The Chevron Employee Savings Investment Restoration Plan (ESIP RP)
The Chevron Employee Savings Investment Restoration Plan (ESIP RP) is a supplemental retirement plan created for high-earning Chevron employees. This plan addresses the limitations imposed by IRS regulations on the main Chevron Employee Savings Investment Plan (ESIP), allowing eligible employees to restore benefits they would otherwise lose due to contribution caps on their Chevron Employee Savings Investment Plan account.
What is the Employee Savings Investment Restoration Plan?
The ESIP RP is a non-qualified deferred compensation plan that helps employees continue saving for retirement after their contributions to the Chevron Employee Savings Investment Plan (ESIP), Chevron’s 401(k), reach IRS limits.
How it Works
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Restoring Lost Benefits: When IRS annual contribution limits for 401(k) plans are reached, the ESIP RP “restores” retirement savings opportunities that would be reduced or eliminated.
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Automatic Redirect: Once the IRS contribution cap is hit within the Chevron Employee Savings Investment Plan (ESIP), Chevron automatically redirects any additional company matching contributions and eligible deferred compensation into the ESIP RP.
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Investment Growth: Contributions in the ESIP RP are invested according to plan guidelines, offering the possibility of long-term growth for your retirement funds.
- Tax Considerations: Unlike the ESIP (a qualified 401(k)), the ESIP RP is a non-qualified plan, which may have different tax rules. Be sure to consult a financial advisor for more details.
Chevron Employee Savings Investment Plan Eligibility
The ESIP RP is intended for employees whose annual compensation exceeds specified IRS limits, which prevent them from contributing the maximum to the ESIP.
2024 Example: In 2024, if you earn $300,000 — and IRS regulations cap compensation for contribution purposes at $305,000 — once your ESIP contributions (employee plus company match) hit the $66,000 IRS annual limit (or $73,500 if you’re 50+), further Chevron contributions are funneled to the ESIP RP automatically.
If you qualify, this transition happens seamlessly—no additional action required.
Relationship to the Main ESIP
While the ESIP serves as Chevron’s primary 401(k), the ESIP RP is a separate, non-qualified plan directly linked to the ESIP. It is triggered only when IRS limits are reached, offering continued company support for retirement saving beyond federal caps.
Key Difference: As a non-qualified plan, the ESIP RP is not subject to many of the contribution and distribution rules that apply to qualified retirement plans like the ESIP.
Plan Benefits
- Restores Lost Savings: The ESIP RP ensures employees can keep saving for retirement and receive the full company match even after IRS limits cap their qualified ESIP contributions.
- Maximizes Employer Contributions: Chevron’s matching contributions that exceed ESIP limits are redirected to the ESIP RP.
- Encourages Long-Term Growth: Contributions made to the ESIP RP have the potential for investment growth, preserving retirement readiness.
Supports High Earners: Specifically designed to benefit employees with incomes above IRS thresholds.
Immediate Vesting: Employees are generally fully vested in their ESIP RP account, meaning you keep your benefits if you leave Chevron.
Additional Savings Potential: The ESIP RP offers an extra channel for tax-deferred savings above what the standard ESIP allow
example scenario
Suppose you are a highly compensated Chevron employee earning $300,000 per year:
2024 Compensation Cap: The IRS caps compensation counted for 401(k) contribution purposes at $305,000.
2024 ESIP Contribution Limit: The IRS limits total employee plus employer 401(k) contributions to $66,000 (or $73,500 with catch-up contributions if you’re 50 or older).
After Hitting the Limit: When your ESIP total reaches this maximum, any further company contributions shift directly and automatically to your ESIP RP account for the rest of the year, restoring your full benefit opportunity
Disclosures: Saxon Financial Group is not affiliated with or endorsed by Chevron. 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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