2025 Guide to Maximizing The Top Benefits at NXP Semiconductors

You work at NXP Semiconductors, earn a good income, and max out your 401(k). Fantastic! But what else can you do to improve your financial situation?

This article focuses on seven strategies that can be implemented by high-earning NXP employees.

What This Guide Covers

Maximizing the top 2025 benefits at NXP:

• 401(k)
• Mega Back Door Roth 401(k)
• Backdoor Roth IRA
• Health Savings Account (HSA)
• Employee Stock Purchase Plan (ESPP)
• Restricted Stock Units (RSUs)
• Deferred Compensation Plan

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401(k)

Employees can contribute up to 75% of eligible earnings to:

• Traditional 401(k) – Pre-tax, deductible contribution with tax-deferred growth
• Roth 401(k) – Tax-deferred growth and tax-free withdrawals. No income limit
• After-tax 401(k) – Roth in-plan conversion available for tax-free growth

2025 contribution limits:

• Employee: $23,500 (catch up: $7,500 age 50+; $11,250 age 60-63)
• Match: NXP matches 100% of contributions up to 5% of pay for Traditional and Roth 401(k), not on After-tax 401(k) contributions
• Total (Employee + NXP): $70,000 ($77,500 age 50+; $81,250 age 60-63)

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Mega Backdoor Roth

• For high earners who have maxed out their 401(k) and want to save more and create tax-free growth and tax-free withdrawals in retirement.
• No income limit and not impacted by inability to contribute to a Roth IRA or by having existing Traditional or Roth IRA accounts.

Contribution examples:

• $Limit – $Contribution – $NXP match = $After-tax contribution
• $70,000 - $23,500 - $20,000 = $26,500 (under age 50)
• $77,500 - $31,000 - $20,000 = $26,500 (catch up age 50+)

How to do it:

• Step 1: Make contribution to an After-tax 401(k). Leave in cash.
• Step 2: Immediately make in-plan conversion to the Roth 401(k).
• Step 3: Invest!

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Backdoor Roth IRA (not NXP-specific)

• For high earners who are ineligible to contribute to a Roth IRA but do want to save more and create tax-free growth and tax-free withdrawals in retirement
• 2025 Roth IRA income phaseout for eligibility: $165,000 (single); $246,000 (MFJ). Contribution: $7,000 (catch up: $1,000 age 50+)

How to do it:

• Step 1: Make a non-deductible contribute to a Traditional IRA. Leave in cash.
• Step 2: Convert to a Roth IRA.
• Step 3: Invest!

Considerations:

• Be aware of current balances in existing Traditional and Rollover (pre-tax) IRAs, leading to tax implications from aggregation and pro rata rules.
• Determine if an existing 401(k) plan accepts roll-ins to remove pro rata situation.

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Health Savings Account (HSA)

Triple tax advantages:

• Tax deduction in the year of contribution
• Tax-deferred growth
• Tax-free withdrawals for qualified medical expenses

Eligible for HSA if participating in Medical Plan 1 (High deductible healthcare plan).

2025 contribution limits:

• Employee: $3,800 (employee-only); $7,550 (family)
• Catch up: $1,000 over age 55
• Match: NXP matches $500 (employee-only); $1,000 (family)

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Employee Stock Purchase Plan (ESPP)

• The opportunity to purchase NXP stock (NXPI) at 15% discount off the closing price at the end of the 6-month offering period
• Eligibility: All regular FT and PT employees at NXP
• 2025 Contribution limit: $25,000 ($21,250 after the 15% discount). Contribute 2-10% of your base salary
• No ESPP trading restrictions, allowing you to sell NXP shares with no holding period
• Note: Qualifying for favorable capital gains treatment requires a minimum holding period

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Restricted Stock Units (RSUs)

• ‍RSUs are a form of equity compensation granted by NXP, typically subject to a 3-year vesting schedule (33% vests each year).
• RSUs are not tax-advantaged because they are taxed as ordinary income at vesting. Taxes are usually withheld at 22%. If your marginal bracket is higher than 22%, set aside income to pay the additional tax due. Consider making estimated payments.

Strategies:

• View your RSUs as income along with salary and bonus. Compare versus your expenses, and back into how much of your total income can be contributed to the other tax-advantaged benefits (401(k), Mega Backdoor Roth, and HSA).
• If holding RSUs instead, be aware of stock concentration risk and create a plan to diversify over time. They must be held for at least one year to qualify for favorable capital gains treatment.

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Deferred Compensation Plan

For Level G8+ employees who want to save more and defer a portion of income to reduce current year taxable income.

Deferrals (Contributions):

• Base salary: Defer 1% to 50% of eligible base pay
• Annual incentive pay: Defer 1% to 90% of eligible pay
• No NXP deferral match
• Immediate vesting (100%) of contributions and earnings

Investment options available through Fidelity NetBenefits.

Distribution elections (taxable upon withdrawal):

• Separation from service (paid in lump sum or installments over 2-10 years)
• Specific date (paid in a lump sum or installments over 2-5 years)

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Five Questions For Wealth Planning

1. What role does your equity play in the achievement of your financial goals?
2. How do navigate your equity awards to make prudent and timely decisions?
3. What proactive tax planning do you initiate each year to reduce taxes and avoid costly mistakes?
4. How are you managing your stock concentration risk to ensure you are diversifying properly and investing wisely?
5. Are you financially organized and prepared with a plan to protect your family and assets from an untimely event?

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TwoTen Planning is a fee-only, wealth planning firm for tech professionals. We provide equity comp, financial, investment, and tax planning services – for a fixed fee.

Learn more about the Free Wealth Assessment, which includes:

Equity Comp Analysis

Tax Return Diagnosis

Financial Plan Blueprint

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TwoTen Planning is not affiliated, associated, or endorsed by NXP Semiconductors. This information is supplied from sources that we believe to be reliable, however, we cannot guarantee the accuracy. All information is subject to change without notice. NXP employees are encouraged to contact their employer should they have any questions regarding their specific employee benefits.

The foregoing content reflects the opinions of TwoTenPlanning and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as financial, legal, tax, or investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee or assurance that diversification, strategies based on Nobel prize-winning research, or any investment plan or strategy will be successful.