Should you make a Roth IRA Conversion for Devon Energy Employees
Healthcare Provider Update: Healthcare Provider for Devon Energy:
Devon Energy Corporation partners with Aetna as its healthcare provider. Aetna offers a range of health plans and services to support the wellness needs of Devon Energy employees and their families.
Potential Healthcare Cost Increases in 2026:
As healthcare costs continue to rise, Devon Energy could see significant increases in employee healthcare expenses in 2026, attributed in part to anticipated premium hikes associated with the Affordable Care Act (ACA). With some states preparing for rate increases of up to 66% and the expiration of enhanced federal premium subsidies, employees may face out-of-pocket premium escalations of over 75%. The confluence of rising medical costs and changes in healthcare policy may necessitate adjustments in how both employers and employees plan for their health coverage, prompting a careful re-evaluation of benefit strategies in the coming year.
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If you have qualified funds in your Devon Energy retirement portfolio and are concerned about future tax law changes, converting those eligible funds to a Roth IRA could be a good solution for any Devon Energy employee or retiree.
Traditional IRAs are usually funded with before-tax dollars and are generally fully taxable when withdrawn. The owner of a traditional IRA generally has required minimum distributions (RMDs) beginning at age 72. If withdrawals are taken before age 59 1/2, they may be subject to an additional 10% federal tax.
Roth IRAs are funded with after-tax dollars. Distributions after age 59 ½ are completely income-tax-free as long as the Roth IRA owner has met a five-year requirement, determined by the date the owner first funded any Roth IRA. No required minimum distributions apply during the owner’s lifetime, but certain RMD rules do apply to Roth IRA beneficiaries.
The Benefits of a Roth IRA Conversion
A Roth IRA conversion entails taking all or a portion of funds from a traditional retirement account and converting them to a Roth IRA. This could also apply to pre-tax funds in a qualified plan like your Devon Energy 401(k). Since you are moving pre-tax dollars to a post-tax account, you owe income taxes on the amount converted in the year of conversion. This can be paid with funds outside of your IRA or qualified plan. Any such conversion should be done with due diligence and consult with a financial planner to avoid major tax implications.
A few of the advantages of this strategy include:
Tax-free growth inside of Roth IRAs.
Qualified distributions from Roth IRAs are income-tax free, providing flexibility to choose when to take these distributions for smarter tax management.
There are no RMDs for Roth IRA owners when you reach age 72, but certain rules apply to Roth IRA beneficiaries.
There is a potential for lower taxes if the income tax bracket is projected to be the same or higher at the time of distribution than at the time of conversion.
A Roth IRA conversion could lower your income-tax bracket
Can reduce your estate taxes and eliminate the income tax your heir would have to pay
Some other items for consideration:
Roth IRA conversions are subject to ordinary income tax on the entire amount of the conversion in the year of conversion.
Distributions may be subject to the additional 10% federal tax if removed within five years of the conversion.
If you have any questions about your Devon Energy 401(k) plan, you can reach out to your Devon Energy HR Department.
Jim and Linda are both 66 and retired from working at Devon Energy. They have a pension and Social Security benefits that amount to a taxable income of $65,000 a year. In 2022, they are in the 12% tax bracket ($20,551-$83,550) and are concerned that future tax law changes could put them in a higher bracket. [6]
Jim and Linda also have a traditional IRA with an account value of $750,000. In a few years, they will be required to start taking Required Minimum Distributions from this account that could bump them up to the next tax bracket.
While a Roth conversion is a fairly simple concept, there are many things to consider and several ways to do it. After discussing all of the variables with their financial professional, Jim and Linda decide to use a method often called “tax-bracket stuffing.”
With a taxable income of $65,000, there is $18,550 until they hit the top of the bracket - $83,550. If Jim and Linda convert $40,000 from the traditional IRA to a Roth IRA, they are bumped in to the 22% bracket, but once the standard deduction of $25,100 is applied, their taxable income will be $79,900.
By converting some of the funds from their traditional IRA to a Roth IRA, they can choose the amount of the distribution, so it stays within their lower tax bracket of 12% once the standard deduction is applied. And since qualified distributions from Roth IRAs are income tax free, Jim and Linda have the flexibility to choose when to take these distributions for smarter tax management.
If this method is used each year until Jim and Linda turn 72, they will continue to reduce the amount in their traditional IRA and increase the amount in their Roth IRA.
Want to learn if a solution like this is right for you? Call us today to discuss your financial goals.
What is Your Next Step?
Your receipt of this report entitles you to a one on one conversation with one of our TRG financial advisors to explore the benefits of diversifying your assets with your taxes in mind. Any customary hourly planning fees associated will be waived for this one hour session.
What should you expect at this meeting? Below are some frequently asked questions about what you can expect from our one on one meetings
Q: What will be discussed in this meeting?
A: This meeting is simply an opportunity for you to ask any questions that you may have related to the diversification of your assets with taxes in mind, as well as your personal finance and retirement. Throughout the course of the meeting, we will ask questions about you and your situation.
From working with many Devon Energy employees and retirees, we’ve found that everyone’s definition of a comfortable retirement from Devon Energy is a little different and that everyone’s situation is unique. Our goal is to learn about your personal goals as we explore how to help you retire from Devon Energy the way you want.
Q: Why is the consultation free?
A: Simple. It gives us an opportunity to meet people from around the area that may have questions about financial matters. It’s no secret that we love new clients. Gaining new clients is the way that our business grows. However, we want to provide a comfortable environment for exploring a new, potential professional relationship — for you and for us. By offering this time, it provides a non-threatening way for us to spend some time with you to see if it makes sense for us to continue discussions regarding your Devon Energy retirement in the future.
Q: Will there be a presentation?
A: Not at all. In fact, we are very hesitant to talk about any potential solutions to any questions or concerns you may have. It is important for us to understand your goals and desires about what retiring from Devon Energy or investing for your future means to you. We feel it would be financial malpractice to begin exploring solutions prematurely.
We tend to look at the first meeting as an opportunity for you to ask some questions and for us to get to know each other. Furthermore, we can both be more informed by the end of the meeting which will help determine whether or not it will be beneficial for us to meet again.
Q: How long is the meeting?
A: Most of our meetings are stacked throughout the day. Future sessions may require more time, but we’ve found that an hour, provides a good basis for getting to know a little more about each other.
Q: Is there anything I should bring to the meeting?
A: We are sensitive to the fact that your personal financial information is just that — very personal. However, it is hard for us to help if we don’t have at least a fundamental understanding of your financial position. We ask that you bring information regarding your financial accounts and your previous year’s tax return. However, we follow a strict policy of not looking at any of this until you are comfortable with us doing so.
Q: When would we meet again?
A: If we both decide that it would be beneficial to meet again, we’ll schedule another time to get together. At that meeting, we would introduce to you the various areas in which our firm may be able to provide value to your situation. Again, we shy away from offering solutions at this point because we still consider it to be a discovery meeting. At that point, you should be in a better position to make an educated decision as to whether you wish to engage the services of our firm.
Q: Should someone come with me?
A: We do ask that if you are married you bring your spouse with you. If you wish to bring any children with you to the meeting, you are welcome to do so. For that matter, anyone that you may utilize in helping you with your Devon Energy retirement and personal finances is welcome to join.
About The Retirement Group
The Retirement Group is a nation-wide group of financial advisors who work together as a team.
We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.
TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.
Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.
Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.
What is the primary purpose of the 401(k) Savings Plan at Devon Energy?
The primary purpose of the 401(k) Savings Plan at Devon Energy is to help employees save for retirement by allowing them to contribute a portion of their salary on a pre-tax or after-tax basis.
How can employees at Devon Energy enroll in the 401(k) Savings Plan?
Employees at Devon Energy can enroll in the 401(k) Savings Plan by logging into the employee portal and completing the online enrollment process during the designated enrollment period.
What types of contributions can employees make to the Devon Energy 401(k) Savings Plan?
Employees at Devon Energy can make pre-tax contributions, Roth (after-tax) contributions, and, if eligible, catch-up contributions to the 401(k) Savings Plan.
Does Devon Energy offer any matching contributions to the 401(k) Savings Plan?
Yes, Devon Energy offers a matching contribution to the 401(k) Savings Plan, which is designed to encourage employees to save for retirement.
What is the vesting schedule for employer contributions in the Devon Energy 401(k) Savings Plan?
The vesting schedule for employer contributions in the Devon Energy 401(k) Savings Plan typically follows a graded vesting schedule, meaning employees gradually earn ownership of the company's contributions over time.
Are there any fees associated with the Devon Energy 401(k) Savings Plan?
Yes, there may be administrative fees associated with the Devon Energy 401(k) Savings Plan, which are disclosed in the plan documents provided to employees.
Can employees at Devon Energy take loans against their 401(k) Savings Plan balance?
Yes, employees at Devon Energy may be able to take loans against their 401(k) Savings Plan balance, subject to the plan's terms and conditions.
What investment options are available in the Devon Energy 401(k) Savings Plan?
The Devon Energy 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and company stock, allowing employees to diversify their retirement savings.
How often can employees change their contribution amounts to the Devon Energy 401(k) Savings Plan?
Employees at Devon Energy can change their contribution amounts to the 401(k) Savings Plan at any time, subject to the plan's guidelines.
What is the minimum age requirement to participate in the Devon Energy 401(k) Savings Plan?
The minimum age requirement to participate in the Devon Energy 401(k) Savings Plan is typically 21 years old, but employees should refer to the plan documents for specific details.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Devon Energy Pension Plan
Devon Energy does not specifically offer a traditional defined benefit pension plan but provides retirement benefits through their 401(k) plan, which includes additional company contributions. The company contributes a percentage of the employee's eligible compensation to their 401(k) account each quarter, regardless of whether the employee contributes. This contribution is designed to supplement the employees' savings, ensuring they have a robust retirement fund.
Devon Energy 401(k) Plan
The Devon Energy 401(k) Incentive Savings Plan allows employees to contribute 1% to 50% of their eligible pay on a pre-tax basis, Roth after-tax basis, or a combination of both, up to the IRS limits. Employees aged 50 or older can make additional catch-up contributions. Devon Energy matches 100% of the employee contributions up to 6%, based on years of service, making it a significant part of the retirement savings strategy for employees.
Devon Energy announced the layoff of approximately 300 employees, representing around 9% of its workforce, as part of a broader effort to reduce general and administrative costs by $150 million to $200 million by 2024. This restructuring follows a challenging period for the energy sector, despite recent increases in oil prices. The layoffs are part of a strategy to streamline operations, focus on core assets, and enhance the company's financial stability. Additionally, Devon Energy has continued its disciplined cash-return business model, focusing on generating free cash flow and returning capital to shareholders. They have also announced preliminary plans for 2024, including the continuation of their fixed-plus-variable dividend strategy, which has been a key component of their financial approach since their merger with WPX Energy.
Stock Options and RSUs:
Devon Energy offers a combination of stock options and RSUs to its employees under the Long-Term Incentive Plan (LTIP). This plan has been in place and was amended as of 2024. Employees eligible for these awards typically include executive officers, directors, and other key employees within the company. The awards are designed to vest over a period, usually tied to continued employment and performance metrics.
RSUs (Restricted Stock Units) at Devon Energy are granted as part of the LTIP and typically vest over a multi-year period. The RSUs represent a promise to deliver shares of Devon Energy stock to employees upon meeting specific vesting conditions. For example, RSUs granted in 2022, 2023, and 2024 usually vest after three years, encouraging employees to stay with the company long-term. These RSUs do not require employees to purchase the shares; instead, they are given shares once the units vest.
Devon Energy offers a comprehensive set of health benefits to its employees, focusing on ensuring both physical and mental well-being. For the years 2022, 2023, and 2024, the company's health benefits package includes medical, dental, and vision coverage, all starting from the first day of employment for regular full-time, part-time employees, and interns.
Healthcare-Related Terms and Acronyms:
PPO (Preferred Provider Organization): Employees can choose between PPO and Premier plans, with differences in deductible amounts and coverage percentages for services like preventive care and major services.
UBreathe Program: A tobacco cessation program that helps employees avoid a tobacco surcharge on their medical insurance if they meet specific requirements.
VSP (Vision Service Plan): Administers the vision coverage, offering annual exams and allowances for lenses and frames.
Recent Employee Healthcare News:
Devon Energy has placed significant emphasis on wellness through various programs and facilities. For example, "The Well," a wellness center at their Oklahoma City headquarters, provides access to state-of-the-art fitness equipment, group classes, and wellness resources. The company also offers a near-site primary care clinic, "The Doc," which provides advanced medical care, behavioral health services, and physical therapy.
Additionally, Devon Energy's commitment to employee wellness is evident in their support for flexible spending accounts and comprehensive dental and vision coverage options, designed to cater to a wide range of employee needs
For more information you can reach the plan administrator for Devon Energy at 333 W Sheridan Ave Oklahoma City, OK 73102; or by calling them at (405) 235-3611.
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