Maximizing Your Boeing 401(k)

For most Boeing employees, maximizing retirement savings is a smart step toward ensuring long-term financial security. Boeing's 401(k) plan allows high earners to contribute up to $69,000 annually through pre-tax, post-tax, and employer contributions. This unique setup also offers an ideal path for Roth conversions, allowing you to grow some of your retirement savings. Here's how to fully utilize Boeing's 401(k) to secure a more flexible and tax-efficient retirement.

Understanding the Contribution Limits

The 401(k) contribution limits can be broken down as follows:

1. Employee Pre-Tax and Roth Contributions: In 2024, you can contribute up to $27,000 if you're over 50, thanks to the additional $7,500 catch-up contribution. In 2025, if you are between 60 and 63, you can contribute $11,250 as a catch-up.
2. Employer Match: Boeing provides an employer match, which adds to the total annual contribution amount. Maximizing this match is essential, as it's essentially "free" money toward your retirement.
3. After-Tax Contributions: If you've maximized your pre-tax contributions and Boeing's matching contributions, you can contribute additional funds after-tax, bringing your total 401(k) contribution limit up to $69,000, including all contributions.

The After-Tax Contribution and Roth Conversion Strategy

The IRS allows employees to make after-tax contributions to their 401(k), which can then be converted into a Roth account. This "Mega Backdoor Roth" strategy is an attractive option for Boeing employees, especially as the company's plan allows for in-plan Roth conversions. Here's how it works:

1. Max Out Pre-Tax Contributions: Start by ensuring you've contributed the maximum allowable amount to your 401(k) through pre-tax or Roth contributions ($27,000 if you're over 50).
2. Contribute After-Tax Dollars: Once you've reached this limit, you can contribute after-tax dollars up to the $69,000 cap, depending on Boeing's match amount.
3. Convert After-Tax Funds to Roth: By converting these after-tax funds to a Roth 401(k) or an external Roth IRA, you can grow your money tax-free. Roth funds are also not subject to required minimum distributions (RMDs), giving you more flexibility during retirement.
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Why Roth Conversions Make Sense for High Earners

For high earners, Roth conversions have several distinct advantages:

• Tax-Free Growth: Any earnings on your Roth 401(k) funds grow tax-free, which can make a significant difference over the years.
• No RMDs: Unlike traditional 401(k)s, Roth accounts are not subject to RMDs, so you won't be forced to take taxable distributions at age 73. This allows you to better manage your income in retirement and potentially reduce your tax burden.
• Flexibility: Roth accounts offer flexibility that traditional accounts don't. Because distributions are tax-free in retirement, they can be strategically used to manage your taxable income in retirement years.
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Planning for a Successful Retirement with a Strategic 401(k) Approach.

Taking full advantage of your Boeing 401(k) plan requires careful planning, but the potential rewards are worth it. Contributing up to $69,000 and leveraging the Mega Backdoor Roth conversion can increase your savings, reduce future tax obligations, and allow you greater control over your retirement income.

As you approach retirement, aligning your 401(k) contributions and Roth conversions with a long-term tax strategy is essential. Working with a financial advisor can help you navigate these options and determine the best approach for your circumstances. This strategy may only be suitable for some, but for high-income earners looking to build a robust retirement plan, it's an effective way to get the most from Boeing's 401(k) offerings.

Ready to maximize your Boeing 401(k)? Contact us at Centorbi Financial to explore how you can optimize your retirement contributions and tax strategy.