Tax season may be behind us but it’s not time to file away your documents yet. Before those papers start collecting dust, remember this time of year presents an excellent opportunity to review your tax situation, asset allocation, and retirement contributions to help ensure you’re on track for next year. As an RTX (Raytheon) employee, you may need to take a look at additional timely and unique factors and make some mid-year adjustments to keep you on the right flight path. Let’s review some of the actions you may consider.
Review Your Tax Withholdings
Review your recently filed taxes — did you owe taxes or receive a refund? If you had a tax surprise this year, you probably under-withheld, resulting in a penalty. On the other hand, if you received a large refund, you likely could have put your excess income to work more efficiently, for example, toward investing or paying down debt. To help avoid penalties and improve your cash flow, consider adjusting your federal and state income tax withholdings to “break even” or receive a small refund. a
Owing more in taxes than expected could also be a result of one-time events, such as the vesting of RTX stock via RSUs, and/or conversion of after-tax dollars to Roth within your 401(k), as many employees have been missing the conversion step in the mega backdoor Roth process. CCMI can guide you through identifying the tax impact and whether an additional tax payment to the IRS is recommended during the year instead of at tax time.
Make Your Deferred Compensation Elections
June is the only time to make your deferred compensation elections for next year, if you are eligible (usually level M7 or higher). Reviewing RTX’s three options within the Compensation Deferral Plan — Salary Direct Deferral, Salary Excess Deferral, and Bonus Deferral — is critical, as your decision is irrevocable and applies to the following year. There is also a PSU deferral plan and both plans allow you to defer income from your current high tax bracket to a lower tax year in the future. While you can participate in one of them, more than one, or none at all, your choice will depend on several factors, such as your tax situation, income needs, and 401(k) contributions. The CCMI team has designed a detailed template coordinating both salary deferrals and 401(k) contributions so you know what the total impact to your take-home pay will be before making a decision. Please reach out to us in May or early June to determine whether you should re-evaluate your situation and get an assessment.
Track Your 401(k) Progress
To help ensure your 401(k) savings remain on track, review your contributions and allocation and make adjustments as necessary.
401(k) Contributions
If you want to maximize your 401(k) contributions by up to $23,500 if you are under age 50 or up to $31,000 if you are 50 or older (2025 limits), consider increasing to a point that does not strain your cash flow. You can contribute up to $34,750 if you are between 60 and 63 in the 2025 calendar year. If you are a high earner in a high tax bracket, we typically recommend pre-tax contributions to help lower your tax burden.
You may also consider after-tax contributions once you reach the 401(k) limits by targeting a larger contribution amount for the year, through the mega backdoor Roth strategy. While after-tax contributions do not lower your tax-burden in the year of contribution, after converting to Roth, the tax-free growth can minimize your overall tax burden when incorporating future years. The RTX 401(k) allows up to $70,000 of total contributions in 2025 when aggregating the employee contribution, employer match, and excess contributions. This limit increases to $77,500 for those 50 or older and $81,250 if you are between 60 and 63 in the 2025 calendar year. Contact us if you would like to review your pay stub to determine the excess contribution amount based on your specific situation.
401(k) Asset Allocation
Does your current allocation align with your goals, retirement timeline, and income? RTX offers low-cost, diversified options to help you strike an appropriate balance. It is important to monitor your allocation, especially if you are an executive who also receives stock compensation, which can create added concentration risk in the same company from which you are also collecting a paycheck.
New Features available to RTX employees
- Auto-convert after-tax contributions to Roth: RTX employees who are also contributing in excess of the employee limits to their 401(k) plan through the mega backdoor Roth strategy have worked with us to complete after-tax conversions to Roth manually through their benefits portal. A new election allows you to have all future after-tax contributions converted to Roth automatically with every paycheck. This election is something that needs to be “turned on” and will remain in effect until you turn it off or separate from employment. Please note that a portion of your conversion, whether done manually or automatically will be taxable. Additionally, if a portion of your 401(k) contribution is to RTX stock, converting this portion to Roth will disqualify the NUA tax treatment. For these reasons, we suggest consulting with an advisor on your unique situation before making any changes.
- Auto-diversify company match: The company’s matching contributions are invested in RTX stock through the RTX ESOP Match account within the RTX stock fund, regardless of the investment elections you have on file for other types of contributions. You can manually move money out of this fund anytime if you so choose. This new feature automatically transfers and invests the employer match portion from RTX stock to your current investment elections on a quarterly basis. This option can be ideal for those who have high RTX stock concentration; however, it would reduce or eliminate the NUA option in the future.
Uniquely Equipped to Guide RTX (Raytheon) Employees
Kim Benson, CFP®, CPA, CeFT®, CCMI principal and owner, is a former Raytheon Technologies employee, and we guide current employees across business units in various states on an ongoing basis. We speak RTX’s language. Our clients have shared the confidence and peace of mind they feel when having a safe space to navigate intricacies of their plans with us to maximize their opportunities because of our deep familiarity with RTX compensation plans, benefits, and timelines.
View RTX articles in our blog or contact our team to learn more about how we can support you and help make integrative decision-making even more manageable, considering all your options.
CCMI provides personalized fee-only financial planning and investment management services to business owners, professionals, individuals and families in San Diego and throughout the country. CCMI has a team of CERTIFIED FINANCIAL PLANNERTM professionals who act as fiduciaries, which means our clients’ interests always come first.
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