3 Strategies to Optimize Your 2024 EMSP Contributions

Some people enjoy starting a road trip with only a general destination in mind. We did that in the early 1990s on a family vacation, driving from New Jersey through Canada’s Atlantic Provinces.

It was dinner time in Portland, Maine, in mid-August, and I had not booked a motel room for that night for the family. This was before cell phones or GPS devices. As evening approached, I used all my change at a pay phone booth, trying to find motel vacancies somewhere nearby.

I finally secured rooms at a motel in Bar Harbor, some three hours away, but it was dark when we got there, and I got lost. I drove hopelessly around the island for an hour, trying to find the place. Men don’t ask for directions.

Finally, a policeman pulled us over and asked if I knew where I was going. I confessed I did not–at least not precisely–and we received a police escort to our motel. Neither the kids nor my wife showed much appreciation at that late hour.

Like me from years ago, ExxonMobil employees can head into 2024 with only a general sense of a specific “destination.” The “destination” here isn’t a motel for the night but a decision on where they’d like their EMSP to be at year-end. A general destination might be “up” or “worth more.”

Maybe it’s a bit of a stretch to consider deciding how much to contribute to the EMSP as determining a “destination,” given that you don’t control the returns. But it is a destination in the sense of controlling what you can to get to where you’d like to be at YE2024.

Do you know where you would like your ExxonMobil Savings Plan (EMSP) to be at YE2024? What is your EMSP contributions strategy? Are you simply going on inertia, doing what you’ve always done, satisfied that whatever you’re doing is “close enough?” Or have you developed an objective of where you’d like to end up come December 2024?

To simplify things, we suggest you pause to consider what you want to achieve this year and set one of three objectives…

The “Rules of the Road”

The IRS and ExxonMobil impose certain limitations on how much you and ExxonMobil can contribute to the tax-qualified EMSP.

In 2024:

• You’re limited to $23,000 (plus a catch-up contribution of $7,500 if you’re 50 or older by the end of the year) that you can contribute to the Before-Tax and/or Roth 401(k) accounts. Any employee contributions beyond that go to your After-Tax account. (We assume you’re not voluntarily stopping contributions after reaching $23,000).
• Once your pay reaches $345,000, neither you nor the company can contribute any more to the EMSP.
• The total contributions you and the company can make to the EMSP in 2024 are limited to $69,000 (or $76,500 to include the $7,500 catch-up contribution if you were born in 1974 or earlier).
• The EMSP limits payroll deductions to no more than 20% of your Savings Plan-eligible pay.

Getting to Your Destination

If you want to get the company’s 7% match for as much of the year as possible:

• If your pay is less than $345,000, divide $23,000 by your annual salary. Round that percentage down and apply it (or a lower one, as long as it is 6% or higher) as your contribution each paycheck. You’ll continue to contribute throughout the year, and you’ll continue to get the company match on your full salary.
• If your annual pay is $345,000 or higher, contribute the 6% required to get the match and recognize that you can only contribute part of the $23,000 allowed. But you’ll get the company match as long as your cumulative pay is less than $345,000. Once you’re stopped from contributing because your pay has exceeded $345,000, the company will put its match in the Supplemental Savings Plan, and you can invest your dollars outside of the EMSP.

If you want to maximize total additions to your EMSP account:

• If your pay is less than $345,000, divide $69,000 by your annual salary. Subtract 7% from the resulting percentage for the company’s match, and the remainder (at least 6% but no more than 20%) is the percentage of your pay you should contribute each pay period. That combination of the company’s match and your ongoing semi-monthly or monthly contributions may not total $69,000 by the end of the year. If so, consider making a Special Contribution with after-tax money later in the year. (If you are 50 or older in 2024, you can also make catch-up contributions each pay period to get another $7,500 into your account.)
• If your annual pay is $345,000 or higher, you’ll get the company match in the EMSP for as long as you contribute and your cumulative pay is less than $345,001. You’ll receive 7% from the company on the first $345,000 of pay, which is $24,150. The balance of $69,000 minus $24,150 is $44,850. Dividing $345,000 into $44,850 is 13%. If you contribute 13% each payday and the company’s match is 7%, by the time you’ve reached $345,000 in cumulative pay, you will have 20% of $345,000 ($69,000) added to your account. (Catch-up contributions can be added if you’re 50 or older in 2024.)

If you want to maximize how much you get from the company from the non-tax-qualified Supplemental Savings Plan (SSP):

• If your annual pay is between $255,555 and $345,000, you can get stopped from contributing to the EMSP if your contributions and those of the company add up to $69,000. The earlier you do that, the more the Company will contribute to the Supplemental Savings Plan. That plan doesn’t attract employee contributions but is credited for the 7% company match once you’re no longer permitted to contribute to the EMSP because of IRS regulations. To get your contributions and those of the company to $69,000, divide $69,000 by your annual pay. Subtract 7% from that percentage, and the remainder (but no more than 20%) is how much you should contribute each pay period until the $69,000 maximum additions rule limits you. Once you and the company have added $69,000 to your account, ExxonMobil should add 7% of the remaining pay on which you’re prohibited from contributing to the EMSP to your Supplemental Savings Plan account.
• Suppose your annual pay is more than $345,000 for 2024. In that case, you can maximize ExxonMobil’s contribution to the Supplemental Savings Plan by contributing 20% of your pay to the EMSP until the earlier of your contributions and those of the company reach $69,000 or your cumulative pay for the year reaches $345,000. In either case, you’ll be restricted from contributing any more to the EMSP, and at that point, ExxonMobil’s match will be credited to your Supplemental Savings Plan account.

Let’s talk!

There are benefits to each of these three strategies. While you may not be able or choose to pursue one of these destinations completely, each underscores the value of thinking through what you’d like to accomplish with your EMSP contributions.

These are also examples of how a knowledgeable financial advisor can be helpful. We’re available for a no-obligation, no-commitment consultation if you’d like assistance developing a strategy for yourself. We can help build a road map to help you reach your “destination” for the EMSP and for your retirement goals more broadly. Don’t drive around aimlessly because you don’t want to ask for directions.

Cerity Partners is not contracted with, endorsed by or affiliated with Exxon Mobil Corp.

Please read important disclosures here.