Understanding Your Pfizer Benefits Package in 2022

Louis Butera |

As an employee of Pfizer, you know that the company appreciates their staff. That’s why it’s no surprise that their employee benefits package offers a variety of valuable financial, healthcare, and insurance benefits. As a Fortune 500 company and one of the best pharmaceutical companies to work for, (1) The Pfizer benefits package is competitive for many employees.

At Butera Wealth Management, we specialize in helping Pfizer employees seek the most of their benefit packages. That’s why we’ve put together this guide to help you understand the key components of your retirement package and how they can be integrated into a financial plan.

Pfizer Retirement & Pension Plans

Pfizer offers several types of retirement plans, both qualified and non-qualified. Here is an overview of the plans most of our clients receive.

Pfizer Savings Plan (PSP)

This is a qualified 401(k) retirement savings plan that allows you to contribute funds either as before-tax, Roth, after-tax, or some combination of all three. This is an important point to consider when making your annual selections as it can have a big effect on your tax liability. 

Generally speaking, before-tax contributions may reduce your current year’s tax liability, but you may owe tax when you withdraw the funds in retirement. Conversely, after-tax contributions may have no effect on your current tax liability, but you may be able to withdraw the funds tax-free in retirement (contributions only). Roth contributions are similar to after-tax contributions, but you may be able to withdraw both contributions and earnings tax-free in retirement.  

Other points to consider with this plan include:

  • Employee contributions are 100% vested - you have complete ownership over the amount contributed even if you leave Pfizer. 
  • Pfizer matches 4.5% on every 6% of income contributed to this plan - these contributions are considered 100% vested.
  • The maximum salary eligible for this plan is $290,000. If you make more than this amount, it can trigger the Pfizer Supplemental Savings Plan (PSSP).

Pfizer Supplemental Savings Plan (PSSP)

This is a non-qualified plan meant for highly compensated executives at Pfizer. It is triggered once the maximum salary is reached for PSP, but there is no salary cap on the PSSP. Employee contributions to this plan are considered before-tax and 100% vested. As with PSP, Pfizer will match 4.5% on every 6% of income contributed to the plan.

Since this is a non-qualified plan, income tax may be owed on both contributions and earnings upon withdrawal in retirement. 

Retirement Savings Contributions (RSC)

This is a supplemental retirement contribution that helps older employees with more years of employment save more for retirement. The contributions are calculated as a percentage of your eligible pay throughout the year (for both the PSP and PSSP plans). The percent contribution ranges from 5%-9% and it is calculated as a combination of your age plus your years of service to Pfizer. These contributions become fully vested after 3 years of employment.

Aim to Maximize Employer-Matching Contributions

As mentioned, Pfizer matches 401(k) contributions dollar for dollar, up to 4.5% on $290,000 of income. This means that if you make $290,000, Pfizer will match up to $13,050 of contributions.

This is an excellent company match. If you haven’t already, consider adjusting your paycheck withholdings so you’re contributing enough to get the full employer match. It’s a 100% return on your investment.

Consider Maxing Out Your Pfizer 401(k)

For 2022, employees can contribute up to $20,500 ($27,000 for employees over 50) before-tax to their 401(k) plan. (2) But, the limit on all contribution types (before-tax, after-tax, and employer contributions) is $61,000, or $67,500 for employees over 50. (3)

Considering maxing out your 401(k) is one of the easiest ways to reduce your taxable income for the year. It also gives a nice boost to your retirement savings. Be sure to consider increasing your contribution limit when you turn 50 in order to take advantage of the increased threshold. 

Consider Roth Contributions 

Roth accounts can play a large part in helping you minimize taxes and maximize your retirement savings. Depending on your financial situation, it may make sense to contribute to your PSP plan using Roth contributions, or even a backdoor Roth IRA. 

This step is more difficult to complete than the others, so you may need help from an expert to figure out if Roth contributions are something you should consider. Backdoor Roth IRAs, in particular, require precise timing to avoid taxes and, due to new tax bills being considered, may not be available much longer. Our team can help you figure out if they should be a part of your overall wealth plan.

If you’re a highly compensated Pfizer employee, you may have access to a long-term incentive compensation plan. Review Your Pfizer Stock Incentive Plans

If you hold any of the stock incentive plans , it may be beneficial to go over the details of each with an experienced professional. For our clients, we typically come up with a multi-year strategy to diversify out of company stock and mitigate investment risk. We also maintain a detailed record of the terms of each award, its vesting schedule, and any potential tax consequences. We then strategize ways to manage these taxes and even estimate taxes due so there are no surprises. 


How We Help Pfizer Employees

At Butera Wealth Management, our goal is to make a difference in your financial life. We know the ins and outs of Pfizer’s benefit package and we can help employees like you focus to maximize your compensation. If you’d like a professional review of your benefits package, or just want to learn more about our 2nd Opinion Service, schedule a free, no-obligation phone call by contacting us at 484-455-2661 or louis@buterawm.com.

About Louis

Louis Butera is the founder and president of Butera Wealth Management, LLC, an independent wealth management firm operating out of Newton Square, Pennsylvania. With over 30 years of experience in the financial services industry, Louis specializes in serving pre-retirees who hold management or executive roles, particularly in the pharmaceutical industry. In 2015, he started his own firm with the express goal and vision of fostering meaningful relationships with clients to help them pursue financial independence and prepare for retirement. Louis and the Butera team provide a proven and customized process to help their clients plan for towards every aspect of their financial life. Trust has always been key for Louis, and with this foundation, he has helped guide his clients through many different market cycles and life milestones. 

Louis is a CERTIFIED FINANCIAL PLANNER™ professional and has a bachelor’s degree in business management from Ithaca College. When he’s not working with his clients, Louis enjoys being outside, playing golf, skiing, and leading an active life with his wife, Michelle. They are both great supporters of local charities and their community. To learn more about Louis, connect with him on LinkedIn.

Pfizer, Butera Wealth Management and LPL Financial are separate entities.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.​

(1) https://www.northeastern.edu/graduate/blog/top-pharmaceutical-companies/

(2) https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

(3) https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2022-irs-401k-contribution-limits.aspx