Halliburton Retirement and Savings Plan Overview
The Halliburton Retirement and Savings Plan is designed to help eligible employees secure their financial future through a robust and flexible plan that includes contributions from both employees and the company. Understanding how to maximize your Halliburton Retirement and Savings Plan benefits is essential for building long-term wealth.
*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.
Key Features of the Halliburton Defined Contribution Plan (401k)
Halliburton Stock
ESPP (Employee Stock Purchase Plan) and ESOP (Employee Stock Ownership Plan) are both ways Halliburton employees can gain ownership in the company
Immediate and Full Vesting
You are immediately vested in your own contributions and any earnings. Company matching contributions generally vest 100% after you complete three years of service.
Tax-Advantaged Choices
You can make pre-tax (traditional 401(k)) contributions, Roth after-tax contributions, or a mix of both—tailoring tax benefits to your present and future goals.
Company Match and Non-Elective Contributions
Halliburton matches 100% of the first 4% of your contributions and 50% of the next 2%. To receive the maximum match (5%), you must contribute at least 6% of your pay.
Broad Investment Options
Choose from a variety of mutual funds, including stock, bond, and target-date funds. The plan also features a Halliburton Stock Fund.
Flexible Distribution Options
Upon retirement, termination, disability, or death, you may choose from a lump sum, recurring installments, or roll your savings into another qualified retirement account.
Key Features of the Halliburton Defined Contribution Plan (401k)
Understanding the Difference between Halliburton’s ESPP and ESOP
As part of the comprehensive Halliburton Retirement and Savings Plan offerings, Halliburton offers employees two primary ways to gain an ownership stake in the company: the Employee Stock Purchase Plan (ESPP) and the Employee Stock Ownership Plan (ESOP).
ESPP (Employee Stock Purchase Plan)
Employee-funded Participation:
Employees contribute their own after-tax earnings to the plan, typically through automatic payroll deductions.
Stock Purchase Discount:
Employees can purchase Halliburton shares at a discount, often 5–15% below market value, increasing the potential return on investment.
Voluntary and Flexible:
Participation is purely optional, and employees can choose whether to enroll and how much to contribute, subject to IRS and plan limits.
Shorter-term Focus:
Stocks bought via an ESPP may generally be sold relatively quickly, making ESPPs a popular option for employees seeking more immediate access to gains.
Taxation Rules:
The discount received at purchase is taxed as regular (ordinary) income when the shares are sold.
Additional gains are taxed as ordinary income if sold within one year, or as long-term capital gains if held for more than a year.
Holding periods may apply for preferential tax treatment if the ESPP is tax-qualified.
Example:
An employee chooses to allocate a portion of each paycheck to the ESPP. On a set purchase date, the pooled contributions purchase Halliburton stock at a discount. The employee may then hold or sell those shares according to personal financial goals.
ESOP (Employee Stock Ownership Plan)
Employer-funded Benefit:
Halliburton contributes shares of company stock, or cash to be used to acquire shares, into a trust on behalf of employees. Employees do not contribute their own money to an ESOP.
Retirement Plan Structure:
ESOPs are classified as qualified retirement plans, regulated under ERISA, and function similarly to 401(k) plans.
Long-term Ownership:
Shares are allocated to employees, typically based on a formula such as salary level and years of service. Ownership accumulates over time, and shares are usually distributed when an employee retires, leaves the company, or as otherwise defined in the plan.
Potential for Larger, Lasting Stakes:
ESOPs can represent a significant part of an employee’s retirement savings and, in some cases, grant voting rights on company issues.
Taxation Rules:
Employees pay no tax when the company allocates stock to their ESOP account. Taxes are only due when shares (or their value) are distributed, and they are taxed as ordinary income at that time.
Example:
Halliburton deposits its stock in an ESOP trust. Over time, employees receive allocations based on tenure and compensation. At retirement, employees receive the value of their ESOP shares according to plan rules—either as actual shares or as cash.
Comparison Chart
Key Takeaway
ESPP: Lets employees buy Halliburton stock at a discount using their own money, offers quicker access to shares, and has more immediate tax consequences.
ESOP: Allocates company-paid Halliburton stock to employees as a retirement benefit, building ownership over time and deferring taxes until withdrawal.
Both provide employee ownership and a stake in Halliburton’s success, but serve different financial planning needs for company team members.
By understanding these differences, employees can better evaluate which plan(s) align with their financial goals and retirement strategies. For more details, Halliburton employees should review their Summary Plan Description (SPD) and consult with the benefits or HR department for guidance on eligibility and plan specifics.
Special Tax Strategy: Net Unrealized Appreciation
If you hold Halliburton stock in your Halliburton Retirement and Savings Plan, you may qualify for the NUA tax advantage during distribution.
Net Unrealized Appreciation (NUA) refers to the growth in value of company stock held in your 401(k) from its cost basis (what you paid for it) to its current market value at distribution.
Rather than paying ordinary income tax on the total value of distributed Halliburton stock, you only pay ordinary income tax on the original cost basis at the time of distribution.
The appreciation (NUA portion) is taxed at long-term capital gains rates if/when you later sell the stock, which is often significantly lower than ordinary income tax rates.
- Lump-Sum Distribution Requirement: To take advantage of NUA, you’ll need to take a lump-sum distribution of your entire vested balance from all qualified plans (e.g., all your 401(k) accounts with ConocoPhillips) within one tax year.
- Qualifying Events: Your distribution must align with a qualifying event. These events include separation from service, turning 59 ½, death, or disability.
- Transfer as Stock, Not Cash: To utilize NUA, you must transfer the company stock “in-kind” from your 401(k). This means taking the stock as shares, not as cash converted back into shares later.
example scenario
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%.
NUA Eligibility Criteria for Halliburton Stock
The NUA option is available when you take a “qualified lump-sum distribution” after a qualifying event such as retirement, termination, disability, or reaching age 59½.
You must transfer Halliburton stock “in-kind” (as stock, not cash) to a taxable brokerage account—NUA is lost if you first roll the stock to an IRA.
The rest of your plan investments can be rolled into an IRA or another retirement plan at the same time.
Your entire plan must be emptied in a single calendar year for NUA eligibility
Important Tax Reminders
Taxation of the NUA after death.
- The NUA portion of the stock will not benefit from the Step-up in cost basis. It will still retain its long-term capital gain status once completed.
- Subsequent gains of the stock will, on top of the NUA, benefit from a step-up in cost basis.
The cost basis of the employer stock is subject to ordinary income.
The NUA is not subject to the 3.8% Net Investment Income tax associated with high earners.
NUAs before Age 59 ½ will be subject to a 10% Early Withdraw Penalty.
NUAs are better with low cost basis stocks vs high cost basis.
Additional Benefits
Halliburton provides deferred compensation plans as part of its comprehensive benefits for key employees, particularly senior executives and board members. These plans are designed to attract and retain top talent by offering flexible, tax-advantaged opportunities to postpone a portion of earned income until a future date—typically retirement or upon leaving the company.
Halliburton’s Supplemental Executive Retirement Plan (SERP) is a non-qualified deferred compensation program specifically designed to provide additional retirement benefits for key executives, including senior leaders and officers. This plan serves as an essential part of Halliburton’s strategy to attract and retain top executive talent by bridging the retirement income gap that can occur under standard company retirement and savings plans.
Take the Next Step
Preparing for retirement is about more than just saving; it’s about making the most of what’s available to you. Whether you’re nearing retirement or already enjoying it, we’re here to ensure you’re getting the most out of your Halliburton benefits.
Are you ready to secure your future? Contact us today to schedule a consultation and take the first step toward achieving your retirement goals.
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Got questions or need assistance with the Halliburton Retirement and Savings Plan?
Our team is here to help!
We ensure that employees are equipped with the knowledge and strategy needed to take full advantage of the Halliburton plan while creating a strong financial foundation for their future.
Disclosures: Saxon Financial Group is not affiliated with or endorsed by Halliburton. 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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