401(k) Contribution Limits & How to Max Out the Chevron Employee Savings Investment Plan (ESIP)

The IRS has recently released the 2022 retirement plan contribution limits. For super-savers at Chevron,  this is great news. Chevron employees can now contribute $20,500 (or $27,000 for those over 50 years old) of pre-tax or Roth savings to the Chevron Employee Savings Investment Plan and can get up to $67,000 (or $74,500 for those over 50 years old) of retirement savings into tax-efficient vessels in 2022.

The maximum amount Chevron employees can put toward after-tax contributions to get the full Chevron match benefit has increased to $16,100, which means employees can contribute up to $36,600 (or $43,100 for those over 50 years old) between pre-tax and non-Roth after-tax savings to their Chevron 401(k).

Some Chevron professionals accidentally overfund the after-tax source within the 401(k) which can impact the contributions they receive from Chevron. Learn more here>>

How Chevron Employees Can Make Tax-Efficient Retirement Plan Contributions

If you are contributing after-tax dollars to the Chevron ESIP, consider rolling out the after-tax funds to a Roth IRA at the tail end of the third quarter to take advantage of the mega backdoor Roth strategy. For many Chevron employees that are contributing after-tax, the end of the third quarter is the best time to do what we call an "after-tax rollover" because Chevron will freeze all company and employee after-tax basic contributions to the ESIP for the 90 days that follow the distribution. 


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2022 401(K) Income Limits and Strategic Saving for Chevron Employees

The annual compensation limit for 2022 has increased from $290,000 to $305,000. If you make more than $305,000 in base and bonus compensation for 2022, remember to ensure that you max out your ESIP contributions before earning $305,000 of income. After you earn $305,000 of income, you can no longer contribute to the Employee Savings Investment Plan.

 

What is Chevron's 401(k) Match?

Chevron offers up to an 8% contribution to employee 401(k) accounts. Since the annual compensation limit for 2022 is now $305,000, Chevron will now cap out contributions to the ESIP at $24,400. In 2022, once you begin making more than $305,000, Chevron will be making their contributions to the Employee Savings Restoration Plan (ESIP RP) instead of the Employee Savings Investment Plan. If 2022 is the first year you expect to make over $305,000, check that you have an allocation and investment strategy set up for your ESIP RP.

 

The Backdoor Roth Strategy for Tax-Efficient Savings

In addition, many Chevron employees will be able to take advantage of the backdoor Roth savings strategy. Since the IRA contribution limit for 2022 is $6,000 (and $7,000 for those over 50 years old), super-savers at Chevron can put away $42,600 (or $50,100 for those over 50 years old) between the 401(k) and backdoor Roths into tax-preferred retirement accounts. The 2022 limit adjustments will be advantageous for super-savers at Chevron and it is important to be sure that you make the most of these changes.

At Willis Johnson & Associates, we work with our Chevron clients to ensure they get the full 8% company contribution, take advantage of backdoor Roth IRAs to ensure they are on track for success, and facilitate after-tax roll-outs from the Employee Savings Investment Fund to get the maximum amount of savings. If you have any questions about the 2022 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Chevron specialists.

 

 

Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Corporate benefits may change at any point in time. Be sure to consult with human resources and review Summary Plan Description(s) before implementing any strategy discussed herein. Willis Johnson & Associates is not a CPA firm.