When leaving Boeing, you have a few options for what to do with your 401(k). In this guide, we’ll look at the pros and cons of each.
Leaving Boeing
When you leave Boeing, the full balance in your 401(k) remains yours. That includes any contributions from Boeing, since the employer match is 100% vested from day one. The choices you make now can impact your taxes and withdrawals for years to come, so it’s worth knowing your options before making a final decision.
Your Options After You Leave
1. Leave Your Savings at Boeing
You can keep your savings in the Boeing 401(k) after leaving the company. Your investments will remain in the plan, and you can manage them through Fidelity NetBenefits just as you did while employed at Boeing.
This option may make sense if you are satisfied with the plan’s investment options and fees, and don’t feel the need to change anything. If you retire early, it can also provide a major benefit: the rule of 55. Normally, withdrawing from your 401(k) before age 59½ would result in a 10% additional tax. Under the rule of 55, this penalty is waived as long as you leave during or after the year you turn 55.
The rule of 55 only applies to money in your Boeing 401(k), so if you roll the balance into another account, you will have to wait until 59½ for penalty-free withdrawals. If you are already over that age, this will likely not be a factor in your planning, but for many early retirees, it can make all the difference.
2. Roll It Into an IRA
Rolling your 401(k) balance into an IRA can give you more control over your retirement savings. Instead of being limited to the investment menu inside the Boeing plan, an IRA gives you access to a much wider range of mutual funds, ETFs, stocks, bonds, and other investments. If you already have traditional IRAs or old retirement accounts from other employers, a rollover can also help simplify your finances in one place. This will make it easier to manage your investments, track withdrawals, and coordinate your income sources in retirement.
The taxes for a rollover will depend on what account you have:
Pre-tax Boeing 401(k) funds rolled directly into a traditional IRA remain tax-deferred and do not create an immediate tax bill.
Roth 401(k) funds rolled into a Roth IRA are not taxed and remain as Roth funds.
Pre-tax Boeing 401(k) funds moved into a Roth IRA will be added to your income and taxed in the year of the conversion.
If you decide to roll over the account, a direct rollover is always the best way to do it. Using this method, the money moves directly from your Boeing 401(k) to the receiving retirement account. If you choose an indirect rollover instead, Boeing will have to withhold 20% for federal taxes. You will then have 60 days to deposit a check for the full amount into the new account, including paying the 20% that was withheld out of your own pocket.
Before rolling your account into an IRA, compare what you would gain with what you would give up. Look at investment choices, fees, withdrawal options, and whether you may need to use the rule of 55 before age 59½.
3. Roll It Into a New Employer’s Plan
If you are moving to another job after leaving Boeing, you may be able to roll your Boeing 401(k) into your new employer’s retirement plan. This can be useful if you want to keep most of your retirement savings in one place instead of managing several different accounts. However, your new employer is not required to accept incoming rollovers. If they do, compare the new plan’s investment options, fees, withdrawal rules, and other features with your Boeing plan before transferring your money. There is rarely a reason to consolidate accounts if the new plan is more expensive or gives you fewer investment choices.
4. Withdraw the Full Balance
You can choose to withdraw your entire Boeing 401(k) balance after leaving the company. However, this is virtually never the right choice. Pre-tax contributions and earnings that you withdraw are treated as ordinary taxable income in the year you receive them. Depending on the size of the account, taking everything at once could push a significant portion of your income into higher tax brackets.
Withdrawing the full balance also takes that money out of a tax-advantaged retirement account. Any future growth on money you keep in a regular taxable account will no longer receive the same tax-deferred or Roth treatment. For most retirees who need income from their Boeing 401(k), taking smaller withdrawals over time will be more practical than cashing out the entire account at once.
If you aren’t sure which option is best when retiring, a fiduciary financial advisor can help you make the right choice.
Hear from Real Boeing Retirement Clients
Building a plan for family and generosity
Making the Right Call
When leaving Boeing, you don’t have to decide what to do with your 401(k) right away. Keeping the money at Boeing for a while can give you time to compare your options without rushing yourself into a choice that could have lasting consequences.
While making your decision, it’s worth asking a few questions:
How do the investment choices compare? An IRA may offer more choices, but more options are only useful if they improve the way you want to invest.
What will you pay? Compare plan expenses, fund expenses, and any other costs before making a final call.
When will you need the money? If you are retiring before age 59½, the rule of 55 could make keeping at least some money in the Boeing plan worthwhile.
Would consolidation make your finances easier? Combining accounts can simplify things, though that may not outweigh better features elsewhere.
How does the account fit into your retirement income plan? Consider when you expect to take withdrawals and how the account works alongside Social Security, pension income, IRAs, and other savings.
Will you be working with a financial advisor? If you want your advisor to directly manage your retirement investments, rolling the account into an IRA may give them more flexibility than leaving the money in the Boeing plan.
As you answer these questions, you can start to make a decision based on your overall retirement plan.
Hear from Real Boeing Retirement Clients
From Corporate Finance at Boeing to Financial Freedom with Family
Get Help from the TrueWealth Team!
Leaving Boeing can be a major transition in your professional and financial life. With careful planning and the right advice, you can ensure that your retirement savings continue to grow and support your future goals.
Whether you're resigning, retiring, or facing an unexpected layoff, understanding your options and taking proactive steps can make all the difference. And we can help!
At TrueWealth Financial Partners, we offer reliable guidance to help you prepare for retirement with confidence. We’ll take the time to understand your unique needs and goals so we can customize our strategies for you.
Schedule a quick introductory call today, and we’ll be happy to help you in any way we can!
Let’s talk.
Leaving Boeing FAQs
Do I have to roll over my Boeing 401(k) when I leave?
No. A rollover is one option, but it is not required for departing employees. You can leave your savings in the Boeing plan or roll them into a new account, whichever makes most sense for you.
Can I withdraw money from my Boeing 401(k) after leaving?
Yes, former employees can take distributions from the Boeing 401(k). Pre-tax withdrawals are taxed as ordinary income, and depending on your age, a 10% early-withdrawal penalty may apply.
What happens to my Boeing 401(k) loan when I leave?
Leaving Boeing does not mean you have to repay the entire balance of an outstanding 401(k) loan immediately. Boeing’s current plan allows former employees to continue making monthly payments on eligible outstanding loans. However, failing to make required payments or taking a full distribution while a loan remains outstanding can create tax consequences. Review your specific loan before moving the rest of your 401(k).
What if my Boeing 401(k) balance is small?
Under Boeing’s current plan rules, an account balance of $1,000 or less after you leave the company is paid out automatically. Anything above that amount can remain in the plan or be rolled over as you choose.
Hear from Real Boeing Retirement Clients
From DIY’ers to Retirees