RTX/Raytheon 401(k): What Employees Should Know Before Retirement

For most of your career, the goal of your 401(k) is pretty straightforward.

Save consistently.

Invest appropriately.

Let the account compound.

And avoid making unnecessary changes every time the market gets uncomfortable.

But as retirement gets closer, the job of the 401(k) changes.

You are no longer simply trying to accumulate as much as possible.

You are preparing to eventually turn that account into income.

That is a very different problem.

One of the biggest things I want RTX and Raytheon employees to understand as they approach retirement is this:

Accumulation and decumulation require different strategies.

A large 401(k) balance is a great starting point. But it doesn't tell you where your retirement income should come from, how much tax you'll pay, how much investment risk you should take, or how to coordinate the account with your pension, Social Security and assets outside the plan.

That's where planning becomes much more important.

Your 401(k) Is Only One Part of the Retirement Plan

When someone comes to me five years from retirement, I don't want to evaluate their 401(k) by itself.

I want to know:

• What does the household need to spend?
• When do you want to retire?
• What pension benefits do you have?
• When might you claim Social Security?
• How much money do you have outside retirement accounts?
• How much is Roth?
• How much is pre-tax?
• What investment risk are you currently taking?
• What happens to your taxable income once your paycheck disappears?

Those questions tell me much more than the 401(k) balance alone.

We discuss this broader framework in Financial Planning for RTX/Raytheon Employees in Dallas-Fort Worth.

The 401(k) is an important piece of the plan.

It just shouldn't become the entire plan.

1. The Final Five Years Should Look Different From the First 25

Earlier in your career, market volatility may be uncomfortable, but it can also be relatively easy to tolerate.

You're still earning a paycheck.

You're still contributing.

And you may not need the money for decades.

That changes when retirement is around the corner.

Imagine retiring with $1.8 million in your 401(k).

If the market declines significantly shortly after retirement and you immediately need to begin withdrawing $80,000 or $100,000 a year, you're no longer just watching a temporary decline on a statement.

You're selling assets while they're down.

That's why one of the first things I want to understand is:

How much of this portfolio may actually need to fund the first several years of retirement?

That doesn't mean someone approaching retirement should automatically become conservative.

A 60-year-old retiree may still need the portfolio to support them for another 30 years.

You still need growth.

The goal is to align the amount of investment risk you're taking with the amount of risk the retirement plan can actually afford.

2. Don't Arrive at Retirement With Everything in the 401(k)

This is one of the most common issues I see with strong savers.

They've done almost everything right.

They've maximized retirement savings for years.

They've built a substantial 401(k).

Their house may be mostly or completely paid off.

But almost all of their investable wealth is inside retirement accounts.

That can create a surprisingly inflexible retirement.

Imagine an RTX employee retiring at 60 with:

• $1.7 million in the 401(k)
• Pension benefits
• $60,000 in cash
• Very little in taxable investments

They're wealthy on paper.

But if they need $75,000 for a home renovation or a new vehicle, where does that money come from?

If the answer is the traditional 401(k) or IRA, the withdrawal can also create taxable income.

That's why I like seeing employees build a bridge account before retirement.

A taxable brokerage account can sit between short-term cash and long-term retirement assets.

That gives us another place to draw from during the years between work and later retirement income.

We explain this strategy in more detail in Why High Earners Need Brokerage Accounts Beyond Their 401(k).

This becomes especially valuable if you're planning to retire relatively early.

The earlier the retirement date, the longer your retirement assets may need to last—and the more valuable financial flexibility can become.

3. Think About the Tax Control Triangle

One of the frameworks I like to use with clients is what we call the Tax Control Triangle.

Ideally, someone entering retirement has assets in three different tax environments:

Tax-Deferred

Traditional 401(k)s and IRAs.

You generally received a tax benefit when contributing, and withdrawals are generally taxable later.

Tax-Free

Roth 401(k)s and Roth IRAs.

Qualified withdrawals can generally come out tax-free.

Taxable

Brokerage accounts.

These don't have the same retirement-account tax treatment, but they provide accessibility and a different set of tax characteristics.

The point isn't that everyone should have exactly one-third of their money in each bucket.

The point is control.

If virtually everything you've accumulated is pre-tax, you have fewer choices about where retirement income comes from.

RTX's Savings Plan has historically allowed multiple contribution types, including pre-tax, Roth 401(k), and traditional after-tax contributions, although individual plan provisions can vary.

That creates planning opportunities.

The question isn't simply:

“How much should I put into my 401(k)?”

A better question may be:

“Where should the next dollar go based on the retirement plan I'm trying to build?”

4. A $2 Million 401(k) Isn't $2 Million of Spendable Money

This is an important distinction.

Suppose someone retires with $2 million in a traditional 401(k).

That is an excellent accomplishment.

But the entire $2 million isn't necessarily available to spend without tax consequences.

Most distributions from pre-tax retirement accounts generally become taxable income.

And as retirement progresses, those withdrawals can begin interacting with other parts of the financial plan.

Depending on your circumstances, additional taxable income can affect:

• Your federal tax bracket
• How much of your Social Security is taxable
• Medicare IRMAA premiums
• The amount of room available for Roth conversions
• Future Required Minimum Distributions

RMD rules ultimately require distributions from many tax-deferred retirement accounts once the applicable age is reached, although workplace-plan rules can differ for someone who continues working.

That's why the goal isn't simply building the largest possible pre-tax balance.

It's thinking about how that balance will eventually be distributed.

5. Understand the Different Types of Money Inside Your RTX 401(k)

Two employees can look at similar 401(k) balances and actually own very different combinations of assets.

Depending on your history and elections, your account may include different contribution sources.

The RTX Savings Plan has included:

• Pre-tax contributions
• Roth 401(k) contributions
• Traditional after-tax contributions

It has also offered an RTX Stock Fund, among other investment choices. Plan provisions can vary, so employees should always confirm their own plan information before making a distribution or rollover decision.

That matters because different dollars can have different tax characteristics.

Before someone retires, I want to understand what is actually inside the account—not just the total balance shown on the first page.

For example:

How much is pre-tax?

How much is Roth?

Are there after-tax contributions?

Is there employer stock?

Are there old contribution sources that have different treatment?

Those details can affect what we do next.

6. Pay Attention to RTX Stock Inside the Plan

If you own meaningful RTX stock inside your retirement plan, I would evaluate that separately from the rest of the portfolio.

There are two reasons.

Concentration Risk

You may have spent decades receiving your income from the company.

If you also hold a meaningful percentage of your retirement assets in RTX stock, your financial life can become heavily concentrated around one company.

That doesn't automatically mean sell everything.

It means understand how much exposure you actually have.

Potential NUA Planning

Employer stock held inside a qualified retirement plan can sometimes qualify for special tax treatment known as Net Unrealized Appreciation, or NUA.

Under qualifying circumstances, NUA rules can allow the appreciation on employer securities to receive different tax treatment than it would after simply being rolled into an IRA.

NUA is not appropriate for everyone, and the distribution rules matter.

But if an RTX employee has substantially appreciated employer stock inside the plan, I would want to evaluate that before completing a full rollover.

Once certain decisions are made, they may not be easy to undo.

7. After-Tax Contributions Can Be Valuable—but Don't Ignore Liquidity

The availability of traditional after-tax contributions can create interesting planning possibilities for higher-income employees.

But there is a mistake I don't want people making:

Putting every available dollar into retirement accounts simply because the plan allows it.

Tax-advantaged savings are valuable.

So is liquidity.

If you're 55 and hoping to retire at 60, I may care considerably about what your balance sheet looks like outside the 401(k).

You need enough accessible money to support:

• Early retirement spending
• Large purchases
• Unexpected expenses
• Travel
• Healthcare
• Potential tax payments
• Roth-conversion strategies

Otherwise, you can end up retirement-rich and liquidity-poor.

That's why I keep coming back to the Tax Control Triangle.

A strong retirement plan isn't necessarily the one with the most money in the 401(k).

It is the one that gives you enough financial flexibility to respond to different situations.

8. The Years After Retirement May Create a Tax Opportunity

This is where all of the planning before retirement starts to pay off.

Consider an employee who retires at 61.

Their salary goes away.

Maybe they begin receiving pension income.

But they delay Social Security.

Required Minimum Distributions haven't begun.

There could be several years where taxable income is significantly lower than it was during their career.

That creates what we often call a tax-planning window.

One strategy we may evaluate during those years is a Roth conversion.

Instead of waiting until later retirement to withdraw all of the pre-tax money, it may make sense to deliberately recognize some taxable income earlier.

The goal is not automatically paying as little tax as possible this year.

The goal is trying to manage taxes over the entire retirement.

For someone with a large 401(k), that distinction can matter considerably.

9. Your Pension Changes How the 401(k) Should Be Invested

For RTX or legacy Raytheon employees who also have pension benefits, I want to evaluate the pension and the investment portfolio together.

Suppose your household needs $120,000 per year.

If pension and Social Security eventually provide $80,000 of that amount, the 401(k) only needs to fill the remaining gap.

That's very different from a household where the portfolio needs to provide almost all $120,000.

A reliable pension income stream may allow the portfolio to play a different role.

That can affect:

• Investment risk
• Withdrawal needs
• Cash reserves
• Social Security timing
• Roth conversions
• How much money needs to remain liquid

This is why I don't think in terms of:

pension or 401(k)

I think in terms of:

one retirement income system

How do all of these assets work together?

10. Retirement Doesn't Mean You Have to Move the 401(k) Immediately

One of the first administrative questions employees ask after retirement is often:

“Should I roll the 401(k) into an IRA?”

That can be an important decision.

But I don't believe it should be the first decision.

Before moving anything, we want to understand:

• What investments are inside the account?
• Is there RTX stock?
• What contribution sources are present?
• What does the plan provide that you may want to preserve?
• What investment strategy will you need in retirement?
• What tax-planning opportunities are available?
• Do you need immediate withdrawals?

There can be good reasons to eventually roll assets into an IRA.

There can also be reasons to slow down and understand the account before moving it.

The plan should come before the transaction.

What This Could Look Like in Practice

Consider a hypothetical longtime RTX employee preparing to retire at 62.

They have:

• $1.8 million in their 401(k)
• Pension benefits
• $125,000 in taxable investments
• $75,000 in cash
• Some Roth assets
• A spouse planning to work another three years
• Social Security that they don't immediately need

They've done an excellent job accumulating wealth.

Now the challenge changes.

I would want to understand how much of their spending the spouse's income and pension can cover during the first few years.

Then we can determine how much taxable liquidity should be available outside retirement accounts.

We can evaluate whether the investment risk inside the 401(k) still makes sense.

We can review the mix of pre-tax, Roth and taxable assets.

If RTX stock is present, we can evaluate concentration and whether any special distribution planning deserves attention.

Then we can project taxable income after the spouse retires.

That may reveal several years where Roth conversions become attractive.

Finally, we'd determine when Social Security fits into the plan and how much the portfolio can sustainably provide.

The account balances haven't changed.

But now every account has a job.

That's what we're trying to accomplish before retirement.

The Biggest Shift: From Saving to Spending

Many RTX and Raytheon employees have spent decades getting very good at accumulation.

Retirement requires a new skill.

You have to begin using the money.

That means understanding:

• Which account to spend from
• How much to withdraw
• How investment risk should change
• How taxes affect those withdrawals
• How your pension fits in
• When Social Security starts
• How much money needs to remain available
• How much you can actually afford to enjoy

That is why I think retirement planning should begin several years before the retirement date.

The decisions you make in those final working years can create options that are much harder to build after the paycheck has already stopped.

The Bottom Line

A large RTX 401(k) is an excellent foundation.

But the objective isn't simply to retire with the biggest account balance possible.

It's to turn decades of saving into a retirement strategy that gives you:

Income.

Liquidity.

Tax flexibility.

Appropriate investment risk.

And confidence to actually use the money you've accumulated.

For many employees, that means thinking beyond the 401(k) itself and building assets across taxable, tax-deferred and Roth accounts.

That's the Tax Control Triangle.

And the earlier you begin creating that flexibility, the more options you may have when retirement arrives.

At Apeiron Planning Partners, we help aerospace and defense professionals throughout Dallas-Fort Worth coordinate their retirement benefits, investments and tax strategies.

If you're approaching retirement from RTX or Raytheon and want help determining how your 401(k) fits into the broader plan, schedule a conversation with our team.

Related Resources

• Financial Planning for RTX/Raytheon Employees in Dallas-Fort Worth
• Why High Earners Need Brokerage Accounts Beyond Their 401(k)
• Roth Conversions: Why Retirees Talk About Them So Much
• How Retirement Income Actually Works
• Tax Planning
• Retirement Planning
• Financial Planning for Aerospace & Defense Professionals