Financial planning and retirement

The Merck U.S. Savings Plan is a 401(k) plan, a voluntary retirement plan provided through Merck that helps you save toward retirement. You fund your personal 401(k) plan account through paycheck contributions. Then, Merck matches a portion of your contributions up to certain limits. You manage how the funds in your account are invested, which means – unlike the pension – you assume the risk associated with gains and/or losses in your account balance.

You are eligible to participate in the 401(k) on your date of hire. Your contributions, company match and earnings are 100% vested immediately.

If you do not actively enroll in the 401(k) within 60 days of your date of hire, you are automatically enrolled as follows:

• 6% base pay contribution rate on a before-tax basis
• 6% AIP/SIP contribution rate on a before-tax basis
• Invested into the plan’s Designated Fund – a target-date fund based on an assumed retirement age of 65
• Enrolled in the Annual Increase Program with a 1% per year election (until your before-tax base pay and before-tax AIP/SIP contribution rates each reach 10%)

Tip: To maximize your 401(k) match, don’t forget to elect the spillover feature (see Financial planning tools and resources).

Employee contributions

• You can contribute up to 25% of your total pay*, up to the IRS elective deferral limit, through combined before-tax and Roth after-tax contributions.
• You can contribute up to 50% of your total pay*, up to the IRS total contributions limit, through combined before-tax, Roth after-tax and traditional after-tax contributions.
• You may change your contribution elections or stop contributions at any time.
• You can make an affirmative election under the Annual Increase Program, which will allow your annual increases to continue past the 10% cap, up to the Plan’s maximum of 25%.

Merck contributions

• Merck provides a company match of $0.75 for every $1.00 you contribute, up to the first 6% of your total pay (and up to IRS limits).
• To maximize the 401(k) match, you must elect 6% pay PLUS 6% AIP/SIP and elect spillover, which automatically rolls over your before-tax contributions to after-tax contributions once the before-tax contribution limit is reached.

* Total pay is your total annual cash compensation, which includes base pay, commissions, paid cash bonus, overtime and shift differential.

• Before-tax — Contributions are taken from your pay before taxes come out; lowers your taxable income today.
• Roth after-tax — Contributions are taken from your pay after taxes come out; lowers your taxable income at distribution because withdrawals and earnings are tax-free.
• Traditional after-tax — Contributions are taken from your pay after taxes come out; up to 25% of total pay; lowers your taxable income at distribution because withdrawals (but not earnings) are tax-free.
• Catch-up — If you will be at least age 50 by the end of a year, your annual before-tax/Roth after-tax contribution (elective deferral) limit will be increased by $7,500 (catch-up contribution limit in 2023).

The IRS limits how much you can contribute into your 401(k) each year. The limits are adjusted annually.

The plan offers a three-tiered approach to investing, ranging from fully directed to self-directed:

• Retirement portfolios: Target date funds based on your estimated retirement date; portfolios adjust risk profile automatically as you get closer to your retirement date. Watch a quick video explaining target date funds.
• Core funds: Nine investment funds are available
• Brokerage account: Self-directed brokerage option that provides thousands of investment options beyond the core fund lineup

Note: If you do not elect investment options, your contributions and the company match will default into the plan’s Designated Fund, a retirement portfolio that best matches an assumed retirement age of 65.

For details about distribution options and timing, refer to the summary plan descriptions (SPDs) at onlinespd.com.

For more information, contact the Benefits Service Center at 800-666-3725. Representatives are available 8:30 a.m. to 8:30 p.m. ET, Monday through Friday (excluding New York Stock Exchange holidays). Or go to netbenefits.com.

If you are planning to retire, contact netbenefits.com.