ExxonMobil Retirement Timeline
How To Plan For Retirement Throughout Your Career
Preparing for Retirement
Whether you are 10 days or 10 years away from retirement at ExxonMobil, most people aren’t quite sure where to start when it comes to preparing. At Rhame & Gorrell Wealth Management, we have cracked the code to helping individuals ready themselves for that exciting milestone. Our unique process involves walking hand-in-hand with ExxonMobil employees throughout their careers, which ultimately results in the outcome they want: a stress-free transition into retirement. Our goal is to help our clients retire with two main objectives in mind:
- Execute the retirement process as smoothly as possible, and
- Ensure that our clients walk out the door with the highest level of benefits available by using our
expertise in the ExxonMobil Savings Plan, Pension plan, tax law, and more.
With these goals in mind, we have created a brief timeline of actions that you should consider following regardless of your proximity to retirement from ExxonMobil. It doesn’t matter what stage of your career you are currently in, it’s never too late to benefit from our expertise.
Early & Mid-Career Stage
(10+ years to retirement)
During the majority of an ExxonMobil employee’s career, they will fall into this category. Our role throughout this period is to help you make a couple of key decisions. You need to:
- Quantify your personal risk appetite for investments
- Construct an optimum Savings Plan portfolio of investments that matches your risk tolerance
- Plan for other major expenses, such as college funding for children
- Save as much as possible!
This part of the plan is relatively simple. During this phase, it’s important to save as much as you can, as early as you can to take advantage of the power of compounding! The key to this phase is to build an appropriate portfolio that has a level of risk you’re comfortable with.
Many of the individuals we have helped have no idea about what they actually own when they purchase an “International Unit” or an “EMU”. Our team can accurately assess your appetite for risk and assist you in creating an appropriate portfolio based on your goals – all with no cost to you.
During this process, you should continue to interface with our team on at least an annual basis. We can continue to monitor the progress of your portfolio as you get closer to retirement and ensure you’re still allocated correctly inside the savings plan.
(2-7 years to retirement)
In this phase, our goal is to begin taking some of the risk of your portfolio in the savings plan off the table. Since this phase typically begins in your late 40s to mid-50s, we traditionally see much of the household debt like student loans, mortgages, etc. begin to disappear. This frees up even more cash flow for retirement savings.
In some cases, the Savings Plan contribution limits may be too low, and it may make sense to use additional investment strategies. These include the Mega Backdoor Roth Conversion, Nondeductible IRA contributions and conversions, standard brokerage accounts, or the supplemental pension plan (SPP) and savings plan (SSP). Our team will continue to guide you through the most advantageous investment opportunities to compound your wealth in this vital phase.
The Home Stretch
(Less than 1 year to retirement)
This phase is where things really start to heat up. Once you have a retirement date planned, you’ll want to complete a few specific actions:
Initiate Your Retirement
The first step in the retirement process is to contact the ExxonMobil human resources (HR) department at 1-800-682-2847 between 3 and 4 months prior to your retirement date. You will be required to provide the HR department with your last day on the payroll and your benefit commencement date (BCD).
The human resources department will mail a Benefit Commencement Package (BCP) to you and you will be assigned a case administrator. The administrator will assist you in filling out your retirement paperwork and will be available to answer questions that you may have regarding the retirement process. If you prefer, our team is extremely familiar with the retirement paperwork and is happy to assist you.
ExxonMobil Pension Election
Prior to your retirement, you will need to provide ExxonMobil’s human resources department with your pension elections by filling out the pension authorization forms that are contained in your Benefit Commencement Package (BCP). You will be required by written signature to select between the pension annuity options, lump sum or a combination. Depending on your status as a heritage Exxon or heritage Mobil employee, your pension options will be slightly different.
Pension Annuity – Depending upon which form of annuity you choose, this pension option (single life, joint and survivor, etc.) will provide you with a fixed annual amount of income for life or joint lives. The single life annuity option provides the retiree with the maximum amount of income. However, once the retiree is deceased, income benefits to the family are terminated. The joint and survivor annuity option provides the retiree with a reduced amount of income for life and for the life of their surviving spouse.
Pension Lump Sum (PLS) – If you choose to receive your ExxonMobil pension as a lump sum, you will need to notify the H.R. department and provide the name of your IRA Custodian. Although not mandatory, it is highly recommended to instruct the H.R. department to directly rollover your pension balance to an IRA.
ExxonMobil 401(k)/Savings Plan
To distribute assets from the Savings Plan, no paperwork is involved. You will need to contact the Savings Plan administrators to complete the distribution. Making a mistake at this point can be detrimental, so we ALWAYS complete the savings plan call with our clients. When you’re making the distribution, keep in mind that there are only three types of assets that can be taken from the Savings Plan:
Cash – All the Savings Plan Unit Funds like Common Assets, Equity, International, Extended Market, International, Balanced and Bond Unit funds must be liquidated and distributed as cash. These assets can be rolled over into an IRA. A check made payable to your IRA custodian for the benefit of you will be mailed to your home address or to an alternative address (such as your investment firm) upon your request.
ExxonMobil Stock Shares – These assets can be rolled over to an IRA in the form of cash or shares. If you select cash, a check will be made payable to your IRA Custodian for the benefit of you and mailed to your home or financial institution. If you elect to receive stock shares, the shares will be transferred from the Savings Plan to Computershare. Computershare will mail you a notification letter within two weeks of receiving your stock shares from the Savings Plan. The letter will provide you with your Computershare account number. Once you sign an IRA transfer form from your IRA custodian and provide your investment firm with your Computershare account information, your ExxonMobil shares can be transferred into your IRA.
ExxonMobil Net Unrealized Appreciation (NUA) Stock Shares – To receive company stock shares under the NUA tax guidelines, you must receive a full distribution of the Savings Plan within the same calendar year once you retire or reach another qualifying event. This is the most overlooked aspect of ExxonMobil retirement and it can be extremely beneficial! When assets come out of an IRA, they can be taxed at the highest income tax rate (37.0% in 2023). If you take NUA treatment and keep the stock in a taxable account, you pay capital gains rates. Typically, capital gains are taxed at 15%, but based upon your income it can be as high as 20% or as low as 0%. Read more about how ExxonMobil employees can utilize the NUA strategy.
Need Some Help?
If you’d like some help from a CPA or CERTIFIED FINANCIAL PLANNER (CFP®) professional regarding this strategy and how it applies to you, the Rhame & Gorrell Wealth Management team is here to help.
Our experienced Wealth Managers can help you review your financial and tax situation inside the Savings Plan and come up with a custom tax optimization strategy going forward – all at no cost to you!
Feel free to contact us at (832) 789-1100, [email protected], or click one of the buttons below to ask a question or schedule your complimentary strategy session today.
Rhame & Gorrell Wealth Management is not affiliated with or endorsed by ExxonMobil
Rhame & Gorrell Wealth Management, LLC (“RGWM”) is an SEC registered investment adviser with its principal place of business in the State of Texas. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that RGWM has attained a certain level of skill, training, or ability.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own CPA or tax professional before engaging in any transaction. The effectiveness of any of the strategies described will depend on your individual situation and should not be construed as personalized investment advice.
For additional information about RGWM, including fees and services, send for our Firm Disclosure Brochures as set forth on Form ADV Part 2A and Part 3 by contacting the Firm directly. You can also access our Firm Brochures at www.adviserinfo.sec.gov. Please read the disclosure brochures carefully before you invest or send money.