By Decima Wealth Consulting — A Guide for Pfizer Colleagues
As a Pfizer colleague, your retirement savings strategy should not be a one size fits all plan. You have a higher income base, equity compensation, and a robust benefit package to coordinate. One powerful opportunity that often goes under-utilized: maximizing your 401(k) contributions beyond the standard deferral limits, and turning them into a tax free vehicle for long-term growth. You may have heard of a Mega Back Door Roth. Below, we walk you through what that means and how to set it up for your retirement plan.
1. Understanding Contribution Limits and What’s Possible
For 2025, the annual elective deferral limit into a 401(k) plan is $23,500 (before age 50) with a catch-up of $7,500 for those age 50+. If you are between 60-63, you can do a catch up contribution of $11,250. But here’s the additional opportunity many Pfizer Colleagues miss: The total contributions (employee + employer) to a 401(k) can go up to about $70,000 (for 2025) including after-tax contributions.
For Pfizer Colleagues, coordinating your 401(k) contributions with the PSSP can make a meaningful difference in reducing both current and future taxes. If you are looking to save even more, understanding the after-tax option is a great way to turbo charge your 401(k) with extra tax free growth. See the illustration below:
2. The “After-Tax 401(k)” Option — What It Is and Why It Matters
Most retirement plans allow pre-tax (traditional) and/or Roth (post-tax) deferrals up to the elective limit. What many don’t realize: Pfizer Colleagues can also make after-tax contributions. This allows contributions to continue into your 401(k) even after the normal deferral limit has been reached for the year.
Why this matters:
- Pfizer allows a Roth In Plan Conversion. This means that Pfizer Colleagues can convert these after-tax dollars to a Roth vehicle, allowing future tax-free growth and withdrawals.
For a Pfizer colleague, this option can be a significant addition to your Roth bucket, giving you more tax free income for your retirement.
3. How to Use After-Tax Contributions Strategically at Pfizer
A. Prioritize deferrals first
Before you start after-tax contributions, review with your financial advisor whether it makes sense to maximize the pre-tax or Roth elective deferrals. The after-tax contribution do not give you a tax deduction, so coordinating this with your overall tax strategy is key.
B. Understand the PSSP Trigger
At Pfizer, contributions to the 401(k) are capped upon reaching a certain income level. For some, that means that the Pfizer Supplemental Savings Plan will start to receive your dollars. Making sure you maximize your 401(k) before the PSSP starts can mean more of your dollars in the right account. Working with an expert on Pfizer’s plan will allow you to determine what your trigger is, and what the optimal contribution rates are for you.
C. Understand the conversion process
- Make after-tax contributions into your 401(k)
- Convert those contributions (or roll them) into a Roth account. This can be done either in-plan or via a rollover/IRA
This strategy can align beautifully with your broader tax planning (e.g., bracket topping, Roth conversion timing, and managing future required minimum distributions).
D. Be aware of earnings on after-tax contributions if a conversion is not elected
Important: While the contributions themselves have already been taxed, any earnings on them are not after-tax unless they are immediately converted to a Roth. It is critical to reach out to the benefits team to make sure your after tax contributions are converted to Roth automatically.
4. Key Takeaways for Pfizer Colleagues
- Don’t stop saving at the standard elective deferral limit . Pfizer’s plan allows after-tax contributions, which can create even more tax free growth.
- Coordinate your 401(k) savings goal with the PSSP Trigger.
- Make sure you convert the after tax to a Roth: If the after tax is not converted, the earnings grow tax deferred instead of tax free.
- Use your advisor (like Decima Wealth Consulting) to model the impact of these strategies on your projected retirement income, taxes, and legacy goals.
Ready to Take Action?
If you’re a Pfizer colleague and want to explore how after-tax 401(k) contributions and Roth conversion strategies fit into your retirement cash flow plan, let’s connect. At Decima Wealth Consulting, we specialize in aligning Pfizer benefits, long term incentives, and retirement timing into a clear, cohesive plan.
Schedule a confidential strategy call to see how much more you could be saving, converting, and optimizing before you retire.
