CITGO Petroleum Benefits Overview
CITGO Petroleum provides a mix of retirement programs designed to support your income and health in retirement. Understanding how these programs work together is key to maximizing your benefits.
*We are an independent financial planning firm and are not affiliated with BP, Chevron, CITGO, ConocoPhillips, ExxonMobil, Halliburton, Shell, or Schlumberger. We help former employees of these companies with retirement planning and investment strategies.
Citgo Pension Plan
The CITGO Pension Plan offers retirement income for eligible employees after age 21 and one year of service. Benefits are based on years of credited service and pay, providing predictable monthly income. The plan uses a cash balance structure that grows through annual pay credits and interest tied to Treasury rates. It is fully employer-funded.
Employees can retire at 65 or as early as 55 with reduced benefits. Payment options include lifetime or joint-and-survivor annuities, and small balances may be paid as a lump sum. All benefits are insured by the PBGC.
Eligibility
Salaried and hourly employees are generally eligible after reaching age 21 and completing 12 months of work with at least 1,000 hours of service.
Options for Payment
- Single Employees: Traditional single-life annuity or ten-year certain-and-continuous annuity.
- Married Employees: Joint and survivor annuity (typically 50%), ensuring spouse receives income after your death. Flexible options let you select different survivor percentages, or a lump sum if your accrued benefit is small (usually below $10,000).
Retirement Age
Normal retirement age is 65, but early retirement is possible from age 55 with at least 5 years of vesting service (reduced benefit applies).
Benefits calculation
Your pension is calculated using a formula that considers your years of “credited service” and your compensation while employed. This results in a predictable monthly income in retirement.
Cash Balance Structure
CITGO’s Cash Balance Benefit credits your account with a percentage of your annual earnings (based on age and years of service) plus annual “interest credits” at either the 30-year Treasury rate or a minimum of 1.5%, helping the balance grow over time.
Funding
The plan is fully funded by CITGO, so employees don’t make contributions.
CITGO 401(k) Savings Plan
For 2026, contributions are based on up to $360,000 of eligible compensation, with additional catch-up provisions for employees aged 50 and up.
Contributions
Employees can choose between pre-tax and Roth contributions. The company previously offered automatic enrollment at a rate of 3% of earnings, directed into a Target Date/Life Cycle Fund, with automatic escalation options.
Company Match
CITGO historically matched contributions (up to 6%) and provided a basic automatic contribution (3%), although there have been periods when contributions were suspended.
Vesting & Portability
Contributions are subject to vesting schedules, ensuring that employees can take vested portions with them if they leave CITGO. Rollover forms and guidance are available.
Loans & Withdrawals
Employees can borrow against their account under certain rules. In-service and hardship withdrawals may be available; always consult the plan documents for tax and penalty implications.
Tax-Saving Strategies
The plan may support strategies like mega backdoor Roth conversions and NUA for employer stock; check specific plan rules for availability and seek financial advice for proper implementation.
Strategy Highlight: BrokerageLink
A BrokerageLink strategy inside Citgo’s 401(k) uses the plan’s self‑directed brokerage window at Fidelity to build a more customized, diversified portfolio while keeping all the tax benefits of the 401(k). It is typically best suited for experienced investors or those working with an advisor who want access to a broader, often lower‑cost fund universe than the standard Citgo core options.
Optimizing Savings with Mega Backdoor Roth Conversion
One of the most powerful planning opportunities for Citgo employees is the Mega Backdoor Roth strategy:
Step 1 - After-Tax Contributions ls
The first step is contributing the maximum allowable amount to your 401(k). This includes your typical employee deferrals (up to $24,500 in 2026, including catch-up contributions) and any employer matching contributions.
Once you hit these limits, you can make additional after-tax contributions to your 401(k), as long as your total contributions (employee, employer match, and after-tax) do not exceed the Section 415 limit of $80,000 (2026).
Step 2 - Conversion to Roth
After making your after-tax contributions, you need to convert them to a Roth account. There are two ways to do this based on your 401(k) plan’s options:
In-Plan Roth Rollover
If your 401(k) plan supports it, you can directly convert your after-tax contributions into a Roth 401(k) within the same plan.
Roth IRA Conversion
Alternatively, you can roll over your after-tax contributions into a Roth IRA. This option is particularly attractive because Roth IRAs have fewer withdrawal restrictions than Roth 401(k)s.
Tip: Earnings on after-tax contributions are treated as pre-tax: While your after-tax contributions themselves have already been taxed, any earnings they generate within the employer plan are considered pre-tax money. The best practice is to convert after-tax contributions to a Roth account (either Roth 401(k) or Roth IRA) as soon as possible, ideally before substantial earnings accumulate. This minimizes taxable income triggered by the conversion and maximizes the amount growing tax-free in the Roth account moving forward.
example scenario
- Salary: $250,000
- Maxes out pre-tax: $22,500
- Receives 9% company match: ~$31,000
- Remaining room: $24,000 for after-tax contributions
- Converts immediately to Roth = $24,000 tax-free growth potential
NUA can provide significant tax savings for CITGO employees who own CITGO company stock in their 401(k). If eligible, when you retire or otherwise separate from service, you can:
- Transfer employer stock “in-kind” to a taxable brokerage account as a lump-sum distribution.
- Pay ordinary income tax only on the cost basis of the shares, while all appreciation (NUA) is taxed at long-term capital gains rates—usually much lower than income tax rates.
Key Requirements for NUA:
- The stock must be distributed “in-kind,” not sold for cash before the rollover.
- The distribution must be a lump-sum after a qualifying event (retirement, disability, etc.).
- NUA applies only to true company stock (not options or synthetic shares).
It’s recommended you consult with an advisor before electing NUA, as it triggers immediate income taxes on the cost basis and has other financial implications.
Comparing NUA vs. Non-NUA Tax Savings
Example:
A couple is preparing for retirement after decades of careful savings and planning. The husband spent his career in the Oil and Gas Industry, while the wife worked in education. Together, they have built a substantial nest egg and are now considering their best options for handling the husband’s company stock as they transition into retirement.
Their Retirement Snapshot
- Total 401(k) Plan Value: $1,000,000
- Company Stock Value: $400,000
- Cost Basis of Stock: $100,000
- Other Retirement Assets: $600,000 (in mutual funds, target date funds, etc.)
They are weighing two strategies for the company stock portion of their retirement plan to maximize their after-tax savings.
Their Tax Situation
- While working, their household income places them in the 24% tax bracket.
- After the husband retires, their income will drop, and they expect to be in the 22% tax bracket for IRA withdrawals.
- Their current long-term capital gains tax rate is 15%.
Important Tax Reminders
- Tax Complexity: The Savings Plan offers a tremendous amount of flexibility, which also means more complex tax consequences for conversions, rollovers, and distributions. Each decision may impact your taxes now and in the future.
- Seek Professional Advice: Before implementing advanced strategies like mega backdoor Roth conversions or NUA, consult with a qualified tax advisor or financial planner to ensure optimal results for your unique situation
NUAs are better with low cost basis stocks vs high cost basis.
Disclosures: Saxon Financial Group is not affiliated with or endorsed by CITGO. Corporate benefits may change at any time. Be sure to consult with human resources and review your plan summary before making a decision.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. This information is provided for educational purposes only and does not constitute tax advice.
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