–> Shell employees can now contribute up to $19,000 (or $25,000 for those over 50 years old) of pre-tax or Roth savings to the Shell Provident Fund.
–> Shell’s limit on after-tax contributions has remained at $9,000, which means employees can contribute up to $28,000 (or $34,000 for those over 50 years old) to the Shell Provident Fund, between pre-tax and non-Roth after-tax savings.
If you are contributing after-tax dollars to the Shell Provident Fund, remember to roll out the after-tax funds at least once annually to a Roth IRA so that you can take advantage of the mega backdoor Roth strategy.
Many Shell employees will be able to take advantage of higher contribution limits for backdoor Roths. With the IRA contribution limit now being $6,000 ($7,000 if over age 50), super-savers at Shell can put away $34,000 ($41,000 if over age 50) — between the Provident Fund and backdoor Roths– into tax-sheltered retirement accounts.
The annual compensation limit for 2019 has increased from $275,000 to $280,000. If you make more than $280,000 in base and bonus compensation for 2019, remember to ensure that you max out your Provident Fund contributions before earning $280,000 of income. After you earn $280,000 of income, you can no longer contribute to the Provident Fund.
Shell contributes a 10% match to 401(k)accounts for employees that have been with the company over nine years. Since the annual compensation limit for 2019 is now $280,000, Shell will now cap company contributions to the Provident Fund at $28,000.
In 2019, once you begin earning more than $280,000, Shell will make their contributions to the Shell Provident Fund BRP (Benefit Restoration Plan) instead of to the Shell Provident Fund.
If 2019 is the first year you expect to make more than $280,000, check that you have an allocation and investment strategy set up for your Provident Fund BRP. The 2019 limit adjustments will be advantageous for super-savers at Shell and it is important to be sure that you make the most of these changes.
Willis Johnson & Associates will be working with our clients over the next few months to assist with adjusting contributions based on the new IRS rules. In 2019, we will follow up with clients who are eligible to take advantage of backdoor Roth IRAs to ensure they are on track for success. In the second half of the year–once these clients have reached their max contributions– we will help facilitate after-tax rollouts from their Provident Fund accounts.
If you have any questions about the 2019 contribution and compensation limits, please contact your advisor, or schedule a free consultation with one of our Shell specialists.