Section 1: 2024 Tax Changes & Inflation

Section 2: Planning Your Retirement

Section 3: Your Pension Plan

Section 4: Your 401(k) Plan

Section 5: Your Benefits

Section 6: Divorce

Section 7: Survivor Checklist

Section 8: Life After Your Career

Section 9: Sources

Individuals must be aware of any new changes implemented by the IRS. The primary factors that will most likely influence corporate personnel are:

• The standard deduction for 2024 will rise to $14,600 for single filers and married couples filing separately, $29,200 for joint filers, and $21,900 for heads of household.
• Taxpayers over the age of 65 or blind can increase their standard deduction by $1,550. If you are not married or have no surviving spouse, the payment increases to $1,950.

The personal exemption for tax year 2024 remains zero, same as it was in 2023. The abolition of the personal exemption was included in the Tax Cuts and Jobs Act.

Retirement planning is a verb. Consistent activity is required, whether you are 20 or 60.
The truth is that most Americans have no idea how much to save or how much income they will require.

No matter where you are in the planning process or your present age, we hope this guide provides you with a good overview of the steps to follow and resources to help you streamline your transition from your workplace to retirement and make the most of your benefits.

You understand the importance of saving and investing, especially since time is on your side the sooner you start, but you lack the time and experience to determine whether you are creating retirement funds that will persist when you leave your employer.

'A separate study by Russell Investments, a large money management firm, came  to a similar conclusion .  Russell estimates a  good  financial advisor can  increase investor returns by 3.75 percent.'

When you invest in your company's retirement plan, you can potentially increase your wealth by 79% at age 65 over the course of 20 years.

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

We always base our retirement investment recommendations on your specific financial circumstances and aspirations. Consider investing at least 10% of your earnings for retirement in your 30s and 40s. Maximizing your company's contribution match should be a goal as long as your specific circumstances allow.

As you enter your 50s and 60s, you should be in your peak earning years, with some large expenses, such as a mortgage or child-rearing, behind you or soon to be in the rearview mirror. This is an excellent moment to think about whether you can increase your retirement savings goal to 20% or more of your income. For many people, this could be their only chance to save money.

Workers aged 50 and over can put up to $23,000 in their retirement plan/401(k) in 2024, with an additional $7,500 in catch-up contributions available once this amount is reached. Annually, these restrictions are increased to reflect inflation.

If you’re a ExxonMobil employee over 50, you may be eligible to use a catch-up contribution within your IRA.

Why are 401(k)s and matching contributions so popular?

These retirement savings vehicles allow you to take advantage of three major benefits:

• Compound growth prospects (as described above)

• Tax-saving opportunities

• Matching contributions

Whether you're changing jobs or retiring, deciding what to do with your hard-earned retirement funds can be challenging. A company-sponsored plan, such as a pension or 401(k), may account for the majority of your retirement assets, but how much do you actually understand about it and how it works?
 
There appear to be an infinite number of restrictions that differ from one retirement plan to the next, including early withdrawal offers, interest rate affects, age penalties, and intricate tax implications.

Increasing your investment balance and lowering taxes are the keys to a successful retirement plan spending strategy. At The Retirement Group, we can explain how your company's 401(k) fits into your entire financial picture and how to make it work for you.

Workers are much more likely to rely on defined contribution (DC) retirement plans for income.

'Getting help and leveraging the financial planning tools and resources your company

makes available can help you understand whether you are on track, or need to

make adjustments to meet your long-term retirement goals...'

Source: Schwab 401(k) Survey Finds Savings Goals and Stress Levels on the Rise

Interest Rates and Life Expectancy
 
Current interest rates and your life expectancy at retirement have a significant impact on lump sum payouts from defined benefit pension plans. The Blended Interest Rates increased for retirees starting their ExxonMobil Pension in Q1 2023 through Q2 2024, before leveling out in the last two months. As interest rates rise, the value of your lump amount falls. The reverse is also true. Lowering or decreasing interest rates will increase lump sum values.

Interest rates are significant in calculating your lump payment option under the pension plan. However, they have no bearing on the annuity options. Before making pension decisions, the Retirement Group thinks that all ExxonMobil workers should conduct a full RetireKit Cash Flow Analysis that compares their lump sum value to the monthly annuity payout alternatives. As appealing as a large lump payment is, an annuity for all or part of the pension may still be the better option, particularly in a higher interest rate environment. Everyone's situation is unique, and a Cash Flow Analysis will show you how your pension options may evolve over the next 30 years or more.

For grandfathered employees, the Q2 and Q3 2024 pension rates are 4.25% and 4.00%, respectively, up 0.50% from the same period last year. For non-grandfathered employees, the second and third quarter blended segments have similarly shrunk. If interest rates continue to fall, lump sum payments may increase in value; however, there is no certainty that interest rates will fall further in this current environment.

As we continue to follow the interest rate environment through the early summer months and beyond, we will acquire a better understanding of how the year is progressing. If rates continue to fall, lump sum values will rise. However, if rates rise, lump sums will fall. If you need assistance assessing whether or not you are grandfathered, please let us know. Feel free to contact The Retirement Group for assistance in calculating and reviewing your pension options, whether annuity or lump sum. We offer a complimentary retirement cash flow study or an update to an existing one.

Knowing where you stand allows you to make a more informed decision about whether Q2 or Q3 2024 is the best time to retire, or if you should work longer or delay the start of your pension benefit. As interest rates fluctuate, so do lump sums. How much money are you willing to lose in one big sum? Working more hours will result in greater earned income, but this may be offset by a reduction in a future lump sum benefit, which could mean working for free or for less pay.

ExxonMobil 401k Savings Plan

Employees are encouraged to sign up for a 401(k) savings plan immediately away. You can invest before or after tax (regular or Roth) and select from seven investment options with varied levels of risk. You can also transfer pre-tax and Roth funds from other qualifying plans. Your contribution is 6% to 20% of your wage, plus the company contribution (if you contribute at least 6%). 7% of your wage equals total savings of 13% to 27% of your earnings.

Vesting

As a participant, you will receive the employer match after three years of vesting service, at the age of 65, or upon death. If you leave with fewer than three years of service, you lose the corporate match but keep the rest.

Furthermore, if you have an account in an eligible plan from a previous employer, you may be able to roll over a payout from that account to the Savings Plan.

Note: If you contribute at least 6% of your pay, you will receive a 7% corporate match.

If you have 401(k) plan balances at the time of retirement, you will receive a Participant Distribution Notice in the mail. This message will display the current value that you are eligible to receive from each plan and explain your distribution options. It will also explain what you must do to obtain your final allocation. Please call The Retirement Group at (800)-900-5867 for additional information, and we will connect you with an ExxonMobil-focused advisor.

Next step:

• Look for your Participant Distribution Notice and Special Tax Notice Regarding Plan Payments. These mailings will assist you understand your options and the potential federal tax implications for your vested account balance.

• "What has Worked in Investing" & "8 Tenets when picking a Mutual Fund" .

• To learn more about your distribution alternatives, call The Retirement Group at (800)-900-5867. More information on "Rollover Strategies for 401(k)s" is available in our e-book. If you need to amend your beneficiary designations, use the Online Beneficiary Designation tool.

Note: If you voluntarily leave your firm, you may be ineligible for the annual contribution.

More than half of plan participants say they lack the time, desire, or understanding to manage their 401(k) portfolio. However, the advantages of seeking aid extend beyond convenience. According to Charles Schwab studies, plan participants who receive investment advice tend to have portfolios that perform better: The annual performance disparity between those who receive assistance and those who do not is 3.32%, net of expenses. This indicates that a 45-year-old participant may enjoy a 79% increase in wealth by age 65 merely by contacting an advisor. That's a huge difference.

Getting assistance can be the key to improved results across the 401(k) board.

A Charles Schwab study discovered various good effects for those who seek independent professional guidance. They include the following:

• Improved savings rates - 70% of participants who received 401(k) guidance raised their contributions.

• Increased diversity - Participants who managed their own portfolios invested in an average of just under four asset types, whereas those in advice-based portfolios invested in at least eight.

• Increased likelihood of staying the course- Getting assistance enhanced participants' odds of sticking to their financial goals, making them less reactive during unpredictable market conditions and more likely to stick with their original 401(k) investments during a downturn. accomplish not attempt to accomplish it alone. Get assistance with your company's 401(k) plan investments. Your nest egg will appreciate you.

In-Service Withdrawals
 
In general, you can withdraw funds from your account while still employed with your firm, subject to the conditions indicated below.

Certain withdrawals are subject to standard federal income tax, and if you're under age 59½, you may be subject to an additional 10% penalty tax. You can check your eligibility and request a withdrawal online or by phoning your company's Benefits Center.

Rolling over your 401(k) 

An in-service dividend can be rolled over to an IRA if the plan participant is under the age of 72. Direct rollovers eliminate both the 10% early withdrawal penalty and the necessary 20% tax withholding. More information, as well as potential rollover and withdrawal limits, can be found in your company's plan summary.

Because a withdrawal permanently decreases your retirement savings and is taxed, you should always consider borrowing from the plan to fulfill your financial needs. Loans, unlike withdrawals, must be repaid and are not taxable (unless they are not paid back). In other circumstances, such as hardship withdrawals, you cannot make a withdrawal unless you have also taken out the maximum loan allowable under the employer plan.

You should also be aware that your company's plan administrator reserves the right to change the regulations governing withdrawals at any moment, and may further restrict or limit the availability of withdrawals for administrative or other reasons. All plan participants will be notified of any such limits, which apply equally to all corporate workers.

Net unrealized appreciation (NUA)

When you qualify for a distribution, you have three choices:

• Roll over your eligible plan to an IRA and continue to defer taxes.

• Take a distribution and pay regular income taxes on the entire amount.

• Take advantage of NUA and profit from a more favorable tax structure for gains

IRA Withdrawal

When you qualify for a distribution, you will have three options:

Your retirement assets could include IRAs, 401(k)s, taxable accounts, and others.

HSA's

Health Savings Accounts (HSAs) are frequently praised for their effectiveness in managing healthcare costs, particularly for people with high-deductible health plans. However, their advantages go beyond medical cost management, establishing HSAs as a potentially superior retirement savings vehicle compared to typical retirement plans such as 401(k)s, particularly after employer matching contributions are exhausted.

Understanding HSAs

HSAs are tax-advantaged accounts intended for people who have high-deductible health insurance policies. For 2024, the IRS classifies high-deductible plans as having a minimum deductible of $1,600 for individuals and $3,200 for families. HSAs provide pre-tax contributions, tax-free investment growth, and tax-free withdrawals for qualified medical costs, making them a triple-tax-advantaged account.

HSAs' annual contribution limits in 2024 are $4,150 for individuals and $8,300 for families, with an additional $1,000 allowed for those 55 and older. Unlike Flexible Spending Accounts (FSAs), HSA funds do not expire at the end of the year; they grow and can be carried forward indefinitely.

Comparing HSAs versus 401(k)s after Matching

Once an employer's maximum 401(k) match is reached, additional contributions result in less immediate financial rewards. This is where HSAs can serve as a strategic complement. 401(k)s provide tax-deferred growth and tax-deductible contributions, but withdrawals are taxed. In contrast, HSAs allow for tax-free withdrawals for medical expenses, which account for a major amount of retirement costs.

HSA as a Retirement Tool.

After age 65, the HSA stretches its muscles as a powerful retirement tool. Funds can be withdrawn for any reason, subject only to standard income tax if spent for non-medical expenses. This flexibility is similar to that of regular retirement plans, but it also includes tax-free withdrawals for medical bills, which is a substantial benefit given escalating healthcare costs in retirement.

Furthermore, unlike 401(k)s and Traditional IRAs, HSAs have no Required Minimum Distributions (RMDs), giving you more flexibility over your tax planning in retirement. This makes HSAs especially appealing to those who may not need to access their funds immediately after retirement or who want to reduce their taxable income.

Investment Strategy for HSAs.

Initially, it is prudent to invest conservatively in an HSA, with an emphasis on ensuring that there are enough liquid assets to cover the near-term deductible and other out-of-pocket medical expenses. However, if a financial cushion has been formed, using the HSA as a retirement account and investing in a diverse mix of equities and bonds can considerably improve the account's long-term growth potential.

Utilizing HSAs in retirement

In retirement, HSAs can cover a variety of expenses:

• Healthcare Costs-Pre-Medicare: HSAs can cover healthcare costs to bridge you to Medicare.
• Healthcare Costs After Medicare: HSAs can be used to pay for Medicare premiums as well as out-of-pocket medical expenses such as dental and eye treatment, which are frequently not covered by Medicare.
• Long-term Care: Funds may be used for approved long-term care services and insurance payments.
• Non-medical Expenses: After age 65, HSA funds can be used for non-medical expenses without penalty, but withdrawals are subject to income tax.

ExxonMobil Beneficiary Designation
 
As part of your retirement and estate planning, you should designate someone to receive the proceeds of your benefit programs in the case of your death. That is how your employer will choose who should receive your final wages and perks. This may include life insurance benefits, as well as any pension or savings balances.

Next Steps:

• When you retire, make sure to notify your beneficiaries. ExxonMobil offers an online beneficiary designation form for life events like as death, marriage, divorce, childbirth, and adoption.

Schedule a Call

They can assist you with determining your eligibility, enrolling you and/or your eligible dependents in Medicare, and providing you with information about other government programs. Please call us for further information on Social Security.
 
Before you resign from your employer, check on the status of your Social Security payments. Contact the US Social Security Administration, your local Social Security office, or go to ssa.gov.

Are you already or will you soon be eligible for Medicare?
If you or your dependents become eligible for Medicare after leaving your telecom industry business, Medicare will normally become your primary coverage as soon as they do. This will have an impact on the medical benefits offered by the employer.

When you become eligible for Medicare, you and your dependents must enroll in Parts A and B. Medical and MH/SA benefits due under the company-sponsored plan will be lowered by the amounts that Medicare Parts A and B would have paid regardless of whether you enrolled in them.
Your company's summary plan description will provide more information on benefit coordination.

If you or an eligible dependant do not enroll in Medicare Parts A and B, your provider may bill you for any expenses not covered by Medicare or your company-specific medical plan. increasing your out-of-pocket payments dramatically.
 
According to the Employee Benefit Research Institute (EBRI), Medicare only covers roughly 60% of an individual's medical expenses. This indicates that a 65-year-old couple with typical prescription-drug expenses for their age will require $259,000 in savings to cover 90% of their healthcare costs. A single man will need $124,000, whereas a single woman will need $140,000 because to her longer life expectancy.

For 28% of couples over the age of 53, happily ever after and until death do us part will not come true. Most couples have saved for decades, expecting they will retire together. Following a divorce, they must face the expenses of a pre- or post-retirement existence while having just half of their savings.

If you're divorced or in the process of divorcing, your ex-spouse(s) may be interested in a share of your corporate retirement benefits. Before you may begin your pension — and for each former spouse who may be interested — you must submit your firm with the following documents:

• A copy of the court-filed Judgment of Dissolution or Judgment of Divorce and any Marital Settlement Agreement (MSA)
• A copy of the court-filed Qualified Domestic Relations Order (QDRO).

Unlike a married couple, you do not have to wait for your ex-spouse to file for Social Security before applying for your divorced spouse's benefit.

Divorce does not disqualify you for survivor benefits. You can claim a divorced spouse's survivor benefit if the following apply:

• Your ex-spouse has died.

• You are at least sixty years old.

• You were married for at least ten years before the divorce.

• You are single (or remarried after turning 60).

Are you going through a divorce?

If your divorce is not finalized by the time you retire from your company, you are still considered married. You have two choices:

Retire from your company before your divorce is finalized and opt for a combined pension of at least 50% with your spouse — or obtain your spouse's signed, notarized approval to a different election or lump amount.

Defer your retirement from your company until your divorce is finalized and you can supply the necessary divorce documentation*.

Sources: The Retirement Group, "Retirement Plans - Benefits and Savings," United States Department of Labor, 2019; "Generating Income That Will Last Throughout Retirement," Fidelity, 2019.

Things that your survivor must do:

• File a report of your passing. As soon as practical, your spouse, a family member, or a friend should contact your company's benefits service center to report your death.

• Collect the benefits of life insurance. Life insurance benefits must be collected by your spouse or other designated beneficiary by contacting your company's benefits service center.