index funds are a low-cost, low-risk option for steady long-term growth.
Mutual Funds
Boeing’s 401(k) plan also includes a range of actively managed mutual funds, which are managed by professional investment managers who select stocks, bonds, and other assets in an attempt to outperform the market. While these funds offer the potential for higher returns, they usually come with higher fees and more risks compared to index funds.
Mutual funds are good for investors who want to chase higher returns. However, it’s important to weigh the higher costs against the benefits.
Bond Funds
For employees who are closer to retirement or who prefer less risk, the Boeing 401(k) also offers bond funds. This means investing in government or corporate bonds, which tend to be more stable than stocks but offer lower returns. These funds provide regular interest payments and can act as a buffer against the volatility of the stock market.
Bond funds work well if you’re approaching retirement and want safer, more reliable investments.
Boeing Stock Fund
Employees also have the option to invest in Boeing stock through the 401(k) plan. While holding company stock can be rewarding if the company performs well, it comes with higher risk due to the lack of diversification. If Boeing’s stock declines, it can impact both your employment and your retirement savings.
While investing heavily in Boeing may seem like the loyal thing to do, it can be risky. Always make sure to maintain a diversified portfolio to reduce risk.
If you want help with your Boeing 401(k) investment strategy, consult a fiduciary financial advisor for personalized advice on how to optimize your approach.
401(k) Contributions: Traditional vs. Roth
When contributing to your Boeing 401(k), you can choose to make pre-tax contributions or Roth (after-tax) contributions. Both options can offer significant tax advantages depending on your financial plans. Let’s take a closer look at each to help determine which is better for you.
Traditional Contributions (Pre-tax)
Traditional 401(k) contributions are pre-tax, meaning the money is deducted from your paycheck before taxes are applied. This reduces your taxable income for the year, which can result in lower income taxes. Then, when you withdraw from your 401(k) during retirement, your withdrawals will be taxed as regular income.
Pros:
Immediate tax savings: Contributions are made pre-tax, which lowers your taxable income for the year.
Long-term tax savings: Contributions have taxes deferred until retirement, when you may be in a lower tax bracket than you are now.
Cons:
Taxable withdrawals: All withdrawals, including investment earnings, are taxed as regular income. This could be a problem if you expect to be in a higher tax bracket after retiring.
Required minimum distributions: With traditional contributions, you must start taking requirement minimum distributions (RMDs) at age 73, whether you need the money or not. This can complicate your tax strategy during retirement and keep you from maximizing your investment growth.
Roth Contributions (After-Tax)
Roth contributions are made with after-tax dollars, meaning you pay taxes up front. When you withdraw your funds in retirement, the withdrawals will be tax-free (including both the initial contributions and any investment returns).
Pros:
Tax-free withdrawals: Both Roth contributions and investment gains are tax-free after retiring. This is ideal if you expect to be in a higher tax bracket during retirement.
No RMDs: Starting in 2024, Roth 401(k) funds are not subject to RMDs. You can leave the money in your Boeing 401(k) as long as you want to continue growing your wealth after retirement.
Cons:
No up-front tax break: Contributions are made with after-tax dollars, so they won’t lower your taxable income now.
Best for those expecting higher taxes later: You only benefit if your tax rate in retirement is higher than it is now.
Making the Right Choice
So which is better, traditional or Roth contributions? The answer to that will depend on your current and future tax situation. There’s no one-size-fits-all solution. However, there are some guidelines you can use to make an informed decision.
If you expect to be in a lower tax bracket after retiring, making pre-tax contributions could save you more in taxes now and defer taxes until your withdrawals are taxed at a lower rate.
If you expect to be in a higher bracket after retiring, making Roth 401(k) contributions will let you lock in lower tax rates now and give you tax-free withdrawals later — when you need the money the most.
Many employees choose to make a blend of both traditional and Roth 401(k) contributions. This will allow you to benefit from immediate tax savings while also enjoying tax-free income in retirement. This strategy offers diversification in tax treatment and can be a valuable hedge against future tax rate uncertainties. A fiduciary financial advisor can help you choose the perfect mix for your Boeing 401(k) contributions.
Withdrawing Your Funds
Once you reach retirement age, you can begin making regular withdrawals from your Boeing 401(k) without penalties. If necessary, you can also make early withdrawals, though this will typically result in penalties. Here are some of the options for withdrawing funds from your retirement savings.
Withdrawals in Retirement: Lump Sum vs. Monthly Payments
The IRS defines retirement age as 59½. Once you reach this age, you are free to withdraw funds from your 401(k) account. Savings that came from traditional 401(k) contributions will be taxed as ordinary income, while Roth contributions will be tax-free. Either way, you can choose to withdraw your funds in a single lump sum payment or opt for regular monthly payments.
A lump sum withdrawal gives you immediate access to your funds, which you can use as you see fit. However, this can increase your tax liability and make it easier to spend your savings too quickly. Plus, with all the money removed from your retirement account, you will not be able to make further investments through the Boeing 401(k).
Regular monthly payments will provide a steady, predictable income over time. This option is often preferred for retirees seeking long-term financial security and stability. However, there are times when a lump sum payment makes more sense.
The right choice will depend on your financial needs and tax implications. Consult with your fiduciary financial advisor to find out which option makes the most sense for you.
Early Withdrawals
If you need to access your 401(k) funds before age 59½, you can do so — but it comes with a hefty price. Early withdrawals are subject to a 10% penalty on top of regular income taxes. If you made Roth contributions, you can withdraw the original contributions penalty-free at any time, but any investment returns will be subject to taxes and penalties.
Hardship Withdrawals
There are exceptions to the usual early withdrawal penalties if you need the money to cover a financial hardship. This might include:
Significant medical expenses
Permanent disability costs
Avoiding foreclosure or eviction from a home
Funeral expenses for a family member
However, while hardship withdrawals waive the 10% early withdrawal penalty, they may still be subject to ordinary income taxes. Hardship withdrawals should be used only in extreme cases, as they can greatly deplete the potential for growing your 401(k) savings.
Borrowing from Your 401(k)
Boeing allows you to take a loan from your 401(k) up to 50% of your account balance or $50,000, whichever is lower. This loan will accrue interest and must be repaid within five years. If the loan is used to purchase a home, that deadline expands to 20 years.
Taking a loan from your 401(k) can provide access to needed funds without incurring early withdrawal penalties or taxes. However, there are clear downsides, so borrowing against your 401(k) is generally not advised except in emergencies.
401(k) Rollover
When you leave Boeing, whether after retiring or changing employers, you always have the option of a rollover. This means transferring the funds from your existing 401(k) plan into another qualified retirement account, such as:
Traditional IRA
Roth IRA
A 401(k) plan at your new employer
A rollover can give you additional tax benefits and allow you to grow your retirement savings outside of Boeing. Timing a rollover is crucial, especially if you’re nearing retirement. With the right strategy, you can minimize tax liabilities and maximize your benefits. Your fiduciary financial advisor will help you determine the best time and method for rolling over your Boeing 401(k).
Bonus Tip #1: The Mega Backdoor Roth — Save More for Retirement
The Boeing 401(k) has another secret benefit: the Mega Backdoor Roth program. This program lets you make after-tax contributions beyond the standard 401(k) limits, then convert those funds into a Roth account for tax-free growth. Here's how it works.
Understanding the Mega Backdoor Roth Program
After you've maxed out the regular 401(k) contribution limits ($23,000, or $30,500 if you're over 50), you can contribute additional after-tax dollars up to the total 401(k) limit of $73,500 (including employer match). These after-tax contributions can then be converted to a Roth 401(k) or Roth IRA.
To use this program, all you have to do is:
Max out your regular contributions (pre-tax or Roth)
Contribute after-tax dollars beyond the standard limit
Convert those after-tax funds to a Roth account (ideally as soon as possible to avoid taxes on investment earnings)
Benefits of the Mega Backdoor Roth Program
No income limits: Unlike regular Roth IRAs, the Mega Backdoor Roth allows high earners to contribute regardless of income.
Maximized tax-free growth: Future gains in your Roth account are tax-free.
No RMDs: Once converted to a Roth IRA, funds are not subject to required minimum distributions.
The Mega Backdoor Roth can help you maximize your retirement savings in a tax-efficient way. However, this strategy requires careful execution, so working with a qualified fiduciary financial advisor is recommended.
Bonus Tip #2: The Boeing SSP — Worth the Risks?
The Boeing Supplemental Savings Plan (SSP) is another method for high-income employees who want to save beyond the limits of their Boeing 401(k). While it offers additional savings potential, it comes with unique risks that should not be taken lightly.
How the SSP Works
Once you’ve maxed out your total 401(k) contributions (up to $73,500, including employer match), the SSP allows you to contribute even more pre-tax dollars. These contributions, like a 401(k), grow tax-deferred until retirement. Boeing often provides matching contributions, further enhancing your savings.
Benefits of the SSP
Higher savings potential: High-income earners can use the SSP to defer taxation on more income.
Employer match: Boeing may match contributions to the SSP, as with the 401(k).
Tax deferral: Contributions reduce taxable income now and grow tax-deferred.
Risks of the SSP
Non-ERISA protection: SSP funds are not protected by Employee Retirement Income Security Act (ERISA) regulations, meaning your savings could be at risk if Boeing goes bankrupt.
Limited withdrawal flexibility: Unlike a 401(k), SSP distributions have rigid schedules and lack rollover options into an IRA.
Taxable withdrawals: All SSP withdrawals are fully taxable, with no option for Roth conversion.
The SSP is suitable for high-income earners who have maxed out their 401(k) and want additional tax-deferred savings. However, given the risks, you should never consider this option without having a trusted financial advisor to help protect your savings.
PRO TIP: A health savings account (HSA) can provide similar tax benefits to the SSP without the risks. If you’re planning to invest in the Boeing SSP, you may want to consider this safer alternative.
Make the Most of Your Boeing 401(k) Benefits
The Boeing 401(k) plan is an excellent way to grow your wealth and save more for retirement. By following the tips in this guide, you can kick your savings strategy into overdrive. However, retirement planning is nothing if not complicated. It’s easy to make a costly mistake.
At TrueWealth Financial Partners, we can give sound advice backed by years of experience. We’ll take the time to understand your unique needs and goals, then create a personalized financial strategy tailored just for you. And as your needs evolve and markets shift, we’ll adjust your strategy to make sure your savings are safe — and ready to grow.
Are you ready to maximize your Boeing 401(k) benefits and build a better future? Schedule a free consultation with one of our experienced fiduciary financial advisors, and we’ll be happy to answer all your questions.
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Boeing 401(k) FAQs
What 401(k) does Boeing use?
Boeing's 401(k) plan is called the Boeing Company 401(k) Retirement Plan, also known as the Voluntary Investment Plan (VIP). This plan includes both traditional and Roth contribution options, and offers company matching and additional after-tax contributions.
How much is the Boeing 401(k) match?
Boeing matches 100% of employee 401(k) contributions, up to 10% of their salary. This means you can double your retirement savings for free.
What’s the difference between a traditional 401(k) and a Roth 401(k)?
Traditional 401(k) contributions are made with pre-tax money, which lowers your taxable income now. After retiring, withdrawals are taxed as ordinary income.
Roth 401(k) contributions are made with after-tax money, meaning there’s no immediate tax benefit. The advantage is that withdrawals in retirement (including any investment returns) are completely tax-free.
What is the Student Loan Match at Boeing?
When you make qualified student loan payments, Boeing will make matching contributions to your 401(k) plan, up to 10% of your salary. That way, you can still grow your retirement savings even while paying off your student debt.
What are the contribution limits for Boeing’s 401(k) in 2024?
For 2024, you can contribute up to $23,000 to your 401(k) if you're under 50. Employees aged 50 or older can make additional catch-up contributions of $7,500, bringing the total to $30,500.
Can I take out a loan from my Boeing 401(k)?
Yes, Boeing allows employees to borrow from their 401(k) account. You can take out a loan of up to 50% of your vested balance or $50,000, whichever is lower. Loans must be repaid with interest within five years, or 20 years if the money is used to purchase a home.
What happens to my Boeing 401(k) if I leave the company?
If you leave Boeing, you have several options for your 401(k). You can leave your funds in the Boeing 401(k) plan, roll them over into an IRA, transfer them to your new employer's 401(k) plan, or withdraw the funds (though this could incur taxes and penalties if done before age 59½). Rolling the funds into a new retirement account is typically the most tax-efficient option.
Does the Boeing 401(k) have any fees?
While Boeing’s 401(k) plan offers a variety of low-cost investment options, there may still be management fees or fund-specific fees, depending on the investments you choose. Fees for index funds or target-date funds are typically lower than the fees for actively managed funds.
Who manages the Boeing 401(k)?
Boeing's 401(k) and other retirement plans are administered by Fidelity Investments. This partnership began in 2022. Fidelity handles the Boeing 401(k) accounts, including participant contributions, employer matching, and investment management.
How long do you have to work at Boeing to get a pension?
For the Boeing 401(k) plan, there is no vesting period for employee contributions or company matching. You have immediate control of your 401(k) funds, and you can access your 401(k) savings at any time when leaving the company.
Do Boeing employees get company stock?
Boeing offers employees the opportunity to purchase company stock through the Boeing Employee Stock Purchase Plan (BESPP). Using the BESSP, employees can buy Boeing stock at a discount using after-tax payroll deductions. (The discount is calculated based on the average of the high and low trading prices on the applicable purchase date.)
Additionally, Boeing grants stock options and restricted stock units (RSUs) as incentives.
How does the Boeing 401(k) compare to other companies?
The Boeing 401(k) Retirement Plan is one of the largest in the U.S., managing over $60 billion in assets. Boeing’s employer match rate is higher than most companies offer, and immediate vesting helps place it above many other top-tier corporations. These benefits — along with others — make the Boeing 401(k) an attractive retirement plan for anyone.
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