Exxon 2024 updates

Exxon has made major adjustments for 2024 in an effort to improve the perks and assistance offered to both employees and retirees. These modifications cover a variety of measures meant to enhance the ExxonMobil community's general health, financial stability, and well-being. Here's a detailed rundown of the most important improvements and modifications:

1. Updates on Pension Plans

Salary Cap: The $275,000 salary cap for the 2024 pension benefit has been established.

Benefit Limit: The amount of monthly payments that retirees are eligible to receive in retirement is limited by the benefit limit.

Segment Rates: From Q1 to Q2, 2024, segment rates were somewhat lower. For retirees whose benefit start date (BCD) falls in Q2, this reduction will result in a minor rise in lump payment amounts.

Lifetime Monthly Retirement Benefit: ExxonMobil is still providing its workers with a complimentary lifetime monthly retirement benefit. Employees must leave the company on or after the age of 55 and have worked there for at least 15 years in order to be eligible.

Non-Retiree Pension choices: There are three choices available to employees who leave their job before they are eligible for retirement, which is normally at age 55 after 15 years of service.

At age 65, get the entire vested benefit as a single-life annuity.

Get a benefit that is discounted if you are under 65.

Get an offer for a one-time lump sum.

Details about Vesting and Annuities: Following five years of qualifying service, employees are fully vested in the pension benefit. The formula for calculating "pensionable pay" is based on averaging the best 36 months in a row during the previous ten years, usually the latest 36 months.

2. Switch to Alight Solutions

ExxonMobil will hand over its benefits administration to Alight Solutions on January 2, 2024. The goal of this change is to improve retiree and employee benefit management and accessibility.

Your Total Rewards site: Run by Alight, this new site will give users access to a range of tools and information, such as beneficiary designations, direct deposit setting, tax withholding changes, and management of health and pension plans.

Pension and Health Plan Payments: Bank of America will handle pension payments, using the same payment methods as before. The payment of health plan premiums will also be moved to Alight, necessitating that employees adjust their modes of payment.

Security measures: To protect personal information, the site will use cutting-edge encryption techniques. Automatic log-off features will also be in place to guarantee data security.

Support and Assistance: Employees can get help navigating the new system and addressing any concerns from the Alight-managed ExxonMobil Benefits Service Center via phone or online chat.

3. Health Advantages

Medical Plan: The full coverage for medical, prescription medicine, and mental health benefits is part of ExxonMobil's medical plan. Workers have a choice between two network-only and Point of Service (POS) II alternatives. There are minimal or no deductibles for preventive care.

Dental and Vision Plans: The dental plan includes partial coverage for orthodontics as well as 100% coverage for preventative care and other dental operations. The vision plan includes discounts on laser eye surgery, yearly eye exams, and allowances for lenses, frames, or contact lenses.

Flexible Spending Accounts (FSAs): FSAs reduce taxable income and ease out-of-pocket expenses by enabling employees to set aside pre-tax money for qualified healthcare and dependent care expenses.

Employee Assistance Program (EAP): At no additional expense, the EAP offers private, mental health-related expert therapy for concerns pertaining to families and individuals.

4. Security Advantages

Life Insurance: Free coverage for accidental death and dismemberment (AD&D) and basic life insurance are given automatically. Workers have the option to choose voluntary AD&D insurance and Group Universal Life (GUL) for supplementary coverage.

Disability Insurance: In the event of an illness or accident, both short-term and long-term disability insurance provide income protection. While long-term disability gives 50% of salary, with additional potential replacement income, short-term disability offers up to six weeks of full pay.
 
5. Monetary Gains

Savings Plan: Employees may contribute 6% to 20% of their salary; if they contribute at least 6%, ExxonMobil will match 7% of their contribution. The strategy promotes financial stability and growth by providing a range of investment opportunities.

Pension Plan: Automatic enrollment in the plan entitles participants to a monthly payout upon retirement. After five years of service, vesting takes place, and early retirement is an option.

Financial Fitness Program: By providing employees with financial planning tools and resources, this program helps them manage their money wisely and get ready for a stable financial future.

 6. Assistance Advantages

Work-Life Balance: ExxonMobil promotes work-life balance with a number of initiatives, such as paid parental leave, personal time off for emergencies, and vacation days beginning on the first day of work.

Adoption aid and Back-Up Care: Employees are guaranteed the support they require during important life events with financial aid for adoption and back-up care programs for family members.

7. Updates on Strategic and Financial Performance

Financial Results for the First Quarter of 2024: As a result of increased costs and lower refining margins, ExxonMobil reported $8.22 billion in net income for the first quarter of 2024, a 28% drop from Q1 2023. At $83.1 billion, total revenues decreased 1.3%, and the profit margin was 9.9%.

Operational Achievements: Since 2016, the company has lowered operating methane emissions intensity by more than 60% and achieved quarterly gross production in Guyana of more than 600,000 oil-equivalent barrels per day.

Returns to Shareholders: In Q1 2024, ExxonMobil reported free cash flow of $10.1 billion and shareholder payouts of $6.8 billion, which included $3.0 billion in share repurchases and $3.8 billion in dividends. Share repurchases will now occur at a rate of $20 billion annually.

 8. Takeaways for Workers and Retirees

Register on the Your Total Rewards site: In order for employees to properly manage their benefits, they must register on the new site. We'll send you some instructions and temporary passwords to make this procedure easier.

Update Payment Methods: In order to guarantee continuing coverage, employees who pay their health plan premiums by check or automatic deduction must update their payment methods.

Examine Beneficiary Designations: In order to speed up the payment process in the event of unforeseen circumstances, staff members should check and amend beneficiary designations on the new portal.

Watch Pension Payments: Retirees will be able to monitor and control their pension payments and withholdings by accessing pension payment statements via the portal.

In summary

ExxonMobil's thoughtful planning of the shift to Alight Solutions and its extensive benefits package demonstrate the company's dedication to its workers and retirees. ExxonMobil makes sure that its employees are well-protected and supported throughout their careers and into retirement by offering a broad range of health, security, financial, and support benefits in addition to improved management tools. Alight Solutions' adoption represents a major advancement in benefit administration, providing workers and retirees with enhanced benefit access, security, and management.

2024 Tax Changes & Inflation

Tax Reforms & Inflation for 2024
People must be made aware of any recent adjustments made by the IRS. The primary elements that are most likely to have an impact on corporate workers are:

The standard deduction for 2024 will rise to $21,900 for heads of household, $29,200 for joint filers, and $14,600 for single taxpayers and married filers filing separately.
Individuals who are blind or over 65 can increase their standard deduction by an extra $1,550. If you are not a surviving spouse or are not married, that amount increases to $1,950.
 

As in 2023, there is no personal exemption for the tax year 2024. A provision of the Tax Cuts and Jobs Act was the removal of the personal exemption.

Corporate employees who operate remotely may be subject to double taxation on state taxes. Many workers returned home as a result of the pandemic, sometimes even leaving the state in which they were working. Many of the temporary relief provisions that several states had in place last year to prevent double taxation of income have since expired. Currently, a "special convenience of employer" regulation is only in place in six states: Delaware, Connecticut, Nebraska, New Jersey, New York, and Pennsylvania. Ask your tax advisor if there are any other alternatives to reduce the double taxation if you work remotely for a business entity and do not now reside in those states.

Contributions to retirement accounts: You can lower your tax liability by making contributions to your employer's 401(k) plan, and the maximum amount you can save has been raised for 2024. In 2024, the maximum contribution amount that people can make to their 401(k) plans will rise to $23,000, from $22,500 in 2023. For 2024, there will be an increase in the income thresholds that determine who is eligible to make deductible contributions to traditional IRAs, roll over contributions to Roth IRAs, and claim the Saver's Credit. For workers who are 50 years of age or older, the maximum catch-up contribution will rise to $7,500.

You should be aware of the following significant changes to the Earned Income Tax Credit (EITC) if you are a taxpayer who works for a corporation:

 

For qualifying taxpayers with three or more qualifying children, the maximum Earned Income Tax Credit amount for tax year 2024 is $7,830, up from $7,430 for tax year 2023.
Those who are married and file separately may be eligible: If you satisfy certain requirements, you may be eligible to claim the EITC as a married filing separately. In past years, this wasn't offered.

 

Cash charitable contribution deduction: The special deduction that lets individuals who are not itemizers claim a deduction of up to $300 (or $600 for married couples filing jointly) for cash gifts to approved charities has ended.

Changes to the Child Tax Credit

For children aged five and under, the maximum tax credit is $2,000; for children aged six to seventeen, it is $3,000 per qualified child. Furthermore, unlike in 2023, you are not eligible to get a portion of the credit in advance. 
If your adjusted gross income is less than $200,000 if you're filing alone or less than $400,000 if you're filing a joint return with a spouse, you qualify for the Child Tax Credit as a parent or guardian. 
A partial refundability of 70% applies to people whose tax liability is less than the credit amount.

2024 Tax Brackets

 

Over time, inflation diminishes buying power because rising prices result in a basket of products becoming more expensive. You will need to account for increasing costs in your plan if you want to keep your retirement quality of living the same when you leave your business. The Federal Reserve targets an annual inflation rate of 2%, but in 2023 it reached a whopping 4.9%. a significant rise above the 1.4% in 2020. Even though costs have increased significantly overall, there are certain areas, like healthcare, to be mindful of if you are close to or already retired from your employer. Medicare serves as the primary health insurance for many business retirees, and in 2023, the out-of-pocket cost of such coverage is expected to rise by 5% to 14%. The cost of over-the-counter drugs is expected to rise by at least 7% in addition to Medicare increases. In their 2022 research, the Employee Benefit Research Institute (ERBI) discovered that, in order to pay for their average prescription expenses in retirement, a couple would need to save $296,000. All of these elements must be taken into account when creating a comprehensive retirement plan from your employer.

*Source: IRS.gov, Yahoo, Bankrate, Forbes

Planning Your ExxonMobil Retirement

Source: Is it Worth the Money to Hire a Financial Advisor?, the balance, 202

Starting to save as early as possible matters. Time on your side means compounding can have significant impacts on your future savings. And, once you’ve started, continuing to increase and maximize your 401(k) contributions is key.

79% potential boost in wealth at age 65 over a 20-year period when choosing to invest in your company's retirement plan.

*Source: Bridging the Gap Between 401(k) Sponsors and Participants, T.Rowe Price, 2020

Schedule a Call

 

Pension Formula

The ExxonMobil Pension Plan is a Defined Benefit Pension, based on years of service, final average pay, and a social security offset, with potential age penalties.

DB Pension (formula based)

• 5 year vest or age 65
• 1.6% * YOS *FAP - SS offset
  • FAP (highest 36 consecutive months in last 10 years
    
    

Normal Retirement Age

• Age 60 no AP reduction as a retiree
• Age 65 no AP reduction as a terminee
• 55 + 15 = Retiree* = -5% per year under 60
• *Earliest you can take pension is 50 if on disability
  
  

Age Penalty Reductions:

• If you are a pre-65 terminee you stand to face severe age penalties for each year before 65.
  
  

• Pension Distribution Options:

  Lump Sum

  Annuity (SLA + J&S + Period Certain 10/15/20)

  Partial Lump Sum w/Partial Annuity (75%/50%/25%)

  *Terminee only has Annuity Options

   

  PPA rate is being transitioned in.  High-quality corporate bond rates, and updated mortality assumptions, prescribed by the IRS, are being used.

   

  Pension Death Benefit- Active Employees

• The Pension Plan pays surviving spouse annuity, equal to 1/2 of your basic pension benefit earned up to the date of your death (50% J&S Annuity)
  
  
• Spouse may commence benefit at anytime from age 50-65 (your age) subject to early commencement penalties for terminees.

 

15 Years of service or more - Death Benefit Pension

• Calculated as if you retired on date of death and elected the lump sum option (Subject to early commencement penalties depending on age at death)
  
  
• Payable to beneficiary designated on "Special Beneficiary Designation Form" (found on HR intranet). Spousal consent required for non-spouse beneficiary and must be updated at age 35
  
  
• Can be paid as lump sum or basic life annuity using beneficiary's life expectancy
  
  
• Lump sum rollover subject to inherited IRA rules (PPA 2006)
  
  

  Lump-Sum vs. Annuity

  Retirees who are eligible for a pension are often offered the choice of whether to actually take the pension payments for life, or receive a lump-sum dollar amount for the “equivalent” value of the pension – with the idea that you could then take the money (rolling it over to an IRA), invest it, and generate your own cash flows by taking systematic withdrawals throughout retirement from your company.

  The upside of keeping the pension itself is that the payments are guaranteed to continue for life (at least to the extent that the pension plan itself remains in place and solvent and doesn’t default). Thus, whether you live 10, 20, or 30 (or more!) years after leaving your company, you don’t have to worry about the risk of outliving the money.
  
  

In contrast, selecting the lump-sum gives you the potential to invest, earn more growth, and potentially generate even greater retirement cash flow. Additionally, if something happens to you, any unused account balance will be available to a surviving spouse or heirs. However, if you fail to invest the funds for sufficient growth, there’s a danger that the money could run out altogether and you may regret not having held onto the pension’s “income for life” guarantee.

Ultimately, the “risk” assessment that should be done to determine whether or not you should take the lump sum or the guaranteed lifetime payments that your company pension offers depends on what kind of return must be generated on that lump-sum to replicate the payments of the annuity. After all, if it would only take a return of 1% to 2% on that lump-sum to create the same pension cash flows for a lifetime, there is little risk that you will outlive the lump-sum after leaving your company, even if you withdraw from it for life(10). However, if the pension payments can only be replaced with a higher and much riskier rate of return, there is, in turn, a greater risk those returns won’t manifest and you could run out of money.

Interest Rates and Life Expectancy

 

Current interest rates, as well as your life expectancy at retirement, have a large impact on lump sum payouts of defined benefit pension plans. The Blended Interest Rates rose for retirees commencing their ExxonMobil Pension in Q1 of 2023 through Q2 2024, before leveling off the last two months. Rising rates hurt your lump sum value. The reverse or opposite is also true. Decreasing or lower interest rates will increase the lump sum values.

Interest rates are important for determining your lump sum option within the pension plan. However, they have no impact on the annuity options. The Retirement Group believes all ExxonMobil employees should run a detailed RetireKit Cash Flow Analysis comparing their lump sum value versus the monthly annuity distribution options, before making their pension elections. As enticing as a high lump sum is,  the annuity for all or a portion of the pension may  still be the superior option, especially in a higher  interest rate environment. Every person’s situation is different, and a Cash Flow Analysis will show you how your pension choices may play out over the course of 30 years or more from now.

Your ExxonMobil 401(k) Plan

Borrowing from your 401(k)

Should you? Maybe you lose your job with your company, have a serious health emergency, or face some other reason that you need a lot of cash. Banks make you jump through too many hoops for a personal loan, credit cards charge too much interest, and … suddenly, you start looking at your 401(k) account and doing some quick calculations about pushing your retirement from your company off a few years to make up for taking some money out.

We understand how you feel: It’s your money, and you need it now. But, take a second to see how this could adversely affect your retirement plans after leaving your company.

Consider these facts when deciding if you should borrow from your 401(k). You could:

• Lose growth potential on the money you borrowed.
• Deal with repayment and tax issues if you leave your company.
• Repayment and tax issues, if you leave your company.
  

1. Roll-over your qualified plan to an IRA and continue deferring taxes.
2. Take a distribution and pay ordinary income tax on the full amount.
3. Take advantage of NUA and reap the benefits of a more favorable tax structure on gains.

 

How does Net Unrealized Appreciation work?

First an employee must be eligible for a distribution from their qualified company-sponsored plan. Generally, at retirement or age 59 1⁄2, the employee takes a 'lump-sum' distribution from the plan, distributing all assets from the plan during a 1-year period. The portion of the plan that is made up of mutual funds and other investments can be rolled into an IRA for further tax deferral. The highly appreciated company stock is then transferred to a non-retirement account.

The tax benefit comes when you transfer the company stock from a tax-deferred account to a taxable account. At this time, you apply NUA and you incur an ordinary income tax liability on only the cost basis of your stock. The appreciated value of the stock above its basis is not taxed at the higher ordinary income tax but at the lower long-term capital gains rate, currently 15%. This could mean a potential savings of over 30%.

As an ExxonMobil employee, you may be interested in learning more about NUA with  a complimentary one-on-one session with a financial advisor from The Retirement Group.

Your ExxonMobil Benefits

Divorce

Even being divorced does not bar you from receiving survivor benefits. If any of the following apply to you, you may be eligible for the survivor benefit of a divorce:

• Your former partner passed away.
• You were married for at least ten years before getting divorced, and you are at least sixty years old.
• You are unmarried (or you got married again after turning 60).

Are you going through a divorce?

You remain married even if your divorce isn't finalized by the time you retire. There are two choices available to you:

Retire before the divorce is final and choose a minimum 50% joint pension with your spouse, or obtain your spouse's notarized signature consenting to an alternative pension option or lump sum.
Put off retiring until after your divorce is finalized and you have the necessary divorce records.

Source: U.S. Department of Labor, "Generating Income That Will Last Throughout Retirement," as well as The Retirement Group, "Retirement Plans - Benefits and Savings," 2019. 2019's Fidelity

Survivor Checklist

In the unfortunate event that you aren’t able to collect your ExxonMobil benefits, your survivor will be responsible for taking action.

Life After ExxonMobil

While you may be ready for some rest and relaxation, without the stress and schedule of your full-time ExxonMobil career, it may make sense to you financially, and emotionally, to continue to work.

Sources