Retirement Guide for 3M Employees || The Retirement Group

Author:

Shad Ketcher - Senior Vice President, Financial Advisor

In our comprehensive retirement guide for 3M employees in your city, your state, we go through many factors which you, at the age of retirement age, may take into account when deciding on the proper time to retire from 3M. Some of those factors include: healthcare & benefit changes, interest rates, current tax rates, inflation, and much more. Keep in mind we are not affiliated with 3M. We recommend reaching out to your 3M benefits department for further information.

It is imperative for individuals in your city, your state to be aware of new changes made by the IRS. The main factors that will impact employees will be the following:

The standard deduction for 2026 is $16,100 for single filers and those married filing separately, $32,200 for joint filers, and $24,150 for heads of household.
Taxpayers who are age 65 or older or blind can add an additional $1,650 to their standard deduction for 2026. That amount jumps to $2,050 if also unmarried and not a surviving spouse. Separately, for tax years 2025 through 2028, taxpayers age 65 or older may claim a senior deduction of up to $6,000 per eligible person, which phases out at higher incomes.

Retirement account contributions: Contributing to your company's 401k plan can cut your tax bill significantly, and the amount you can save has increased for 2026. The amount individuals can contribute to their 401(k) plans in 2026 is $24,500. The catch-up contribution limit for employees age 50 and over is $8,000 ($11,250 for ages 60 to 63, if the plan allows). If your 2025 FICA wages from the employer sponsoring your plan were above $150,000, your 2026 catch-up contributions must be made as Roth contributions.

There are important changes for the Earned Income Tax Credit (EITC) that you, as a taxpayer employed by a corporation, should know:

The tax year 2026 maximum Earned Income Tax Credit amount is $8,231 for qualifying taxpayers who have three or more qualifying children, up from $8,046 for tax year 2025.
Married taxpayers filing separately can qualify: You can claim the EITC as married filing separately if you meet other qualifications. This option has been available since tax year 2021.

Deduction for cash charitable contributions: The special deduction that allowed single nonitemizers to deduct up to $300 (and married filing jointly couples to deduct $600) in cash donations to qualifying charities expired after 2021. Starting in tax year 2026, taxpayers who take the standard deduction can deduct up to $1,000 ($2,000 if married filing jointly) in cash donations to qualifying charities. Gifts to donor-advised funds do not qualify.

Child Tax Credit changes:

The maximum tax credit per qualifying child under age 17 is $2,200 for 2026. The credit is claimed when you file your return; it is not paid in advance.
As a parent or guardian, you can claim the full Child Tax Credit of up to $2,200 per qualifying child if your modified adjusted gross income is no more than $200,000 ($400,000 if married filing jointly). Above that, the credit is reduced by $50 for each $1,000 of income until it phases out.
Partial refundability for individuals whose tax bill falls below the credit amount: up to $1,700 per qualifying child may be refundable.

2026 Tax Brackets

2026 Federal Income Tax Brackets and Standard Deductions

Rate	For Unmarried Individuals	For Married Individuals Filing Joint Returns	For Heads of Households	Married Filing Separately
10%	$0 to $12,400	$0 to $24,800	$0 to $17,700	$0 to $12,400
12%	$12,400 to $50,400	$24,800 to $100,800	$17,700 to $67,450	$12,400 to $50,400
22%	$50,400 to $105,700	$100,800 to $211,400	$67,450 to $105,700	$50,400 to $105,700
24%	$105,700 to $201,775	$211,400 to $403,550	$105,700 to $201,750	$105,700 to $201,775
32%	$201,775 to $256,225	$403,550 to $512,450	$201,750 to $256,200	$201,775 to $256,225
35%	$256,225 to $640,600	$512,450 to $768,700	$256,200 to $640,600	$256,225 to $384,350
37%	$640,600 or more	$768,700 or more	$640,600 or more	$384,350 or more
Standard Deduction	$16,100	$32,200	$24,150	$16,100

Source: IRS Revenue Procedure 2025-32, tax year 2026 inflation adjustments, https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

Inflation reduces purchasing power over time as the same basket of goods will cost more as prices rise. In order to maintain the same standard of living throughout your retirement after leaving your company, you may need to factor rising costs into your plan. The Federal Reserve targets 2% inflation over the longer run, but consumer prices rose 9.1% in the 12 months ending June 2022, the largest 12-month increase in about 40 years. While prices as a whole have risen dramatically, there are specific areas to pay attention to if you are nearing or in retirement from your company, like healthcare.

It is crucial to take all of these factors into consideration when constructing your holistic plan for retirement from your company.

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

Planning for a Layoff or Job Change at 3M

On January 8, 2024, 3M announced that it will freeze its U.S. pension plans for non-union U.S. employees, effective Dec. 31, 2028.

Pension-eligible employees in your city, your state will continue to accrue benefits under the pension plans until the freeze date.

This decision applies to both 3M and Solventum, the health care company 3M spun off on April 1, 2024, which maintains its own U.S. pension plan.

Former employees with vested pension benefits, 3M or 3M Health Care retirees, and those currently receiving pension annuity payments are not impacted by this action.

In June 2024, 3M purchased a group annuity contract from Metropolitan Tower Life Insurance Company (MetLife) and transferred about $2.3 billion of the pension plan's obligations and related assets to it, covering about 23,000 U.S. retirees and beneficiaries. MetLife began paying and administering those retirees' benefits on October 1, 2024.

The move from a pension plan structure to a 401(k) retirement plan structure has been underway at 3M for many years.

In 2009, the company closed Portfolio II of the U.S. pension plan to new hires and rehires. By moving to a 401(k) retirement plan structure, the company is focused on providing employees, especially those nearing the age of retirement age, with more flexibility and control when it comes to investing in their future.

3M is providing advance notice to help employees plan alternative strategies to meet their post-retirement income needs.

Retirement planning is a verb; consistent action must be taken whether you’re 20 or 60.

The truth is that most Americans don’t know how much to save or the amount of income they’ll need.

No matter where you stand in the planning process, or your current age, we hope this guide provides you a good overview of the steps to take and resources that help you simplify your transition from your company into retirement and get the most from your benefits in your city your state. You know you need to be saving and investing, especially since time is on your side the sooner you start, but you don’t have the time or expertise to know if you’re building retirement savings that can last after leaving your company at the age of retirement age.

You know you need to be saving and investing, especially since time is on your side the sooner you start, but you don’t have the time or expertise to know if you’re building retirement savings that can last after leaving your company.

As decades go by, you’re likely full swing into your career at your company in your city, your state and your income probably reflects that. However, the challenges of saving for retirement start coming from large competing expenses: a mortgage, raising children, and saving for their college when you are around retirement age.

One of the classic planning conflicts is saving for retirement versus saving for college. Most financial planners will tell you that retirement from your company should be your top priority because your child can usually find support from financial aid while you’ll be on your own to fund your retirement.

How much we recommend that you invest towards your retirement is always based on your unique financial situation and goals. However, consider investing a minimum of 10% of your salary toward retirement through your 30s and 40s.

As you enter your 50s and 60s, you’re ideally at your peak earning years with some of your major expenses, such as a mortgage or child-rearing, behind you or soon to be in the rearview mirror. This can be a good time to consider whether you have the ability to boost your retirement savings goal to 20% or more of your income. For many people, this could potentially be the last opportunity to stash away funds.

In 2026, workers can contribute up to $24,500 into their retirement plan/401(k), and workers age 50 or older can add an additional $8,000 in catch-up contributions for a combined annual total of $32,500. Workers age 60 to 63 may be able to make a higher catch-up of $11,250 if their plan allows. These limits are adjusted annually for inflation.

These retirement savings vehicles give you the chance to take advantage of three main benefits:

Compound growth opportunities (as seen above)
Tax saving opportunities
Matching contributions

Matching contributions are just what they sound like: your company matches your own 401(k) contributions with money that comes from the company. If your company matches, the company money typically matches up to a certain percent of the amount that you put in.

Unfortunately, many people fail to take advantage of their company's matching contributions because they’re not contributing the required minimum to receive the full company match.

Research published in 2022 by Principal Financial Group identified that 62% of workers deemed company 401(k) matches significantly important to reaching their retirement goals.

According to Bank of America's 2023 Financial Life Benefits Impact Report, 56% of eligible employees participated in a 401(k) plan, and 66% of participants contributed less than $5,000 for the year.

The study also found that fewer than one in 10 participants’ contributions reached the ceiling on elective deferrals under IRS Section 402(g), which is $24,500 for 2026.

According to Bank of America's "2022 Financial Life Benefits Impact Report", despite 58% of eligible employees participating in a 401(k) plan, 61% of them contributed less than $5,000 in 2021.

For example, if your company will match up to 3% of your plan contributions and you only contribute 2% of your salary, you aren’t getting the full amount of the company match. By simply increasing your contribution by just 1%, your company is now matching the full 3% of your contributions for a total combined contribution of 6%. By doing so, you aren’t leaving money on the table.

Whether you’re changing jobs or retiring from your company, knowing what to do with your hard-earned retirement savings can be difficult. A company-sponsored plan, such as a pension and 401(k), may make up the majority of your retirement savings, but how much do you really know about that plan and how it works?

There are seemingly endless rules that vary from one retirement plan to the next, early out offers, interest rate impacts, age penalties, and complex tax impacts.

Increasing your investment balance and reducing taxes is the key to a successful retirement plan spending strategy. At The Retirement Group, we can help you understand how your company's 401(k) fits into your overall financial picture and how to make that plan work for you as you approach retirement age.

Please Note:

On January 8, 2024, 3M announced that it will freeze its U.S. pension plans for non-union U.S. employees, effective Dec. 31, 2028.

Pension-eligible employees will continue to accrue benefits under the pension plans until the freeze date.

This decision applies to both 3M and Solventum, the health care company 3M spun off on April 1, 2024, which maintains its own U.S. pension plan.

Former employees with vested pension benefits, 3M or 3M Health Care retirees, and those currently receiving pension annuity payments are not impacted by this action.

The move from a pension plan structure to a 401(k) retirement plan structure has been underway at 3M for many years.

In 2009, the company closed Portfolio II of the U.S. pension plan to new hires and rehires. By moving to a 401(k) retirement plan structure, the company is focused on providing employees with more flexibility and control when it comes to investing in their future.

3M is providing advance notice to help employees plan alternative strategies to meet their post-retirement income needs.

3M Employee Retirement Income Plan (ERIP) Overview

The 3M Employee Retirement Income Plan, which covers employees hired before January 1, 2009 and is set to freeze December 31, 2028, is a defined benefit plan made up of two groups with different formulas, Portfolio I and Portfolio II. The example below follows the Portfolio I formula, which uses a Social Security breakpoint; Portfolio II instead uses a Social Security integration level, and its lump sum equals the greater of the participant's total pension value when they leave 3M, grown 4% a year until the earlier of pension commencement or age 65, or the actuarial equivalent of the future annuity. In general, the pension benefit is based on a combination of factors, including:

* Pension Service (years of service): Employees accumulate benefits based on how many years they work at the company.

* Final Average Earnings: The pension is calculated based on the employee's High-4 average pension earnings: the greater of the highest four consecutive calendar years of pension earnings or the last 48 months of pension earnings before retirement.

* Accrual Rate: Each year of service contributes a percentage (known as the accrual rate) to the final pension amount. This rate ranges between 1-2% of the final average pay for each year of service.

* Normal Retirement Age (NRA): Normal Retirement Age is set at 65 years of age.

The formula used for existing participants will remain in effect until the freeze date on December 31, 2028.

However, for employees hired or rehired on or after January 1, 2009, 3M shifted its focus toward a 401(k)-based plan, no longer offering traditional pension benefits to those employees.

Eligibility:

Any employee of 3M or an affiliate who is a Participant in the ERIP, and who is within a designated class, shall be eligible to become a Member in this Nonqualified Plan III.

Key Features of the ERIP:

he 3M Employee Retirement Income Plan (ERIP) is a defined benefit pension plan designed to provide retirement income to eligible 3M employees.

The plan calculates benefits based on factors such as years of service, compensation, and age at retirement.

Employee Retirement Income Plan (ERIP) Formula Components
The defined benefit plan (ERIP) determines retirement benefits using a combination of an employee's age, length of service, average compensation during their career, and other factors explained below.

Please note that in the example shown below we are using the following assumptions:

1) Participant's age at Benefit Commencement Date (BCD): 59 and 3 months

2) Pension Service Years: 34 years and 1 month

3) Earliest Unreduced Retirement Age: 62

4) Social Security Bridge Eligibility (Rule of 92; age + pension service years): Yes (59 + 34 = 93)

5) IRS Segment Rates Used (for Lump Sum calculation): 5.50%, 5.76%, 5.83

* Pension Service (years of service): The total number of years an employee has worked for 3M.

* Monthly High-4 Average Pension Earnings: This refers to the average monthly salary over the highest consecutive four year period or your last 48 months of earnings converted to a monthly amount.

In the above example, the total Pension Earnings for the last 48 months equals $472,108. This amount divided by 48 months equals $9,835.59 which is the Monthly High-4 Average Pension Earnings.

* Monthly High-4 Average Pension Earnings Over Breakpoint: This refers to the amount that your Monthly High-4 Earnings (see previous calculation above) exceeds your Social Security Breakpoint (which is your 35-year Social Security wage base average).

Using a 35-year average Social Security wage base of $102,156 divided by 12 months equals a Social Security Breakpoint amount of $8,513.

The difference between the Monthly High-4 Average Earnings ($9,835.59) and the Social Security Breakpoint ($8,513.00) is $1,322.59. This $1,322.59 amount is the Monthly High-4 Average Earnings Over Breakpoint amount.

* Early Retirement Reduction Factor: There is a reduction of 5% per year (or 1/12th of 5% per month) that your Benefit Commencement Date begins prior to your Earliest Unreduced Retirement Date.

In the above example, based on a Benefit Commencement Date that begins 33 months prior to the Earliest Unreduced Retirement Date, the Reduction Percent equals 13.75%, and an Early Retirement Reduction Factor of 86.25%.

3M's pension plan allows early retirement beginning at age 55, as long as plan requirements are met.

* Social Security Bridge: This represents a monthly benefit payable based on your Benefit Commencement Date to age 62. Eligibility is reached when age plus years of pension service is 92 or greater.

In our example above, the Annual High-4 Average Earnings is $50,000 or more so the monthly Social Security Bridge is $800 per month.

* Benefit Multiplier: A percentage factor applied to the Pension Plan Part 1 Formula (Monthly High-4 Average Earnings), and the Pension Plan Part 2 Formula (Monthly High-4 Average Earnings in Excess of Social Security Breakpoint). The benefit multiplier used in our example are:
Pension Plan Formula Part 1 = 1.15%
Pension Plan Formula Part 2 = 0.35%

Example Single Life Annuity Calculation: The monthly Single Life Annuity is payable for the retiree's lifetime. Upon retiree's passing payments will cease, with no further benefits payable.

Example Lump Sum Calculation: The Lump Sum is derived from the monthly Single Life Annuity. It is the actuarially equivalent to the total annuity a retiree would have received as a Single Life Annuity recipient. No additional benefits will be paid after you receive a lump sum payment.

The Lump Sum is calculated using 417e Segment Rates from November of the calendar year preceding your Benefit Commencement Date. If you requested a Benefit Commencement Date beyond the current calendar year, your estimated Lump Sum was calculated using the last published November 417e Segment Rates. The 417e Segment Rates for November are typically published in mid-December. As a result, you should be aware that the amount of your Lump Sum payment could increase or decrease based on the actual 417e Segment Rates in effect on your Benefit Commencement Date.

Total Lump Sum Including the Social Security Bridge (as previously discussed above).

Comparison: Single Life Annuity vs. Lump Sum

Single Life Annuity

Lump Sum

Comparison: Monthly Annuity Options

For precise information regarding your pension benefits, it's advisable to consult 3M's human resources or benefits department, as they can provide personalized details based on your employment history and the specific terms of the ERIP.

Note: The examples provided are for illustrative purposes only.

Considerations

Understanding the interest rate risks associated with pension plans is important. While annuities offer stability, they may lack inflation protection. Some retirees consider pairing their annuity election with additional retirement savings to help address rising costs.

For personalized advice regarding your 3M retirement plan, consult with a financial advisor familiar with 3M’s specific retirement offerings and policies. It’s important to review your Summary Plan Description (SPD) or similar documentation for detailed insights tailored to your career at 3M.

Conclusion

If you’re navigating your retirement options at 3M, reach out to The Retirement Group at(800) 900-5867 for expert guidance. They specialize in retirement planning for employees of major corporations like 3M and can provide clarity on your pension choices. Remember to always verify information against your company’s official documents, as The Retirement Group is independent from 3M and its affiliates.

Who Is Eligible?

You are eligible to participate in the Portfolio III VIP if you are an active regular U.S salaried or hourly nonunion production/maintenance/warehouse employee of 3M or a 3M subsidiary offering Portfolio III employees hired or rehired on or after January 1, 2009 or later, or employees who were hired prior to January 1, 2009 whose employer became a participating subsidiary on January 1, 2009 or later. Your participation is voluntary. Residents of your city, your state in the retirement age age range are especially encouraged to consider this opportunity.

3M 401k and Retirement Income Account (RIA)

The 3M Voluntary Investment Plan (VIP), 3M's 401(k) plan, offers employees an excellent opportunity to save for retirement with contributions from both the employee and the company. Here’s a detailed breakdown of how the plan works:

Eligibility:

All active employees of 3M are eligible to participate in the plan from their date of hire.

Employees who don't enroll on their own are automatically enrolled 45 days after hire (three months for Savings Plan participants) at a default before-tax contribution rate of 7% (6% for Savings Plan), invested in the 3M LifePath Portfolio target-date fund closest to the year they turn 65; the default rate then rises 1% a year up to a maximum of 10% unless the employee changes it.

Employees can elect to contribute a percentage of their salary to their 401(k), and contributions are typically made on a pre-tax basis.

Vesting:

3M provides immediate vesting for employee contributions. Company matching and Retirement Income Account contributions vest 40% after one year of service, 70% after two years and 100% after three years.

Employer Matching:

3M's match depends on when you were hired. VIP matching contributions range from 45% to 100% of the first 5% of eligible pay you contribute; employees hired or rehired on or after January 1, 2009 get the 100% rate on that first 5%, according to the 2016 Portfolio III VIP summary plan description, plus a separate 3% nonelective Retirement Income Account contribution on eligible pay. For example, if an employee hired after 2009 earns $100,000 per year and contributes 5% ($5,000), 3M would contribute a $5,000 match plus a $3,000 Retirement Income Account contribution, bringing the total contribution for the year to $13,000.

Example Calculation:

If an employee hired on or after January 1, 2009 makes $80,000 annually and contributes 5% ($4,000) to their 401(k), 3M would match 100% of it. Therefore, 3M would contribute an additional $4,000 match plus a $2,400 Retirement Income Account contribution (3% of pay), making the total annual contribution $10,400.

Loans:

While actively employed, you may take out a loan from your 401(k) Accounts and/or Rollover Accounts. You can have up to two loans outstanding at any time. Only employees receiving regular wage payroll payments are eligible to take a loan. All loans are subject to an origination fee that is deducted from your loan amount. The minimum loan amount is currently $1,000 plus the loan origination fee.

The maximum loan amount is the lesser of:

50% of the total of your 401(k) Accounts, Rollover Accounts, Retirement Income Account, Company Contribution Account and vested Company Match Account, minus any outstanding loans; or
$50,000 minus the highest outstanding loan balance you had during the last 12 months; or
The sum of your 401(k) Account and Rollover Account balances invested in the Plan’s investment funds (excluding 3M stock and PCRA), minus $1,000 if you have a balance in the self-directed brokerage account (PCRA)

Withdrawals:

Over half of plan participants in your city your state, aged retirement age, admit they don’t have the time, interest, or knowledge needed to manage their 401(k) portfolio. But the benefits of getting help goes beyond convenience. Studies like this one, from Charles Schwab, show those plan participants who get help with their investments tend to have portfolios that perform better: The annual performance gap between those who get help and those who do not is 3.32% net of fees. This means a 45-year-old participant could see a 79% boost in wealth by age 65 simply by contacting an advisor. That’s a pretty big difference.
diversification-removebg-preview

Getting help can be the key to better results across the 401(k) board.

A 2010 Charles Schwab study found several positive outcomes common to those using independent professional advice. They include:

Improved savings rates – 70% of participants who used 401(k) advice increased their contributions.
Increased diversification – Participants who managed their own portfolios invested in an average of just under four asset classes, while participants in advice-based portfolios invested in a minimum of eight asset classes.
Increased likelihood of staying the course – Getting advice increased the chances of participants staying true to their investment objectives, making them less reactive during volatile market conditions and more likely to remain in their original 401(k) investments during a downturn. Don’t try to do it alone. Get help with your company's 401(k) plan investments. Your nest egg will thank you.

In-Service Withdrawals

Generally speaking, you can withdraw amounts from your account while still employed with your company under the circumstances described below.

It’s important to know that certain withdrawals are subject to regular federal income tax and, if you’re under age 59½, you may also be subject to an additional 10% penalty tax. You can determine if you’re eligible for a withdrawal, and request one, online or by calling your company's Benefits Center.

Rolling Over Your 401(k)

An in-service distribution can generally be rolled over to an IRA, except any part that is a required minimum distribution (RMDs generally begin at age 73, or 75 for people born in 1960 or later). A direct rollover would avoid the 10% early withdrawal penalty as well as the mandatory 20% tax withholding. Your company's plan summary outlines more information and possible restrictions on rollovers and withdrawals.

Because a withdrawal permanently reduces your retirement savings and is subject to tax, you may want to consider taking a loan from the plan instead of a withdrawal to meet your financial needs. Unlike withdrawals, loans must be repaid, and are not taxable (unless you fail to repay them). In some cases, as with hardship withdrawals, you are not allowed to make a withdrawal unless you have also taken out the maximum loan available within the company plan.

You should also know that your company's plan administrator reserves the right to modify the rules regarding withdrawals at any time, and may further restrict or limit the availability of withdrawals for administrative or other reasons. All plan participants will be advised of any such restrictions, and they apply equally to all corporate employees. If you are approaching retirement or required minimum distribution age (73, or 75 if you were born in 1960 or later), these options are particularly pertinent.

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.

Net Unrealized Appreciation (NUA)

When you qualify for a distribution, you have three options: Pads with color diagrams and color shining on background-3

Roll-over your qualified plan to an IRA and continue deferring taxes.
Take a distribution and pay ordinary income tax on the full amount.
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 within one tax (calendar) year. 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 long-term capital gains rates of 0%, 15%, or 20%, depending on your taxable income. Depending on your tax brackets, this could mean meaningful tax savings on the appreciation.

You may be interested in learning more about NUA with a complimentary one-on-one session with a financial advisor from The Retirement Group in your city, your state.

IRA Withdrawal

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

Your retirement assets may consist of several retirement accounts: IRAs, 401(k)s, taxable accounts, and others.

So, what is the most efficient way to take your retirement income after leaving your company?

You may want to consider meeting your income needs in retirement by first drawing down taxable accounts rather than tax-deferred accounts.

This may help your retirement assets with your company last longer as they continue to potentially grow tax deferred.

You will also need to plan to take the required minimum distributions (RMDs) from any company-sponsored retirement plans and traditional or rollover IRA accounts.

IRS rules require you to begin taking distributions from these types of accounts when you reach your RMD age: 73 if you were born from 1951 through 1959, or 75 if you were born in 1960 or later. Beginning in 2023, the excise tax for every dollar of your RMD under-distributed was reduced from 50% to 25%, and it may be 10% if the shortfall is corrected in time.

Current rules allow account owners to delay taking their first RMD until April 1 following the later of the calendar year they reach RMD age or, in a workplace retirement plan, retire.

Two flexible distribution options for your IRA

When you need to draw on your IRA for income or take your RMDs, you have a few choices. Regardless of what you choose, IRA distributions are subject to income taxes and may be subject to penalties and other conditions if you’re under 59½.

Partial withdrawals: Withdraw any amount from your IRA at any time. If you’re retirement age or over, you’ll have to take at least enough from one or more IRAs to meet your annual RMD.

Systematic withdrawal plans: Structure regular, automatic withdrawals from your IRA by choosing the amount and frequency to meet your income needs after retiring from your company. If you’re under 59½, you may be subject to a 10% early withdrawal penalty (unless your withdrawal plan meets Code Section 72(t) rules).

Your tax advisor can help you understand distribution options, determine RMD requirements, calculate RMDs, and set up a systematic withdrawal plan.

3M offers a comprehensive benefits package called "3M Total Rewards," designed to enhance employees' physical, financial, and overall well-being in your city, your state. The benefits package is structured into categories such as health care, retirement savings, and additional perks, depending on employment status and eligibility criteria.

Eligibility

Eligibility for 3M’s benefits depends on the employee’s role, years of service, and age.

Employees in the age range of retirement age become eligible for most benefits, including medical, dental, vision, and retirement plans, on the first day of employment.

Health Coverage: 3M provides medical, dental, and vision plans, covering routine, emergency, and preventive care. Some medical plans include a Health Savings Account (HSA), and all cover preventive care at 100% for in-network providers. Dental and vision plans offer comprehensive coverage, including orthodontia for adults.

Retirement Plans: 3M offers a 401(k) plan with company matching contributions, as well as contributions to a Retirement Income Account. Employees also have access to financial education resources to support retirement planning.
For employees hired before January 1, 2016, 3M also provides Retiree Medical Savings Account (RMSA) credits that accrue for each year of employment and, at retirement, move to a health reimbursement account that can help pay qualified medical and dental premiums and expenses. Employees hired on or after January 1, 2016 do not receive these credits, and 3M amended the plan in 2025 to adjust them, so check current terms with 3M's benefits center.

Stock Purchase and Incentives: Employees can purchase 3M stock at a 15% discount through the General Employee Stock Purchase Plan (GESPP). Additionally, there are variable pay opportunities like annual incentives and long-term incentive plans for eligible employees.

Paid Time Off: This includes vacation days, holidays, paid sick leave, and parental leave. Employees can also take paid volunteer time.

General Employee Stock Purchase Plan (GESPP)

Monthly purchases of shares of 3M stock at discounted prices through convenient payroll deductions.

The price for shares purchased under the GESPP is fixed at the beginning of each month and represents a 15% discount from the average of the high and low trading price of a share of 3M stock on the first trading day of the month.

Eligible employees may choose to contribute 3%-10% of their eligible compensation.

Retirement Benefits: 3M offers both a 401(k) plan with employer matching, and a pension plan.
Eligibility for the pension plan depends on date of hire, age and years of service, with vesting after three years of service.

Additional Benefits: 3M provides voluntary benefits such as life insurance, disability coverage, critical illness and accident insurance, legal services, and even pet insurance.

HSA's

Health Savings Accounts (HSAs) are often celebrated for their utility in managing healthcare expenses, particularly for those with high-deductible health plans in your city, your state. However, their benefits extend beyond medical cost management, positioning HSAs as a potentially superior retirement savings vehicle compared to traditional retirement plans like 401(k)s, especially after employer matching contributions are maxed out. For individuals in the retirement age age range, understanding the nuances of HSAs becomes increasingly pertinent.

Understanding HSAs

HSAs are tax-advantaged accounts designed for individuals with high-deductible health insurance plans. For 2026, the IRS defines high-deductible plans as those with a minimum deductible of $1,700 for individuals and $3,400 for families. HSAs allow pre-tax contributions, tax-free growth of investments, and tax-free withdrawals for qualified medical expenses—making them a triple-tax-advantaged account.

The annual contribution limits for HSAs in 2026 are $4,400 for individuals and $8,750 for families, with an additional $1,000 allowed for those aged 55 and older. Unlike Flexible Spending Accounts (FSAs), HSA funds do not expire at the end of the year; they accumulate and can be carried over indefinitely.

Comparing HSAs to 401(k)s Post-Matching

Once an employer's maximum match in a 401(k) is reached, further contributions yield diminished immediate financial benefits. This is where HSAs can become a strategic complement. While 401(k)s offer tax-deferred growth and tax-deductible contributions, their withdrawals are taxable. HSAs, in contrast, provide tax-free withdrawals for medical expenses, which are a significant portion of retirement costs.

HSA as a Retirement Tool

Post age 65, the HSA flexes its muscles as a robust retirement tool. Funds can be withdrawn for any purpose, subject only to regular income tax if used for non-medical expenses. This flexibility is akin to that of traditional retirement accounts, but with the added advantage of tax-free withdrawals for medical costs—a significant benefit given the rising healthcare expenses in retirement.

Furthermore, HSAs do not have Required Minimum Distributions (RMDs), unlike 401(k)s and Traditional IRAs, offering more control over tax planning in retirement. This makes HSAs particularly advantageous for those who might not need to tap into their savings immediately at retirement or who want to manage their taxable income.

Investment Strategy for HSAs

Initially, it's prudent to invest conservatively within an HSA, focusing on keeping sufficient liquid funds available to cover near-term deductible and other out-of-pocket medical expenses. However, once a financial cushion is established, treating the HSA like a retirement account by investing in a diversified mix of stocks and bonds can significantly enhance the account's growth potential over the long term.

Utilizing HSAs in Retirement

In retirement, HSAs can cover a range of expenses:

Healthcare Costs-Pre Medicare: HSA's Can pay for healthcare costs to bridge you to Medicare
Healthcare Costs-Post Medicare: HSAs can pay for Medicare premiums and out-of-pocket medical costs, including dental and vision, which are often not covered by Medicare.
Long-term Care: Funds can be used for qualified long-term care services and insurance premiums.
Non-medical Expenses: After age 65, HSA funds can be used for non-medical expenses without incurring penalties, although these withdrawals are subject to income tax.

Conclusion

In summary, HSAs offer unique advantages that can make them a superior option for retirement savings, particularly once you are contributing enough to receive the full 401(k) match. Their flexibility in fund usage, coupled with tax advantages, makes HSAs an essential component of a comprehensive retirement strategy. By strategically managing contributions and withdrawals, individuals can work toward stronger financial health in retirement and help preserve both their medical and financial well-being.

What Happens If Your Employment Ends

Your life insurance coverage and any optional coverage you purchase for your spouse/domestic partner and/or children ends on the date your employment with your company ends, unless your employment ends due to disability. Some group life plans still pay benefits if you die within a short period after your employment ends (often the 31-day conversion period), so check your company's plan for its rules.

Note:

You may have the option to convert your life insurance to an individual policy or elect portability on any optional coverage.
If you stop paying supplementary contributions, your coverage will end.
If you are at least 65 and you pay for supplemental life insurance, you should receive information in the mail from the insurance company that explains your options.
Make sure to update your beneficiaries. See your company's SPD for more details.

Beneficiary Designations

As part of your retirement planning and estate planning, it’s important to name someone to receive the proceeds of your benefit programs in the event of your death. That’s how your company will know whom to send your final compensation and benefits. This can include life insurance payouts and any pension or savings balances you may have.

Next Step:

When you retire, make sure that you update your beneficiaries, and complete the Beneficiary Designation form for life events such as death, marriage, divorce, childbirth, adoptions, etc.

Schedule a Call

For many retirees, understanding and claiming Social Security can be difficult but identifying optimal ways to claim Social Security is essential to your retirement income planning. Social Security benefits are not designed to be the sole source of your retirement income, but a part of your overall withdrawal strategy.

Knowing the foundation of Social Security, and using this knowledge to your advantage, can help you make the most of your benefit.

It’s your responsibility to enroll in Medicare parts A and B when you first become eligible — and you must stay enrolled to have coverage for Medicare-eligible expenses. This applies to your Medicare eligible dependents as well.

You should know how your retiree medical plan choices or Medicare eligibility impacts your plan options. Before you retire from your company, contact the U.S. Social Security Administration directly at 800-772-1213, call your local Social Security Office or visit ssa.gov.

They can help determine your eligibility, get you and/or your eligible dependents enrolled in Medicare or provide you with other government program information. For more in-depth information on Social Security, please call us.

Check the status of your Social Security benefits before you retire from your company. Contact the U.S. Social Security Administration, your local Social Security office, or visit ssa.gov.

Are you nearing Medicare age? If you or your dependents are eligible after you leave 3M, Medicare generally becomes the primary coverage for you or any of your dependents as soon as they are eligible for Medicare. This will affect company-provided medical benefits.

You and your Medicare-eligible dependents must enroll in Medicare Parts A and B when you first become eligible. Many company-sponsored retiree medical plans pay benefits as if Medicare Parts A and B paid first, whether or not you actually enroll, so check your company's plan for its rules.

For details on coordination of benefits, refer to your company's summary plan description.

If you or your eligible dependent don’t enroll in Medicare Parts A and B, your provider can bill you for the amounts that are not paid by Medicare or your company-specific medical plan … making your out-of-pocket expenses significantly higher.

Medicare does not cover all of your health care costs in retirement. The Employee Benefit Research Institute (EBRI) estimated for 2025 that a 65-year-old couple enrolled in a Medigap plan with average premiums and median prescription drug expenses may need $405,000 in savings to have a 90% chance of covering their health care expenses. A single man may need $212,000 and a single woman, because of her longer life expectancy, may need $252,000.

The ideas of happily ever after and until death do us part don't hold for every couple: in 2019, more than one in three people getting divorced in the U.S. (36%) were age 50 or older. Most couples saved together for decades, assuming they would retire together. After a divorce, they face the expenses of a pre-or post-retirement life, but with half their savings.

If you’re divorced or in the process of divorcing, your former spouse(s) may have an interest in a portion of your retirement benefits from your company. Before you can start your pension — and for each former spouse who may have an interest — you’ll need to provide your company with the following documentation:

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

Provide your company with any requested documentation to avoid having your pension benefit delayed or suspended. To find out more information on strategies if divorce is affecting your company's retirement benefits, please give us a call.

You’ll need to submit this documentation to your company’s online pension center regardless of how old the divorce or how short the marriage. *Source: The Retirement Group, “Retirement Plans - Benefits and Savings,” U.S. Department of Labor, 2019; “Generating Income That Will Last Throughout Retirement,” Fidelity, 2019

Social Security and Divorce

You can apply for a divorced spouse’s benefit if the following criteria are met:

You’re at least 62 years of age.
You were married for at least 10 years prior to the divorce.
You are currently unmarried.
Your ex-spouse is entitled to Social Security benefits.

Your own Social Security benefit amount is less than your spousal benefit amount, which is equal to one-half of what your ex’s full benefit amount would be if claimed at Full Retirement Age (FRA).

Unlike with a married couple, your ex-spouse doesn’t have to have filed for Social Security before you can apply for your divorced spouse’s benefit, but this only applies if you’ve been divorced for at least two years and your ex is at least 62 years of age. If the divorce was less than two years ago, your ex must already be receiving benefits before you can file as a divorced spouse.

In the process of divorcing?

If your divorce isn’t final before your retirement date from your company, you’re still considered married. You have two options:

Retire from your company before your divorce is final and elect a joint pension of at least 50% with your spouse — or get your spouse’s signed, notarized consent to a different election or lump sum.
Delay your retirement from your company until after your divorce is final and you can provide the required divorce documentation in your city, your state once you retirement age.

Source: The Retirement Group, “Retirement Plans - Benefits and Savings,” U.S. Department of Labor, 2019; “Generating Income That Will Last Throughout Retirement,” Fidelity, 2019

What your survivor needs to do:

Report your death. Your spouse, a family member or even a friend should call your company’s benefits service center as soon as possible to report your death.
Collect life insurance benefits. Your spouse, or other named beneficiary, will need to call your company's benefits service center in your city, your state to collect life insurance benefits once you have reached retirement age.

If you have a joint pension:

Start the joint pension payments in your city, your state. The joint pension is not automatic. Your joint pensioner, aged retirement age, will need to complete and return the paperwork from your company's pension center to start receiving joint pension payments.
Be prepared financially to cover living expenses. Your spouse will need to be prepared with enough savings to bridge at least one month between the end of your pension payments from your company and the beginning of his or her own pension payments.

Financial benefits of working

Make up for decreased value of savings or investments. Interest rates affect both pension lump-sum values and how much income a portfolio can generate. Some people continue to work to make up for poor performance of their savings and investments.

Maybe you took an offer from your company and left earlier than you wanted with less retirement savings than you needed. Instead of drawing down savings, you may decide to work a little longer to pay for extras you’ve always denied yourself in the past.

Meet financial requirements of day-to-day living. Expenses can increase during your retirement from your company and working can be a logical and effective solution. You might choose to continue working in order to keep your insurance or other benefits — many employers offer free to low-cost health insurance for part-time workers. This can be particularly appealing as you approach retirement.

Emotional benefits of working

You might find yourself with very tempting job opportunities at a time when you thought you’d be withdrawing from the workforce.

Staying active and involved. Retaining employment after your previous job, even if it’s just part-time, can be a great way to use the skills you’ve worked so hard to build over the years and keep up with friends and colleagues.

Enjoying yourself at work. Just because the government has set a retirement age with its Social Security program doesn’t mean you have to schedule your own life that way. Many people genuinely enjoy their employment and continue working because their jobs enrich their lives.

Retirement Guide for 3M Employees

Table of Contents

2026 Tax Changes & Inflation

Schedule An Appointment with a Retirement Group Advisor

Planning for a Layoff or Job Change at 3M

Planning Your Retirement

Retirement planning is a verb; consistent action must be taken whether you’re 20 or 60.

The truth is that most Americans don’t know how much to save or the amount of income they’ll need.

"A separate study by Russell Investments, a large money management firm, came to a similar conclusion about the potential value of working with a financial advisor."

Getting help with how your company's retirement plan account is invested may make a meaningful difference in what you have saved by age 65.

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

Your 3M Pension Plan

Please Note:

Your 401(k) Plan

Eligibility:

Vesting:

Employer Matching:

Example Calculation:

Net Unrealized Appreciation (NUA)

IRA Withdrawal

Your 3M Benefits

Eligibility

Social Security & Medicare

Divorce

Unlike with a married couple, if you have been divorced for at least two years, your ex-spouse doesn’t have to have filed for Social Security before you can apply for your divorced spouse’s benefit (your ex-spouse must be at least 62).

Survivor Checklist

Life After Your Career

Sources