5 Reasons to Make a “Special Contribution” to the ExxonMobil Savings Plan (EMSP)

If you find yourself in the fortunate position of having extra funds available as the year draws to a close, you have a remarkable opportunity to bestow upon yourself a truly valuable holiday gift.

So, what’s the secret? It’s in the ‘Special Contribution’ to your ExxonMobil Savings Plan (EMSP) account. However, time is of the essence as the deadline looms—December 15th is a date you must mark on your calendar.

But what exactly is a ‘Special Contribution,’ and why is it a financial move worth considering? This financial maneuver involves a one-time after-tax deposit into your EMSP account, a strategic step designed to ensure that you maximize the contribution limits set by the IRS for participants in specific 401(k) plans.

Now, you might be wondering why you should allocate additional after-tax funds into your EMSP account. The answer lies in five compelling reasons:

1. You can generate additional tax-deferred earnings. Think of it as putting that extra cash to work, generating tax-deferred earnings that will build up your IRA at retirement.
2. After-tax contributions in your EMSP can be used to fund an in-plan Roth conversion during your time at ExxonMobil or can fund a Roth IRA when you finally take distribution of your account at retirement or termination.
3. If you ever need to withdraw from your After-Tax Account in the EMSP, more after-tax contributions offer larger withdrawal options. The more you’ve contributed after tax, the more you have available for a withdrawal and possibly the higher the percentage of the withdrawal considered tax-paid.
4. After-tax contributions can be returned to you tax-free when you finally take a distribution of your account at retirement. If you retire before 59-1/2, having access to tax-paid money can help you avoid paying an early retirement tax penalty of 10% on IRA withdrawals.
5. After-tax contributions can offset potential taxes on the distribution of low-cost XOM shares exercised using NUA (net unrealized appreciation). Employing the NUA strategy can be complicated. For now, know that any difference between the cost of the shares and the after-tax contributions “attributed” to that cost basis is considered taxable ordinary income. Increasing your after-tax contributions can minimize taxes or enable more shares without generating taxable income.

The IRS 2023 contribution limit for participants in defined contribution plans like the EMSP is $66,000. That’s the limit on how much you and ExxonMobil can contribute together to your tax-qualified account. (The $7,500 “catch-up” contribution for participants turning 50 or older in 2023 is in addition to the $66,000 limit.)

If you need help to estimate how much you can add to your EMSP account with a Special Contribution or to process a Special Contribution:

• Book a complimentary consultation with me or a member of our team.
• Remember the deadline to enroll is December 15^th 
• Don’t miss out on an opportunity to give yourself an early gift to celebrate the holidays and add to your retirement savings!

Let’s talk!

Cerity Partners LLC and ExxonMobil are separate and unaffiliated entities. The information provided is for educational purposes only and should not be construed as personalized investment, tax, or legal advice. ExxonMobil may modify benefits described herein at any time. Readers should consult their own tax and investment professionals before making any decisions.

Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser. Registration does not imply any level of skill or training. For information about Cerity Partners’ services, fees, and conflicts of interest, please review our Form ADV Part 2A and Form CRS at www.adviserinfo.sec.gov or request a copy from us directly.

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