What Happens to Your Retirement Savings When You Leave Boeing?
Leaving Boeing can be a major change for any employee. Whether you're retiring, resigning, or facing termination, you’ll want to understand how your retirement plans and benefits will be affected. That way, you can adapt your finances accordingly.
In this guide, we’ll look at what you need to know to make informed decisions about your future.
Key Takeaways
No matter why you’re leaving Boeing, you have options to protect and manage your retirement funds.
You may choose to withdraw your funds, leave them at Boeing, or roll them over into a Roth IRA or new employer’s plan.
With the right approach, you can preserve your savings and retire with more.
Understanding Boeing's Retirement Plans
Boeing offers valuable retirement benefits for employees. These benefits can continue to support you after leaving the company, regardless of how you make your exit.
The primary Boeing retirement benefit is the Voluntary Investment Plan (VIP), also known as the Boeing 401(k) Retirement Plan. Boeing also offered a defined benefits pension plan in the past, but this has been phased out for new employees, with a greater focus on the VIP.
Voluntary Investment Plan (VIP)
The Boeing Voluntary Investment Plan (VIP) is a 401(k) program that lets employees invest and grow their savings for retirement. Key features include:
Employee contributions: Employees can contribute a percentage of their salary, with pre-tax, Roth, and after-tax options available.
Company match: Boeing matches your contributions dollar-for-dollar up to a cap of 10% of your total salary.
Investment options: Boeing offers a variety of investment options, including lifecycle funds, index funds, and individual stocks.
Defined Benefits Pension Plan (Phased Out)
While Boeing historically offered defined benefit pension plans, these have been discontinued for new employees. Current employees may still have access to these benefits if they were hired before the phase-out period.
The pension benefit is usually calculated based on factors such as years of service and salary history. Retirees can choose from various payment options, including single life annuity, joint and survivor annuity, and lump-sum payment.
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Scenarios for Leaving Boeing
There are multiple ways you might part ways with Boeing. Here are some possible scenarios — and what you should do to protect your retirement savings.
1. Resignation
If you decide to leave Boeing on your own, there are some steps you should take right away.
Notify Boeing and update information: Ensure that your personal information is up to date through Boeing Worklife and any other relevant service centers. If necessary, update your address and contact details so you can receive important communications regarding your benefits.
Evaluate your VIP options: Decide whether to keep your 401(k) with Boeing, roll it over into a new employer’s plan, or transfer it to an IRA. Consider factors such as investment choices, fees, and tax implications. Rolling over to an IRA often provides more investment options and flexibility.
2. Retirement
When the time comes to retire from Boeing, you’ll want to make sure your retirement savings are taken care of.
Access pension and 401(k) benefits: Contact Boeing’s Financial Benefits Service Center to understand your payout options and how to manage your 401(k) distributions.
Consider health and insurance benefits: Evaluate health insurance options, especially if you're eligible for Medicare. Boeing offers health programs like Teladoc Health and Hinge Health, which can be beneficial in managing your health post-retirement.
Consult a financial advisor: The sooner you start working with a qualified financial advisor, the better. Your advisor can help you plan for retirement and make the most of your savings.
PRO TIP: Start planning for Medicare well before your retirement to avoid any gaps in coverage and maximize your benefits.
3. Layoff
Being laid off can be a challenging experience, but you can still manage your retirement plans effectively.
Review your severance package: Take the time to review the details of any severance package offered, including how it impacts your benefits.
Decide what to do with your VIP funds: After being laid off, you may choose to roll over your 401(k) into an IRA or a new employer’s plan. Alternatively, you might withdraw your funds early. The right decision will depend on your unique situation. Talk to your financial advisor to learn which option makes sense for you!
PRO TIP: Consider using a high-yield savings account to park any severance pay or emergency funds to earn interest while keeping your money accessible!
4. Termination
If you are fired from Boeing, take these steps to secure your retirement benefits:
Contact the Benefits Service Center: As soon as possible, get in touch with Boeing’s Financial Benefits Service Center to discuss your options and ensure your benefits are protected.
Manage your VIP funds: Consider rolling over your 401(k) and pension benefits to maintain control and potentially reduce fees. This ensures that your retirement savings remain secure and well-managed.
Get advice from your financial advisor: No matter how you leave Boeing, it’s always wise to have reliable financial help in your corner. Your advisor can give you the guidance you need to make informed decisions with your retirement savings.
Keep track of all documents and correspondence from Boeing regarding your termination and benefits. This can help resolve any issues that may arise after you leave.
5. Leave of Absence
When taking a leave of absence, whether for personal reasons or medical leave, you should be able to maintain your Boeing retirement account. Coordinate with Boeing’s HR and benefits service center to ensure that your contributions and benefits continue during your leave.
6. Disability Leave
Employees on disability leave may have access to additional health benefits and support programs. Speak to the Boeing Benefits Service Center to learn your options. This will help you maximize your benefits during this period.
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Special Considerations for Employees Leaving Boeing
No matter why you’re departing Boeing, there are several factors you should keep in mind when leaving the company.
1. Minimum Balance Requirements
If your account balance falls below a certain threshold, Boeing may require you to roll it over into another retirement account or distribute it. For example, if you have less than $5,000 in your VIP account, you will likely need to withdraw or roll over your finances when leaving the company.
If possible, make sure your account meets the minimum balance requirements to avoid unnecessary fees or forced distributions, which can disrupt your retirement plans.
2. Understanding Vesting
Here’s some good news: Boeing's employees are 100% vested in your VIP funds immediately. This means that from the very start, you have full ownership of both your own contributions and Boeing's matching contributions.
This allows for flexibility and security when managing retirement savings, regardless of how long you remain with the company.
3. Company Stock and NUA Strategies
If you hold Boeing company stock within your 401(k), you should be aware of the net unrealized appreciation (NUA) strategy. This can provide significant tax advantages.
NUA basics: NUA is the difference between the cost basis of the company stock and its current market value. When you distribute the stock to a taxable brokerage account, you only pay ordinary income tax on the cost basis, while the appreciation is taxed at the lower long-term capital gains rate.
Strategic advantages: Using NUA can reduce your overall tax liability compared to withdrawing the stock as a cash distribution from your 401(k). This strategy is particularly beneficial if there is a substantial difference between the ordinary income tax rate and the long-term capital gains rate.
Implementing NUA: To take advantage of NUA, you must follow specific IRS rules, including ensuring that the stock is distributed in-kind to a taxable account. Consulting with a financial advisor or tax professional is recommended to navigate the complexities and ensure compliance.
Talk to your financial advisor to learn more about this strategy!
4. Tax Implications of Retirement Plan Distributions
Managing the tax implications of distributions from your retirement plans is essential to maximize your savings.
401(k) and IRA distributions: Withdrawals from your 401(k) and traditional IRA are taxed as ordinary income. Plan these distributions carefully to avoid pushing yourself into a higher tax bracket.
Roth conversions: Converting a traditional 401(k) or IRA to a Roth account can provide tax-free withdrawals in retirement. However, the conversion amount is subject to income tax in the year of conversion. Consider the timing and tax implications of such a conversion.
Required minimum distributions (RMDs): Starting at age 73, you must take RMDs from your traditional 401(k) and IRA accounts. Failure to take RMDs can result in significant penalties. Proper planning can help manage the tax impact of RMDs.
PRO TIP: The Boeing Mega Backdoor Roth program is a great way to reap the rewards of a Roth IRA! To learn more, check out this guide: The Boeing Mega Backdoor Roth: Retire with More.
Get Help from the TrueWealth Team!
Leaving Boeing can be a major transition in your professional and financial life. With careful planning and the right advice, you can ensure that your retirement savings continue to grow and support your future goals.
Whether you're resigning, retiring, or facing an unexpected layoff, understanding your options and taking proactive steps can make all the difference. And we can help!
At TrueWealth Financial Partners, we offer reliable guidance to help you prepare for retirement with confidence. We’ll take the time to understand your unique needs and goals so we can customize our strategies for you.
Schedule a quick introductory call today, and we’ll be happy to help you in any way we can!
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Leaving Boeing FAQs
What happens to my Boeing 401(k) if I leave the company?
You have several options for your Boeing 401(k) when you leave the company:
Leave it with Boeing: You can leave your 401(k) account with Boeing and continue to manage it through their platform.
Roll it over: You can roll your 401(k) over into an IRA or a new employer’s 401(k) plan. Rolling over to an IRA typically offers more investment options and flexibility.
Cash out: While this option is available, it is usually not recommended due to the significant taxes and potential early withdrawal penalties involved.
How do I access my pension benefits after leaving Boeing?
To access your pension benefits after leaving the company, contact the Boeing Benefits Service Center. They will help you access your funds.
Can I continue my health insurance after leaving Boeing?
Yes, you have several options to continue your health insurance:
Continuation of Health Coverage (COBRA): You can opt for COBRA coverage, which allows you to continue your current health insurance for a limited period, typically up to 18 months, by paying the full premium plus an administrative fee.
Retiree health plans: If you are eligible, Boeing offers retiree health plans that may provide continued coverage. These plans vary based on whether you are eligible for Medicare.
What should I know about rolling over my Boeing 401(k)?
When considering rolling over your 401(k):
Investment options: Compare the investment options available in the new plan or IRA versus your current Boeing 401(k).
Fees: Assess the fees associated with the new account compared to your current plan.
Tax implications: Ensure you understand the tax implications of rolling over your 401(k). Direct rollovers typically avoid immediate taxes, but indirect rollovers may result in tax withholding.
As always, be sure to consult your financial advisor before making any major decisions. It’s good to have some trustworthy input!
What should I do if I am laid off or fired from Boeing?
If you are laid off or fired:
Contact the benefits service center: Immediately reach out to discuss your options and understand how your benefits are affected.
Review severance package: Understand the details of any severance package offered and how it impacts your benefits.
Manage retirement accounts: Consider rolling over your 401(k) and any pension benefits to maintain control and avoid penalties.
Are there any special benefits for employees on disability leave?
Yes, Boeing provides specific benefits and support for employees on disability leave:
Additional health benefits: Employees on disability leave may have access to additional health benefits and support programs tailored to their needs.
Long-term disability insurance: Ensure you understand the long-term disability insurance options available and how they impact your overall benefits.
What are the benefits of rolling over my 401(k) to an IRA?
Rolling over your 401(k) to an IRA offers several benefits:
More investment options: IRAs typically provide a broader range of investment options compared to 401(k) plans.
Consolidation: If you have multiple retirement accounts, rolling them into a single IRA can simplify management and tracking.
Flexibility: IRAs offer more flexibility in terms of withdrawals and beneficiary designations.
Control over fees: IRAs may have lower fees than 401(k) plans, allowing you to keep more of your investment earnings.
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