The IRS has recently released the 2023 retirement plan contribution limits. For super-savers at Shell, this is great news. Shell employees can now contribute $22,500 (or $30,000 for those over 50 years old) of pre-tax or Roth savings to the Shell Provident Fund and can get up to $72,500 (or $81,000 for those over 50 years old) of retirement savings into tax-efficient vessels in 2023.
How Shell Employees Can Max Out the Shell 401(k)
Shell’s limit on after-tax contributions hasn’t been announced for 2023 yet. If we assume that they’ll increase their limits so employees can max out the 401(k), the after-tax limit for 2023 for Shell employees will be $10,500.
If you’re under age 50, the total IRS limit for 401(k) contributions in 2023 from employee or employer contributions is $66,000. This means employees under age 50 can contribute up to $33,000 to the Shell Provident Fund, between pre-tax and non-Roth after-tax savings.
If you’re over age 50, the total IRS limit for 401(k) contributions in 2023 from employee or employer contributions is $73,500. If Shell contributes the full $33,000 contribution, employees over age 50 can contribute $40,500 across the Pre-Tax, Roth, or After-Tax sources.
How Shell Employees Can Make Tax-Efficient Retirement Plan Contributions
If you are contributing after-tax dollars to the Shell Provident Fund, remember to roll out the after-tax funds at least once annually to a Roth IRA so that you can take advantage of the mega backdoor Roth strategy.
Many Shell employees will be able to take advantage of the backdoor Roth savings strategy. With the IRA contribution limit increasing to $6,500 ($7,500 if over age 50), super-savers at Shell can put away $39,500 ($48,000 if over age 50) — between the Provident Fund and backdoor Roths— into tax-sheltered retirement accounts.
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2023 Income Limits for 401(k) Contributions and Strategic Saving for Shell Employees
The annual compensation limit for 2023 has increased from $305,000 to $333,000. If you make more than $330,000 in base and bonus compensation for 2023, remember to ensure that you max out your Provident Fund contributions before earning $330,000 of income. After you earn $330,000 of income, you can no longer contribute to the Provident Fund.
Shell's 401(k) Match
Shell offers a 10% contribution to 401(k)accounts for employees that have been with the company for over nine years. Since the annual compensation limit for 2023 is now $330,000, Shell will now cap company contributions to the Provident Fund at $33,000.
Shell Provident Fund Benefit Restoration Plan (BRP)
In 2023, once you begin earning more than $330,000, Shell will make their contributions to the Shell Provident Fund BRP (Benefit Restoration Plan) instead of to the Shell Provident Fund. If 2023 is the first year you expect to make more than $330,000, check that you have an allocation and investment strategy set up for your Provident Fund BRP. The 2023 limit adjustments will be advantageous for super-savers at Shell and it is important to be sure that you make the most of these changes.
At Willis Johnson & Associates, we work with our Shell clients to ensure they get the full 10% company contribution, take advantage of backdoor Roth IRAs to ensure they are on track for success, and facilitate after-tax roll-outs from the Provident 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 Shell specialists.
