Shell Employees Can Save MORE in the Shell Provident Fund 401(k)

The IRS has recently released the 2021 retirement plan contribution limits. For super-savers at Shell,  this is great news. Shell employees can now contribute $19,500 (or $26,000 for those over 50 years old) of pre-tax or Roth savings to the Shell Provident Fund and can get up to $64,000 (or $71,500 for those over 50 years old) of retirement savings into tax-efficient vessels in 2021.

Shell’s limit on after-tax contributions has increased to $9,500, which means employees can contribute up to $29,000 (or $35,500 for those over 50 years old) to the Shell Provident Fund, between pre-tax and non-Roth after-tax savings.

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 staying at $6,000 ($7,000 if over age 50), super-savers at Shell can put away $35,000 ($42,500 if over age 50) -- between the Provident Fund and backdoor Roths-- into tax-sheltered retirement accounts.

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2021 Annual Compensation Limits and Strategic Saving for Shell Employees

The annual compensation limit for 2021 has increased from $285,000 to $290,000. If you make more than $290,000 in base and bonus compensation for 2021, remember to ensure that you max out your Provident Fund contributions before earning $290,000 of income. After you earn $290,000 of income, you can no longer contribute to the Provident Fund.

Shell's Company Match in the 401(k)

Shell offers a 10% contribution to 401(k)accounts for employees that have been with the company over nine years. Since the annual compensation limit for 2021 is now $290,000, Shell will now cap company contributions to the Provident Fund at $29,000.

Shell Provident Fund Benefit Restoration Plan

In 2021, once you begin earning more than $290,000, Shell will make their contributions to the Shell Provident Fund BRP (Benefit Restoration Plan) instead of to the Shell Provident Fund. If 2021 is the first year you expect to make more than $290,000, check that you have an allocation and investment strategy set up for your Provident Fund BRP. The 2021 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 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 2021 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Shell 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.