The IRS has recently released the 2025 retirement plan contribution limits. For super-savers at Shell, this is great news. Shell employees can now contribute $23,500 (or $31,000 for those over 50 years old) of pre-tax or Roth savings to the Shell Provident Fund and can get up to $85,550 (or $95,050 for married couples aged 55-60) of retirement savings into tax-efficient vessels including the HSA, in 2025.
How Much Is Shell's 401(k) Contribution
Shell offers a 10% contribution to 401(k)accounts for employees who have been with the company for over nine years. Since the annual 401(k) income limit for 2025 is now $350,000, Shell will cap company contributions to the Provident Fund at $35,000.
How Shell Employees Can Max Out the Shell 401(k) if Under Age 50
If you’re under age 50, the total IRS limit for 401(k) contributions in 2025 from employee or employer contributions is $70,000. Here's how it breaks out:
- In Pre-tax or Roth: Employees under age 50 can contribute up to $23,500 across the two sources
- In Non-Roth After-Tax Contributions: The maximum Shell allows for after-tax contributions is $11,500 in 2025.
- Shell's Employee Contribution: Shell contributes anywhere from 2-10% of an employee's compensation to their 401(k) each year. The maximum they can contribute in 2025 is $35,000 due to the IRS' income limits.
How Shell Employees Can Max Out the Shell 401(k) if Aged 50-59 or Over Age 63
Before reaching age 55, when an additional HSA catch-up comes into play, your contributions could look like this:
If you’re age 55-59 or over 63, the total IRS limit for 401(k) contributions in 2025 from employee or employer contributions is $77,500, broken out as follows:
- In Pre-tax or Roth: Employees in these age brackets can contribute up to $31,000 across the two sources, thanks to a $7,500 catch-up allowance.
- In Non-Roth After-Tax Contributions: The maximum Shell allows for after-tax contributions is $11,500 in 2025, regardless of age.
- Shell's Employee Contribution: The maximum amount Shell will contribute to an employee's Provident Fund in 2025 is $35,000 due to the IRS' income limits.
If you max out all of these sources and the full HSA contribution limit for families with an individual catch-up because you're over 55, you could save over $95,050 in tax-efficient vessels in 2025!
How Shell Employees Can Max Out the Shell 401(k) if Age 60-63
Employees aged 60 to 63 after January 1, 2025, can contribute even more to workplace retirement plans thanks to legislation under Secure Act 2.0. Individuals in this age group have a higher catch-up contribution amount, indexed each year for inflation.
2025 Changes to 401(K) Contribution Limits for Those Ages 60-63 Under SECURE Act 2.0
Instead of the standard catch-up amount of $7,500 for individuals aged 50-59 or 63+, savers aged 60-63 can leverage a catch-up amount of $11,250 in 2025 to boost their retirement savings. Here's how it breaks out across sources:
- In Pre-tax or Roth: Employees in these age brackets can contribute up to $34,750 across the two sources. Thanks to the new instated $11,250 catch-up amount, individuals can contribute $3,750 more than if they only had the standard over 50 catch-up of $7,500.
- In Non-Roth After-Tax Contributions: The maximum Shell allows for after-tax contributions is $11,500 in 2025, regardless of age.
- Shell's Employee Contribution: The maximum amount Shell will contribute to an employee's Provident Fund in 2025 is $35,000 due to the IRS' income limits.
This change provides a valuable opportunity for older employees to enhance their retirement savings as they approach retirement. Employees in this 3-year age bracket maxing out their Provident Fund, a family HSA with catch-ups, and backdoor Roths can save up to $98,800 in 2025!
2025 Income Limits for 401(k) Contributions
The annual compensation limit for 2025 has increased from $345,000 to $350,000. If you make over $350,000 in base and bonus compensation for 2025, remember to max out your Provident Fund contributions before reaching that income threshold. After you earn $350,000 of income, both you and Shell can no longer contribute to the Provident Fund.
What Happens if You Make More than the 401(K) Income Limits?
In 2025, once you earn more than $350,000, Shell will contribute to the Shell Provident Fund BRP (Benefit Restoration Plan) instead of the Shell Provident Fund. If 2025 is the first year you expect to make over $350,000, check that you have an allocation and investment strategy for your Provident Fund BRP. The 2025 limit adjustments will be advantageous for super-savers at Shell, and it is crucial to be sure that you make the most of these changes.
Shell Employees Can Save on Taxes Using a Mega Backdoor Roth with After-Tax 401(K) Contributions
The IRA contribution limit for 2025 stays at $7,000 ($8,000 if over age 50). Though many are prevented from directly contributing to a Roth IRA, many Shell employees can take advantage of the backdoor Roth strategy to get more saved in Roths each year.
Additionally, if you are contributing after-tax dollars to the Shell Provident Fund, you can roll out the after-tax funds annually to a Roth IRA to take advantage of the mega backdoor Roth strategy for additional tax savings over time.
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How to Use Shell's HSA (Health Savings Account) for Tax-Optimized Savings
A Health Savings Account (HSA) is often an under-utilized benefit that provides a unique triple tax advantage for those looking to save more each year:
- Tax-Deductible Contributions: Contributions made to an HSA are tax-deductible, which means they lower your taxable income in the year you make the contribution. This can reduce your overall tax liability.
This year, Shell employees can contribute up to $8,550 (or $10,550 if they are over age 55 and both spouses are taking advantage of the catch-up contribution) for a family. For individuals, the maximum HSA contribution is $4,300. - Tax-Free Growth: The funds in your HSA can be invested, and any earnings or capital gains from these investments are tax-free as long as they remain in the account. This allows your savings to grow over time without incurring taxes.
- Tax-Free Withdrawals for Qualified Medical Expenses: The withdrawals are entirely tax-free when you use the HSA funds for qualified medical expenses.
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When using an HSA as a retirement fund, Shell employees can benefit from both tax deductions and tax-free growth, making HSAs a valuable tool for long-term savings and retirement planning.
Get a Tailored Savings Plan From an Advisor with Specialized Shell Benefits Knowledge
At Willis Johnson & Associates, we work with our Shell clients to help them get the full 10% company contribution, take advantage of backdoor Roth IRAs, and facilitate after-tax roll-outs from the Provident Fund to get the maximum savings. If you have any questions about the 2025 contribution and compensation limits, please contact your advisor or schedule a free consultation with one of our Shell specialists.
