Maximizing Your Raytheon benefits: A Roadmap to Retirement Success
Raytheon Technologies offers a comprehensive benefits package designed to support your financial future and health needs. Two of the most powerful tools available are the 401(k) retirement plan and the Health Savings Account (HSA). Together, these benefits provide opportunities to grow your wealth, save on taxes, and prepare for future expenses. Whether you’re building a retirement nest egg or planning for healthcare costs, understanding these benefits is essential to making the most of what’s available to you. Here’s a closer look at its key features, including how Roth contributions and after-tax contributions can help you supercharge your savings.
Key Features of the RTX 401(k) Plan
Company Match: RTX matches up to 3% of your salary. To receive the full match, you must contribute at least 3% of your eligible pay. Contributions above this limit won’t earn additional matching funds. KEY: The company match is "free money”. If you contribute 3% and receive 3%, then you have already made 100% returns on your 401(K) contributions.
Contribution Limits: In 2025, the IRS allows up to $23,500 in combined pre-tax and Roth salary deferral contributions for employees under 50. Employees older than 50 can contribute an additional $7,500 in catch-up contributions. For example, if you are 52, your salary deferral contribution could be $31,000. The total contribution limit (including employee and employer contributions) is $70,000 ($77,500 for employees 50+).
Contributions: This plan allows employees to contribute a flexible amount ranging from 1% to 90% of their salary. This contribution can be made on a pre-tax, Roth, or after-tax basis, adhering to IRS limits. Once you max out pre-tax and Roth contributions, you can make additional after-tax contributions up to the total limit. This is not available in all 401(K) plans but is offered by RTX - Keep reading for mega back door Roth conversions.
Vesting Schedule: Matching contributions vest fully after three years of service. If you leave the company before meeting the vesting requirement, you forfeit unvested matching funds. Your salary deferral contributions are 100% vested immediately.
Investment Options: A diverse range of options, including index funds, target-date funds, and actively managed funds.
Roth vs. Traditional Contributions
Traditional 401(k) Contributions:
Contributions lower your taxable income today.
Taxes are deferred until withdrawal, when distributions are taxed as ordinary income.
Ideal if you’re in a higher tax bracket now than you expect in retirement.
Roth 401(k) Contributions:
Contributions are made with after-tax income.
Qualified withdrawals (including growth) are tax-free.
Ideal for those expecting higher taxes in the future or who want tax flexibility in retirement.
Roth 401(k) Contributions
Normal pretax contributions reduce your taxable income in the current year, but future withdrawals from this bucket are taxed as ordinary income. Roth contributions allow you to pay taxes on your contributions upfront, offering significant advantages:
Tax-Free Growth: All earnings grow tax-free, and qualified withdrawals in retirement are also tax-free.
Flexibility in Retirement: Roth accounts give you more control over your taxable income in retirement, potentially avoiding higher tax brackets or income-related surcharges like IRMAA.
Best for Lower Tax Brackets: Roth contributions are ideal if you’re in a lower tax bracket today and expect to be in a higher bracket in retirement. Most people don’t realize they will likely be in a higher tax bracket in retirement.
It boils down to pay tax now or pay tax later.
Having a mix of pre-tax, Roth, and even taxable assets in retirement is a powerful position because you have tremendous control over your tax rate in any given year.
If you’re unsure which option is best for you, consult a financial planner for expert guidance.
The Mega Backdoor Roth IRA: A Game-Changer for High Savers
If you’ve already maxed out your $23,500 in Roth contributions, after-tax contributions can help you take advantage of the full $70,000 limit. These contributions, when converted, can fuel a Mega Backdoor Roth IRA.
How It Works:
Contribute after-tax dollars to your 401(k).
Elect to convert those contributions to Roth within the plan (in-plan Roth conversion).
Earnings on the after-tax funds are taxed as ordinary income during the conversion, so it’s best to convert frequently to minimize taxable growth.
Why It’s Powerful:
You can shift significant additional savings into Roth accounts, enabling tax-free growth.
After-tax contributions don’t reduce your ability to contribute to pre-tax or Roth accounts.
Once converted, future earnings grow tax-free, and withdrawals in retirement are tax-free for qualified distributions.
Key Considerations:
Avoid contributing too much after-tax early in the year, as it may reduce your employer match. Plan contributions to balance your limits across the year.
Always elect automatic Roth conversion for after-tax contributions to avoid taxable growth.
Review your contribution strategy annually to ensure you’re on track with the total limits and your retirement goals.
Managing your Raytheon Technologies 401(k)
Managing your Raytheon Technologies 401(k) is straightforward and offers flexibility to align with your financial goals. Here's how to navigate your account, handle rollovers, and understand your investment options:
1. Managing Your 401(k) Account
Access Platform: Use the Fidelity Net Benefits portal to view and manage your 401(k) account.
Account Features:
Monitor balances and investment performance.
Adjust contribution amounts and allocations.
Access educational resources and planning tools.
2. Rolling Over Previous Retirement Accounts
Eligibility: You can roll over funds from previous employer-sponsored 401(k) plans or Individual Retirement Accounts (IRAs) into your Raytheon 401(k).
Process:
Contact Fidelity through the Net Benefits portal to initiate the rollover.
Provide necessary details about your existing accounts.
Ensure the transfer is completed as a direct rollover to avoid complications.
Considerations: Compare investment options and fees between your old plan and the Raytheon 401(k). Consult a financial advisor to determine if a rollover aligns with your retirement strategy.
3. Investment Options Within the 401(k) Plan
Available Investments:
A variety of funds, including index funds, target-date funds, and actively managed funds.
Company stock through the Employee Stock Ownership Plan (ESOP).
A self-directed brokerage window for additional investment choices.
Health Savings Accounts (HSAs): A Powerful Tool for Health and Wealth
Raytheon Technologies offers a Health Savings Account (HSA) as part of its employee benefits package for those enrolled in a high-deductible health plan (HDHP). HSAs are one of the most flexible and tax-efficient tools available for managing current and future healthcare costs. Here’s what you need to know about HSAs and why you should consider maximizing this benefit. [Read more about HSAs here]
What Is an HSA?
An HSA is a personal savings account designed to help you pay for qualified medical expenses. Unlike flexible spending accounts (FSAs), HSAs offer several unique advantages:
Triple Tax Advantage:
Contributions are tax-deductible (or pre-tax if made through payroll deductions).
Funds grow tax-free when invested.
Withdrawals are tax-free if used for qualified medical expenses.
Portability: The money in your HSA is yours to keep, even if you change jobs or retire.
Flexibility: Unused funds roll over from year to year with no expiration.
Investment Options: Once your balance reaches a certain threshold (typically $1,000), you can invest HSA funds in mutual funds or other assets for long-term growth.
Why Fund Your HSA?
Immediate Tax Savings: Contributions to your HSA reduce your taxable income, lowering the amount you pay in taxes each year. For 2024, contribution limits are:
$4,300 for individuals.
$8,550 for families.
An additional $1,000 catch-up contribution for those aged 55 and older.
Future Healthcare Costs: Healthcare expenses don’t stop at retirement. HSAs allow you to save now and use funds tax-free for expenses such as:
Prescription medications.
Doctor visits and hospital stays.
Long-term care insurance premiums.
Medicare premiums (excluding Medigap).
Retirement Boost: After age 65, you can withdraw HSA funds for any purpose (non-medical withdrawals are taxed as ordinary income, similar to traditional retirement accounts). This flexibility makes it a backup retirement savings account.
Tax-Free Growth: By investing your HSA funds, you can grow your balance tax-free over time, compounding your savings to cover significant healthcare costs in retirement.
High Flexibility: HSAs can cover a wide range of expenses, from eyeglasses to dental work, making them a versatile tool for managing healthcare costs.
BONUS! Use it as an emergency fund/savings account: Read more about this special strategy in a recent blog post.
Key Considerations:
Maximizing the Match
Evaluate Roth vs. Traditional Contributions
Use HSA Funds Strategically & keep records
Consider After-Tax Contributions & Mega Back Door Roth Contributions
Evaluate strategic Roth Conversions
By fully leveraging the RTX 401(k) plan, you can build a more robust retirement portfolio and potentially save thousands in taxes over time. If you’d like a deeper dive into tailoring these strategies to your goals, feel free to connect.
About the author: Finn Price, CPFA, CEPA, is a business owner and wealth manager at Railroad Investment Group. He helps help successful entrepreneurs & individuals with concentrated stock positions in their 30s, 40s and 50s build, organize, protect and transfer their wealth.
Note: this article is general guidance and education, not advice. Consult your money person or your attorney for financial, tax, and legal advice specific to your situation.
