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Your contributions and the company match
Information about contributions to the ExxonMobil Savings Plan
Q. When I enroll in the Savings Plan, what decisions do I need to make?
A. There are three primary decisions you must make when you enroll in the Savings Plan:
- How much do you want to contribute?
- Do you want to make before-tax contributions, regular after-tax contributions, and/or Roth 401(k) contributions (which are also made on an after-tax basis)?
- How do you want to invest your contributions and the company match? Additional investment decision information is described later in this SPD in the section on investment considerations.
Deciding how much you want to contribute
The Savings Plan is voluntary. You also decide whether you want your contributions to be made on a before-tax and/or an after-tax basis. Listed below are the types of contributions that you may make to the Savings Plan. There are certain limitations on these contributions that may apply to you.
- To participate, you must contribute a minimum of 6% of your pay to the Savings Plan by payroll deduction. This is called your minimum contribution. The company matches only your minimum contribution with 7% of your pay.
- Beyond your minimum contribution, you may make additional contributions by payroll deduction in 1% increments, for a combined total up to 20% of pay.
- You also may make contributions to your After-Tax Account other than through payroll deductions. These are called After-Tax Account special contributions and are made by check.
- Participants who are age 50 or older in a given calendar year and who maximize their before-tax contributions and/or Roth 401(k) contributions may make catch-up contributions to the Before-Tax and/or Roth 401(k) Accounts.
Rollovers
Participants may make rollover contributions directly from another eligible plan into the Savings Plan. An eligible plan includes:
- A tax qualified plan such as a 401(k) plan, profit-sharing plan, and a defined benefit plan. Employees who retire on or after 12/1/2015, and who have a Savings Plan Account, may roll over lump sum distributions from the ExxonMobil Pension Plan into the Savings Plan.
- A section 403(a) annuity plan.
- A section 403(b) tax-sheltered annuity.
- An eligible 457(b) plan maintained by a government employer.
The Savings Plan is Tax-Qualified
The Savings Plan is qualified under the Internal Revenue Code. This provides a valuable benefit by allowing deferral of taxes on before-tax contributions, the company match and any earnings in your Savings Plan Account. The earnings in your Roth accounts may even be exempt from tax.
Rollovers are accepted only in the form of cash from other eligible plans. After-tax contributions (other than after-tax amounts in Roth accounts) and amounts held in Individual Retirement Accounts (IRAs) are not eligible for rollover into the Savings Plan. Some things to consider:
- By law, there are strict time limits and rules applicable to rollover contributions.
- Rollover contributions are placed in your General Account or Roth Rollover Account, depending on the type of account from which the funds are being rolled over.
- Rollover contributions are fully vested immediately upon acceptance into the Savings Plan.
- Rollover contributions are not eligible for withdrawal once in the Savings Plan.
If you have worked for another employer and have eligible plan savings, you may roll over the tax-deferred funds from non-Roth accounts into the General Account in the Savings Plan. Funds from a Roth account in an eligible plan with a previous employer may be rolled over into the Roth Rollover Account. This gives you the ability to consolidate more of your retirement savings into the Savings Plan.
Before-tax vs. after-tax contributions
When you make before-tax contributions, your taxable income is reduced for the year in which the contributions are made, and as a result, you pay less in taxes for that year.
Example:
Suppose your annual pay is $50,000 and you contribute 6% of your pay or $3,000. This example shows a comparison of making before-tax contributions vs. after-tax contributions (regular after-tax contributions or Roth 401(k) contributions).
| Before-Tax Contributions | After-Tax Contributions | |
|---|---|---|
| Annual pay | $ 50,000.00 | $ 50,000.00 |
| Before-tax contributions | - $ 3,000.00 | 0 |
| Taxable income | $ 47,000.00 | $ 50,000.00 |
| Taxes* | $ 7,050.00 | $ 7,500.00 |
| After-tax contributions | 0 | - $ 3,000.00 |
| After-tax pay | $ 39,950.00 | $ 39,500.00 |
| Current tax savings | $ 450.00 | 0 |
* "Taxes" for this example assumes a simple, flat federal income tax rate of 15% and does not include state or local taxes. Your tax savings will depend on your personal financial situation.
As the example above shows, you contribute the same amount (in this example, $3,000) whether you make before- tax or after-tax contributions. But contributing before-tax dollars reduces your current federal income taxes by $450. Before-tax contributions do not reduce your current Social Security or Medicare taxes.
Remember: these taxes are only deferred. When you receive a withdrawal or distribution of your tax-deferred contributions or earnings, they generally will be subject to taxes. Please see more in the section on additional tax considerations.
While contributions to the Before-Tax Account may provide current tax advantages, you cannot make withdrawals from your Before-Tax Account other than hardship withdrawals. Roth 401(k) Account and Before-Tax Account contributions are subject to the same withdrawal limitations. Contributions to the After-Tax Account, however, are eligible for withdrawals. Please see more in the section on withdrawals.
Regular after-tax contributions vs. Roth 401(k) contributions
The value of your Savings Plan Account can in some circumstances be greater if you make Roth 401(k) contributions rather than regular after-tax contributions.
Example:
Assume that the aggregate amount of the after-tax contributions for the one year in the example above grows at a constant rate of 5%. After 20 years, the amount in your account (after taxes) will be greater if you had made Roth 401(k) contributions because, in the case of a qualified distribution, earnings on these contributions are exempt from federal income tax. If, however, the Roth 401(k) contributions are distributed in a non-qualified distribution, then the total amount (after taxes) will be the same as that for the regular after-tax contributions.
| Regular After-Tax Contributions | Roth 401(k) Contributions^ | |
|---|---|---|
| Annual pay | $ 50,000.00 | $ 50,000.00 |
| Before-tax contributions | 0 | 0 |
| Taxable income | $ 50,000.00 | $ 50,000.00 |
| Taxes* | $ 7,500.00 | $ 7,500.00 |
| After-tax contributions | $ 3,000.00 | $ 3,000.00 |
| After-tax pay | $ 39,500.00 | $ 39,500.00 |
| Amount after 20 years (@ 5% growth) |
$ 7,960.00 | $ 7,960.00 |
| Less: amount already taxed | $ 3,000.00 | $ 3,000.00 |
| Less: amount exempted from tax | 0 | $ 4,960.00 |
| Taxable amount | $ 4,960.00 | 0 |
| Taxes* | $ 744.00 | 0 |
| Total amount (after -tax) | $ 7,216.00 | $ 7,960.00 |
* "Taxes" for this example assumes a simple, flat federal income tax rate of 15% and does not include state or local taxes. Your tax savings will depend on your personal financial situation.
^ Assumes a qualified distribution.
Before-tax contributions vs. Roth 401(k) contributions
Changes in your personal tax rate over time can impact the amount you ultimately receive from the Savings Plan in retirement when comparing before-tax contributions to Roth 401(k) contributions. Depending on the changes, Roth 401(k) contributions can result in a higher or lower after-tax balance vs. before-tax contributions, as demonstrated below .
Example:
Assume you have $10,000 to invest for one year. Note that $8,500 on an after-tax basis is the equivalent of $10,000 invested on a before-tax basis assuming a 15% tax rate is applied. What is the value of this one year of contributions at the end of 20 years after taking into account taxes at distribution? Consider the following three scenarios:
1) If your tax rate at the time of your contribution is the SAME as your tax rate at the time you receive a distribution (for example, at retirement), the after-tax value of both types of contributions will be exactly the same, as shown below.
| Before-Tax Contributions | Roth 401(k) Contributions^ | |
|---|---|---|
| Contributions for the year (15% tax rate) |
$ 10,000.00 |
$ 8,500.00 |
| Amount after 20 years (@5% growth) |
$ 26,533.00 |
$ 22,533.00 |
| Taxes (15% rate) |
- $ 3,980.00 |
0 |
| Total after-tax value at distribution |
$ 22,533.00 |
$ 22,533.00 |
2) If your income tax rate at the time of distribution is HIGHER than your income tax rate at the time of contribution, the Roth 401(k) contribution will result in a higher after-tax balance.
| Before-Tax Contributions | Roth 401(k) Contributions^ | |
|---|---|---|
| Contributions for the year (15% tax rate) |
$ 10,000.00 |
$ 8,500.00 |
| Amount after 20 years (@5% growth) |
$ 26,533.00 |
$ 22,553.00 |
| Taxes (20% rate) |
- $ 5,307.00 |
0 |
| Total after-tax value at distribution |
$ 21,226.00 |
$ 22,553.00 |
3) If your income tax rate at the time of distribution is LOWER than your income tax rate at the time of contribution, the before-tax contribution will result in a higher after-tax balance.
| Before-Tax Contributions | Roth 401(k) Contributions^ | |
|---|---|---|
| Contributions for the year (15% tax rate) |
$ 10,000.00 |
$ 8,500.00 |
| Amount after 20 years (@5% growth) |
$ 26,533.00 |
$ 22,553.00 |
| Taxes (10% rate) |
- $ 2,653.00 |
0 |
| Total after-tax value at distribution |
$ 23,880.00 |
$ 22,553.00 |
^ Assumes a qualified distribution.
You may also be eligible to receive an income tax credit for making contributions to the Savings Plan, if your adjusted gross income does not exceed certain limits which are adjusted annually for inflation. For more information regarding eligibility and limitations of claiming the Retirement Savings Contributions Credit (Saver’s Credit), see IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).
The company match
When you make at least the minimum contribution of 6% of pay, you automatically receive a company match of 7% of pay.
How you become vested
Vesting means ownership. When you leave the company, you are entitled to receive a distribution of the vested portion of your Savings Plan Account:
- Your contributions and any earnings – You always are vested in your own contributions to the Savings Plan and in any investment earnings in your Savings Plan Account.
- Company match – As an employee, you vest in the company match upon the earliest of the following events:
- Completion of three years of vesting service
- Reaching age 65.
- Your death.
If you leave the company before you are vested, you forfeit (lose) the company match in your General Accounts, but not the earnings on the company match.
Changing your payroll contributions and company match
You may change the percent of your payroll contributions at any time.
Any change in how you direct your contributions and company match will be effective at the beginning of the next full payroll period after your request is processed. There is no limit on how often you may make such changes.
Suspending your payroll contributions
You may suspend your payroll contributions at any time. However, you will not be able to make payroll contributions again for six months.
Your payroll contributions also may be suspended as a penalty for making certain withdrawals.
While your contributions are suspended, no company match is made to your General Account.
Limits on contributions
Federal law and Savings Plan provisions limit the amounts you and the company can contribute annually to the Savings Plan. Federal law also limits the amount of contributions you can make annually on a before-tax basis. Click here to see the current year limitations.
In-plan Roth conversions
Once a year, you may also convert certain amounts in your non-Roth accounts into the Roth Conversion Account. Generally, you can only convert amounts in existing non-Roth accounts in which you are fully vested and amounts which, if distributed, can be rolled over to an IRA. Below is a summary:
- Employees younger than 59½ can convert a portion or all of the balance in their After-Tax and General Accounts to the Roth Conversion Account. However, funds in the Before-Tax Account cannot be converted.
- Employees 59½ or older can convert a portion or all of the balance in their non-Roth accounts to the Roth Conversion Account.
- Retirees and terminees can convert a portion or all of the balance in their non-Roth accounts to the Roth Conversion Account.
You can see the maximum amount available for you to convert on the ExxonMobil Savings Plan website at http://xomsavings.voya.com.
The decision to make an in-plan Roth conversion is extremely complex and should take into consideration your individual tax and financial circumstances. You should consult your financial and tax advisors if you are thinking about making an in-plan conversion. Please also see rollovers for important tax considerations for in-plan conversions.
The Savings Plan website at http://xomsavings.voya.com and the Savings Plan Telephone Service (STS) at 877-966-4015 are available for more information regarding contributions and in-plan Roth conversions.