P&G Retirement Plan Investment Options in 2024
As a leading consumer goods company, Procter & Gamble (P&G) provides its employees with a robust retirement plan that includes a variety of investment options. In this article, we'll explore the latest trends and changes in P&G's retirement plan for 2024, as well as general retirement industry updates that may impact P&G employees and retirees.
P&G's Strong Financial Performance in 2024
Before diving into the specifics of P&G's retirement plan, it's worth noting the company's strong financial performance in the third quarter of fiscal year 2024. P&G reported a 1% increase in net sales and an 11% increase in diluted earnings per share compared to the prior year[3]. The company also raised its fiscal 2024 guidance for core earnings per share growth to a range of 10% to 11%[3].
This strong financial performance bodes well for P&G's ability to continue offering competitive retirement benefits to its employees. As Jon Moeller, Chairman of the Board, President and Chief Executive Officer, stated, "We remain committed to our integrated strategy of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization."[3]
Retirement Plan Limits and Changes for 2024
Each year, the Internal Revenue Service (IRS) reviews and sometimes adjusts the limits for retirement plan contributions and benefits. For 2024, there are several notable changes that retirement plan participants should be aware of:
- The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans is increased to $23,000 (up from $22,500 in 2023)[2][4][5].
- The catch-up contribution limit for employees aged 50 and over remains $7,500 for 401(k) and 403(b) plans[2][4][5].
- The annual limit for IRA contributions is increased to $7,000 (up from $6,500 in 2023)[4][5].
- The income ranges for determining eligibility to make deductible contributions to traditional IRAs and to contribute to Roth IRAs are increased for 2024[4].
It's important for P&G employees to review these updated limits and consider increasing their retirement plan contributions if possible, in order to take full advantage of the tax benefits and employer matching contributions.
SECURE 2.0 Act Changes for 2024
In addition to the IRS updates, retirement plans are also impacted by the SECURE 2.0 Act that was signed into law in December 2022. This legislation builds upon the original SECURE Act of 2019 and includes several provisions aimed at increasing access to retirement plans and encouraging retirement savings.
Some of the key changes taking effect in 2024 under SECURE 2.0 include:
- Allowing employers to make matching contributions to retirement plans based on an employee's student loan payments[6][10][15]. This provision is designed to help employees who may be struggling to save for retirement while also paying off student debt.
- Permitting penalty-free withdrawals of up to $1,000 per year for emergency expenses[10][15]. This can provide a financial safety net for employees facing unexpected hardships.
- Increasing the age at which required minimum distributions (RMDs) must begin from 72 to 73[10][15]. This gives retirees an additional year to grow their retirement savings before having to start taking distributions.
- Allowing employers to offer "starter 401(k)" plans with no employer contributions required[10][15]. This can make it easier for small businesses to offer retirement plans to their employees.
P&G will need to review these SECURE 2.0 provisions and determine which ones to incorporate into its retirement plan design for 2024 and beyond. The company may also need to update its plan documents, employee communications, and administrative procedures to reflect any changes.
Retirement Industry Trends to Watch in 2024
Looking beyond the regulatory updates, there are several broader trends in the retirement industry that are likely to impact P&G and its employees in the coming years. Here are a few key trends to watch:
Increased Focus on Financial Wellness
Many employers are recognizing that their employees' overall financial well-being is closely tied to their retirement readiness. As a result, there is a growing trend toward offering financial wellness programs that go beyond traditional retirement planning to address issues like budgeting, debt management, and emergency savings[7][13].
P&G may want to consider expanding its financial wellness offerings to help employees navigate these challenges and stay on track for retirement. This could include educational resources, personalized coaching, or online tools and calculators.
Emphasis on ESG Investing
Environmental, social, and governance (ESG) investing has gained significant traction in recent years, as more investors seek to align their portfolios with their values. In response, many retirement plans are starting to offer ESG-focused investment options[7][13].
P&G has a strong track record of corporate social responsibility and sustainability, so offering ESG investment options in its retirement plan could be a natural fit. However, the company will need to carefully evaluate the performance and fees of these funds to ensure they are suitable for employees' long-term retirement goals.
Adoption of Automatic Features
Automatic enrollment and automatic escalation have become increasingly common in 401(k) plans as a way to boost participation and savings rates[7][13]. Under these features, employees are automatically enrolled in the plan at a default contribution rate, which then increases gradually over time unless the employee opts out.
P&G already offers an automatic enrollment feature in its 401(k) plan, but may want to consider adding automatic escalation as well. Research has shown that these features can significantly improve retirement outcomes for employees[7].
Personalization and Technology
As the workforce becomes more diverse and technology continues to advance, there is a growing demand for personalized retirement planning experiences[12]. This could include tailored investment recommendations, interactive planning tools, and mobile apps that make it easier for employees to manage their accounts on the go.
P&G may want to explore ways to leverage technology to enhance the retirement planning experience for its employees. This could involve partnering with a third-party provider or developing proprietary solutions in-house.
Preparing for Longer Life Expectancies
With people living longer than ever before, retirement planning is becoming increasingly complex. Many retirees now face the challenge of making their savings last for 20, 30, or even 40 years after leaving the workforce[7][13].
To help employees prepare for this reality, P&G may want to offer education and resources on topics like longevity risk, healthcare planning, and retirement income strategies. The company could also consider adding investment options designed specifically for retirees, such as target date funds with extended glide paths or annuity products.
Conclusion
P&G's retirement plan remains a valuable benefit for employees, offering a range of investment options and resources to help them save for the future. As the regulatory landscape and retirement industry continue to evolve, it will be important for P&G to stay on top of these changes and adapt its plan design accordingly.
By focusing on financial wellness, ESG investing, automatic features, personalization, and longevity planning, P&G can position its retirement plan as a competitive advantage in attracting and retaining top talent. At the same time, these initiatives can help employees achieve better retirement outcomes and enjoy a more secure financial future.
As always, P&G employees should carefully review their retirement plan options and consult with a financial advisor to ensure they are making informed decisions based on their individual goals and circumstances. With the right planning and support, P&G's retirement plan can be a powerful tool for building long-term financial security.
Meet
Brad Morgan
Hi there! 👋🏼 I'm Brad, a former Procter & Gamble employee turned financial advisor. With a focus on tax planning, I've been a trusted advisor for the P&G community for over ten years.
Disclosure: Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
P&G Retirement Plan Investment Options in 2024
As a leading consumer goods company, Procter & Gamble (P&G) provides its employees with a robust retirement plan that includes a variety of investment options. In this article, we'll explore the latest trends and changes in P&G's retirement plan for 2024, as well as general retirement industry updates that may impact P&G employees and retirees.
P&G's Strong Financial Performance in 2024
Before diving into the specifics of P&G's retirement plan, it's worth noting the company's strong financial performance in the third quarter of fiscal year 2024. P&G reported a 1% increase in net sales and an 11% increase in diluted earnings per share compared to the prior year[3]. The company also raised its fiscal 2024 guidance for core earnings per share growth to a range of 10% to 11%[3].
This strong financial performance bodes well for P&G's ability to continue offering competitive retirement benefits to its employees. As Jon Moeller, Chairman of the Board, President and Chief Executive Officer, stated, "We remain committed to our integrated strategy of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization."[3]
Retirement Plan Limits and Changes for 2024
Each year, the Internal Revenue Service (IRS) reviews and sometimes adjusts the limits for retirement plan contributions and benefits. For 2024, there are several notable changes that retirement plan participants should be aware of:
- The contribution limit for employees who participate in 401(k), 403(b), and most 457 plans is increased to $23,000 (up from $22,500 in 2023)[2][4][5].
- The catch-up contribution limit for employees aged 50 and over remains $7,500 for 401(k) and 403(b) plans[2][4][5].
- The annual limit for IRA contributions is increased to $7,000 (up from $6,500 in 2023)[4][5].
- The income ranges for determining eligibility to make deductible contributions to traditional IRAs and to contribute to Roth IRAs are increased for 2024[4].
It's important for P&G employees to review these updated limits and consider increasing their retirement plan contributions if possible, in order to take full advantage of the tax benefits and employer matching contributions.
SECURE 2.0 Act Changes for 2024
In addition to the IRS updates, retirement plans are also impacted by the SECURE 2.0 Act that was signed into law in December 2022. This legislation builds upon the original SECURE Act of 2019 and includes several provisions aimed at increasing access to retirement plans and encouraging retirement savings.
Some of the key changes taking effect in 2024 under SECURE 2.0 include:
- Allowing employers to make matching contributions to retirement plans based on an employee's student loan payments[6][10][15]. This provision is designed to help employees who may be struggling to save for retirement while also paying off student debt.
- Permitting penalty-free withdrawals of up to $1,000 per year for emergency expenses[10][15]. This can provide a financial safety net for employees facing unexpected hardships.
- Increasing the age at which required minimum distributions (RMDs) must begin from 72 to 73[10][15]. This gives retirees an additional year to grow their retirement savings before having to start taking distributions.
- Allowing employers to offer "starter 401(k)" plans with no employer contributions required[10][15]. This can make it easier for small businesses to offer retirement plans to their employees.
P&G will need to review these SECURE 2.0 provisions and determine which ones to incorporate into its retirement plan design for 2024 and beyond. The company may also need to update its plan documents, employee communications, and administrative procedures to reflect any changes.
Retirement Industry Trends to Watch in 2024
Looking beyond the regulatory updates, there are several broader trends in the retirement industry that are likely to impact P&G and its employees in the coming years. Here are a few key trends to watch:
Increased Focus on Financial Wellness
Many employers are recognizing that their employees' overall financial well-being is closely tied to their retirement readiness. As a result, there is a growing trend toward offering financial wellness programs that go beyond traditional retirement planning to address issues like budgeting, debt management, and emergency savings[7][13].
P&G may want to consider expanding its financial wellness offerings to help employees navigate these challenges and stay on track for retirement. This could include educational resources, personalized coaching, or online tools and calculators.
Emphasis on ESG Investing
Environmental, social, and governance (ESG) investing has gained significant traction in recent years, as more investors seek to align their portfolios with their values. In response, many retirement plans are starting to offer ESG-focused investment options[7][13].
P&G has a strong track record of corporate social responsibility and sustainability, so offering ESG investment options in its retirement plan could be a natural fit. However, the company will need to carefully evaluate the performance and fees of these funds to ensure they are suitable for employees' long-term retirement goals.
Adoption of Automatic Features
Automatic enrollment and automatic escalation have become increasingly common in 401(k) plans as a way to boost participation and savings rates[7][13]. Under these features, employees are automatically enrolled in the plan at a default contribution rate, which then increases gradually over time unless the employee opts out.
P&G already offers an automatic enrollment feature in its 401(k) plan, but may want to consider adding automatic escalation as well. Research has shown that these features can significantly improve retirement outcomes for employees[7].
Personalization and Technology
As the workforce becomes more diverse and technology continues to advance, there is a growing demand for personalized retirement planning experiences[12]. This could include tailored investment recommendations, interactive planning tools, and mobile apps that make it easier for employees to manage their accounts on the go.
P&G may want to explore ways to leverage technology to enhance the retirement planning experience for its employees. This could involve partnering with a third-party provider or developing proprietary solutions in-house.
Preparing for Longer Life Expectancies
With people living longer than ever before, retirement planning is becoming increasingly complex. Many retirees now face the challenge of making their savings last for 20, 30, or even 40 years after leaving the workforce[7][13].
To help employees prepare for this reality, P&G may want to offer education and resources on topics like longevity risk, healthcare planning, and retirement income strategies. The company could also consider adding investment options designed specifically for retirees, such as target date funds with extended glide paths or annuity products.
Conclusion
P&G's retirement plan remains a valuable benefit for employees, offering a range of investment options and resources to help them save for the future. As the regulatory landscape and retirement industry continue to evolve, it will be important for P&G to stay on top of these changes and adapt its plan design accordingly.
By focusing on financial wellness, ESG investing, automatic features, personalization, and longevity planning, P&G can position its retirement plan as a competitive advantage in attracting and retaining top talent. At the same time, these initiatives can help employees achieve better retirement outcomes and enjoy a more secure financial future.
As always, P&G employees should carefully review their retirement plan options and consult with a financial advisor to ensure they are making informed decisions based on their individual goals and circumstances. With the right planning and support, P&G's retirement plan can be a powerful tool for building long-term financial security.
Meet
Brad Morgan
Hi there! 👋🏼 I'm Brad, a former Procter & Gamble employee turned financial advisor. With a focus on tax planning, I've been a trusted advisor for the P&G community for over ten years.
Disclosure: Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
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