facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Maximize Your GE Aerospace Retirement Plan Thumbnail

Maximize Your GE Aerospace Retirement Plan

GE Aerospace

By Matt Held, CFP®

With GE Aerospace employees, it’s essential to clarify the different types of contributions available in the GE Aerospace retirement plan (RSP). Understanding these options can significantly affect your retirement savings and tax strategy. 

In this post, we dive into the differences between pre-tax contributions, Roth contributions, and after-tax non-Roth contributions, including the advantageous mega backdoor Roth strategy, so make sure you read through until the end. 

Pre-Tax Contributions

Definition: Pre-tax contributions are made with income before taxes are deducted. This means that contributions reduce your taxable income for the year.

How it Works: When you contribute to your 401(k) on a pre-tax basis, those contributions are subtracted from your gross income, resulting in a lower tax bill for that year. Taxes on both contributions and earnings are deferred until you withdraw funds in retirement.

Pros:

  • Immediate Tax Savings: Reduces your taxable income, potentially lowering your overall tax bill.
  • Tax-Deferred Growth: Your investments grow without being taxed until withdrawal, which can lead to significant growth over time.
  • Higher Contribution Limits: You can contribute a higher amount because you’re effectively saving on taxes now.

Cons:

  • Taxable Withdrawals: All withdrawals in retirement are taxed as ordinary income.
  • Required Minimum Distributions (RMDs): Starting at age 73 or later, you must begin taking required annual distributions, which can increase your taxable income.

Roth Contributions in Your GE Aerospace Retirement Plan

Definition: Roth contributions are made with income that has already been taxed. This means you pay taxes on the contributions up front.

How it Works: Your contributions grow tax-free, and qualified withdrawals in retirement are also tax-free, provided certain conditions are met. Qualified withdrawals are after age 59½ and after the Roth account has been open for 5 years. 

Pros:

  • Tax-Free Growth: All earnings and withdrawals (if qualified) are tax-free, which can be a significant advantage in retirement.
  • Flexibility: Contributions (not earnings) can be withdrawn at any time without penalty.
  • No RMDs: Unlike pre-tax contributions, Roth accounts do not require RMDs during your lifetime.

Cons:

  • No Immediate Tax Benefit: You won’t receive a tax deduction for contributions, which may be less appealing if you’re in a high tax bracket now.

After-Tax Non-Roth Contributions

Definition: After-tax non-Roth contributions are made with money that has already been taxed, but they do not offer the same tax benefits as Roth contributions.

How it Works: You contribute additional funds to your RSP after reaching the pre-tax or Roth contribution limits, which are $23,500 (under 50) and $31,000 (over 50) for 2025. However, the earnings on these contributions will be taxable upon withdrawal. 

For example, assume you are maxing out your pre-tax contributions at $23,500 for 2025 and you are also receiving GE Aerospace’s match of 4% plus the 3% company contribution for a total 7% contribution by GE Aerospace. (Let’s also assume your compensation is $250,000 so GE’s contribution will be $17,500.) This is $41,000 in total contributions. However, the IRS says you and your employer can put in up to $70,000 for 2025. This means you can add an additional $29,000 to the after-tax non-Roth bucket! 

Pros:

  • Higher Overall Contribution Limits: You can save more than the Roth and pre-tax limits, which can significantly boost your retirement savings.
  • Mega Backdoor Roth Strategy: Once you leave GE Aerospace, this allows you to roll your after-tax contributions to a Roth IRA and any earnings associated with those contributions to an IRA…all tax-free. Going back to the example above, if you had put $26,500 into the after-tax bucket for 15 years, that totals $435,000 in contributions that can be rolled into a Roth IRA at retirement! Assuming a 6% rate of return, the total account value would have grown to $675,003. The earnings of $240,003 can be rolled into an IRA tax-free. 

Cons:

  • No Immediate Tax Deduction: Contributions do not reduce your taxable income for the year.
  • Taxable Earnings: Earnings on after-tax contributions will be taxed upon withdrawal, which can diminish your overall retirement savings.
  • Understand Tax Implications: Make sure you understand the tax implications of any conversions, especially regarding earnings.

We Can Help Optimize Your GE Aerospace Retirement Plan

Understanding the differences between pre-tax, Roth, and after-tax non-Roth contributions is vital for effective retirement planning. Each option has its own set of advantages and drawbacks, and the choice largely depends on your current financial situation and future goals. 

At Clarity Wealth Management, our mission is to provide clarity and confidence through comprehensive financial planning, helping corporate professionals align their wealth with their goals. And each part of our Clear Path Process™ process brings your financial planning to a new height and allows you to navigate even the most unexpected path.

Interested in a no-obligation, icebreaker call? Schedule online here, call (513) 278-9420, or email Info@ClarityWealth.org.

About Matt

Matt Held, CFP®, is the lead advisor and a founding partner of Clarity Wealth Management, a boutique firm based in Cincinnati, OH. Since entering the industry in 2006, Matt has helped corporate executives, professionals, and business owners uncover opportunities and build long-term financial strategies. Driven by a desire to control his own future and create a lasting brand, Matt co-founded Clarity Wealth Management in 2012. His mission was to build a firm that would provide truly personalized guidance—and become a legacy for his own family. Today, Clarity serves about 100 households and focuses on helping clients simplify and navigate complex financial decisions, particularly those involving equity compensation, tax planning, and executive retirement.

Matt’s approach is rooted in trust, loyalty, and hard work. As a CERTIFIED FINANCIAL PLANNER® professional, he is deeply committed to long-term relationships and believes that clarity doesn’t mean predicting the future, but having the confidence that your plan can handle whatever comes your way.

Outside of work, Matt enjoys time with his wife, Abby, and their twins, Henry and Kinsley. Whether it’s watching sports (they love their Ohio State Buckeyes), hitting the slopes out West, or squeezing in a CrossFit workout, he’s passionate about staying active and present. He also serves on the Rising Professionals Network at DePaul Cristo Rey Catholic High School and is a proud graduate of Moeller High School and The Ohio State University. Matt holds Series 7 and 66 licenses, is licensed for health insurance, and earned his CFP® certification in 2012. He has been named a Five Star Wealth Manager in the Cincinnati area each year since 2013.* To learn more about Matt, connect with him on LinkedIn.

*2013-2023 Five Star Wealth Manager Award, created by Five Star Professional. The 2023 award was presented in September 2023 based on data gathered within 12 months preceding the issue date. 1,649 advisors were considered, 240 advisors were recognized. Advisors pay a fee to hold out marketing materials. Not indicative of advisor’s future performance. Your experience may vary. For more information, please visit www.fivestarprofessional.com.