Financial Planning for WEC Energy Group Employees and Retirees
Our deep expertise comes from years of experience helping WEC Energy Group employees and retirees navigate their benefits and compensation, prepare for retirement, and transition to and through retirement. Each of these phases requires thoughtful planning, depth of knowledge and experience, and personal engagement. Our team understands the unique financial planning considerations associated with WEC benefits and can help integrate retirement, pension, and investment opportunities into a comprehensive wealth strategy designed to support your long-term goals.
What is NUA? A Guide for WEC Energy Group Employees
Tom Berkholtz, CFP®, EA, ECA | Manager of Financial Planning
If you’ve spent years building your retirement savings through the WEC Energy Group retirement plan, there is a tax strategy that deserves a closer look as you approach retirement or leave the company: Net Unrealized Appreciation (NUA).
While NUA isn’t the right fit for everyone, it can create significant tax savings for employees who have accumulated a material amount of WEC Energy Group stock inside their 401(k). Understanding how it works before making rollover decisions could save thousands of dollars in taxes.
How Does the Strategy Work?
To qualify for NUA treatment, several IRS rules must be satisfied. While specifics can vary, most situations follow a 4-step execution process:
Experience a Qualifying Event
Must be triggered by retirement, separation from service, reaching age 59½, disability, or death.
Take a Lump-Sum Distribution
Distribute the entire 401(k) account balance within a single tax calendar year.
Transfer Stock In-Kind
Move the WEC Energy Group stock into a taxable brokerage account rather than rolling it into an IRA.
Roll Over Remaining Assets
Roll non-stock retirement assets directly into an IRA to maintain continuous tax deferral.
Net Unrealized Appreciation (NUA)
A Simple Example
Suppose a WEC Energy Group employee has a $1,000,000 401(k) balance, of which $400,000 is held in WEC stock with an original cost basis of $100,000 ($300,000 total appreciation).
Without NUA: Rolling the entire $1,000,000 into a Traditional IRA means every dollar withdrawn is taxed as ordinary income—potentially as high as 37%+ depending on future tax brackets.
Important Things to Keep in Mind
NUA is a complex retirement tax strategy, and mistakes can permanently eliminate the opportunity. Before making any decisions, consider the following:
- NUA only applies to employer stock held inside a qualified retirement plan
- The IRS lump-sum distribution rules must be followed carefully
- The strategy is often most valuable when the stock has significant appreciation relative to the cost basis
- Diversification remains important. Tax savings alone should not drive investment decisions.
This material is provided for informational and educational purposes only and should not be construed as personalized investment, legal, or tax advice. Information presented is general in nature and may not be appropriate for all investors. Net Unrealized Appreciation (NUA) is a complex strategy subject to specific IRS rules, and its suitability depends on each individual’s unique financial circumstances. You are encouraged to consult a qualified professional before implementing any strategy discussed herein. All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results.
Mega Backdoor Roth Conversions
Logan Kepler | Associate Wealth Manager
What is a Mega Backdoor Roth Conversion?
One major benefit that WEC employees have is the ability to complete mega backdoor Roth conversions. If you are a high-income earner, you may be familiar with a backdoor Roth conversion. This allows those who earn more than the annual Roth IRA income limit to still contribute to a Roth IRA. In order to do so without paying taxes, you cannot have a balance in a traditional IRA. In simple terms, you contribute up to the maximum annual amount for an IRA contribution into an IRA as an after-tax contribution. Then, you convert it into Roth soon after the contribution is made. This typically results in little to no taxation and therefore a Roth contribution through the “backdoor”.
A mega backdoor Roth contribution is the same concept that is completed in two steps. First, you contribute after-tax dollars into your 401(k). You then convert those after-tax dollars into Roth soon after the contribution. The good news for WEC employees is that Fidelity makes this fairly easy. The conversion can typically be done with a quick phone call, or participants can set up automatic in-plan Roth conversions so future after-tax contributions are converted automatically. Typically, this is done after reaching the maximum annual pre-tax or Roth contribution limit in a 401(k).
While the backdoor Roth strategy is available to anyone, the mega backdoor Roth strategy is only available if your plan allows for it. Many employers now offer 401(k)s, a way for their employees to contribute towards their retirement while potentially getting a match from their employer as well. However, the mega backdoor Roth strategy is a strategy that many employers do not offer. As a WEC employee, this is one of the benefits that is available to you.
How Does a Mega Backdoor Roth Conversion Work?
In order to be able to utilize the mega backdoor Roth strategy, your plan typically must allow for in-plan Roth conversions, something the WEC 401(k) at Fidelity does allow for. Once you max out the pre-tax or Roth portion of your 401(k), you can then contribute to the after-tax portion of the plan. With after-tax contributions, the contributions are not taxed whenever you take funds out in the future, but any earnings are taxed. With the ability to do in plan Roth conversions, you can convert the after-tax contributions shortly after contributing them so there can be minimal gain and little to no tax on the conversion.
What are the Benefits of a Mega Backdoor Roth Conversion?
The mega backdoor Roth strategy is designed for those who want to save more into Roth than annual limits typically allow. For 2026, the standard employee deferral limit for a 401(k) is $24,500. But the combined employee and employer contribution limit is $72,000, or 100% of eligible compensation, whichever is less. That gap between $24,500 and $72,000 (minus any employer match or profit sharing) is the room the mega backdoor Roth strategy is built to fill.
Unlike a Roth IRA, this strategy carries no income limit. For WEC executives who earn too much to contribute to a Roth IRA directly, the mega backdoor Roth is one of the few remaining paths to build meaningful tax-efficient savings.
This can be very impactful in retirement. Many high earners contribute only to the pre-tax portion of their 401(k), which defers taxes now but creates a potentially large pre-tax balance that must eventually be withdrawn. This often pushes them into higher tax brackets in retirement and increases future Required Minimum Distributions. A larger Roth balance can give you more control: tax-free withdrawals that don’t add to your taxable income, more flexibility to manage your tax bracket year to year in retirement, and no RMDs on the Roth 401(k) portion. In short, the mega backdoor Roth strategy helps diversify when you pay tax on your retirement savings — not just how much you save.
When a Mega Backdoor Roth May Not Make Sense
While the mega backdoor Roth strategy can be very useful, there are certainly times where it may not be appropriate. If you are planning on retiring early, you are not able to take funds out of your 401(k) until you reach age 55. Instead of doing mega backdoor Roth contributions, it would make sense to build up funds in an after-tax account to live on until you are able to access your retirement savings. Additionally, cash flow may not allow for doing mega backdoor Roth contributions. This strategy is really for those who want to save over and above the amount that is allowed for pre-tax and Roth 401(k) contributions. It is more beneficial to first save to the pre-tax and Roth 401(k) before considering mega backdoor Roth contributions. It also may not make sense if you are in higher tax brackets now than you are projected to be in retirement. Since the funds you are contributing through this method are after-tax, you could be paying more now versus converting funds to your Roth IRA in retirement at lower tax rates depending on where your income is projected.
This material is provided for general informational and educational purposes only and does not constitute personalized investment, tax, or legal advice. It does not take into account the specific objectives, financial situation, or needs of any individual. Strategies discussed, including the mega backdoor Roth conversion, may not be suitable for all investors and are subject to plan-specific rules, eligibility requirements, and applicable IRS limits, which are subject to change. Before implementing any strategy discussed herein, you should consult with a qualified tax advisor, attorney, and/or financial professional regarding your individual circumstances.
A Guide to the WEC Energy Group Retirement Account Plan
Eric Turba | Financial Planning Associate
Understanding the WEC Retirement Account Plan
The WEC Energy Group Retirement Account Plan, administered through Fidelity, is a cash balance pension which combines the stability and guaranteed income of a traditional pension with the account balance format of a 401(k) plan.
Unlike a 401(k), you do not contribute your own money or choose investments. Instead, WEC fully funds the plan and maintains your pension using an account balance that grows through annual benefit credits and interest credits.
Once you’re eligible to begin receiving your pension, you’ll generally have the option to receive your benefit as either a lump sum or a monthly annuity payment.
Who Is Eligible?
Participation eligibility primarily depends on an employee’s hire date and classification.
For most employees, participation was frozen beginning January 1, 2015, meaning employees hired or transferred into eligible positions after that date generally are not eligible for the pension. However, several union groups have alternative hire date cutoffs or remain covered under negotiated agreements with separate plan supplements.
If you’re unsure whether you’re covered, review your employment group or your annual pension statement through Fidelity NetBenefits.
How Your Pension Grows
Annual Benefit Credits
Each year, WEC contributes a percentage of your eligible earnings to your pension. For most current participants, this credit equals 6% of pension-eligible pay.
Annual Interest Credits
In addition to benefit credits, your account earns a fixed 5% annual interest credit compounded regularly.
25-Year Growth Example: $100,000 Starting Salary
Hypothetical illustration assuming consistent 6% benefit credits and 5% annual compounding interest.
📊 View Detailed Year-by-Year Growth Chart
Hypothetical graph for illustrative purposes
Vesting and Grandfathered Benefits
Most employees become 100% vested after one year of vesting service, meaning you’ve earned the right to your pension benefit even if you later leave the company.
Employees with longer service may also qualify for a grandfathered pension benefit from a previous WEC pension formula. If eligible, the plan generally pays whichever calculation produces the larger benefit.
Your Distribution Options
One of the plan’s greatest strengths is the flexibility you have when it’s time to begin taking your benefit. Depending on your age and years of service, you may choose from several payment options, including:
Lump Sum
Receive your entire benefit as a single payment. This option is eligible for a qualified rollover to an IRA, providing investment flexibility and allowing you to continue tax deferral until future IRA withdrawals.
Life Annuity
Receive a monthly income payment for the remainder of your life. This option provides the highest monthly payment, but payments end upon your death.
50% or 75% Joint & Survivor Annuity
Receive a monthly benefit for the remainder of your life. Upon your death, the beneficiary continues receiving either 50% or 75% of your monthly benefit amount for the rest of their life. Due to the survivor protection, your monthly benefit will be smaller compared to the Life Annuity.
10-Year Certain & Continuous Annuity
Receive a monthly payment for life, with the added assurance that at least 120 monthly payments will be made. If you pass away before receiving 120 payments, your beneficiary will receive the remaining payments until the full 10-year period has been satisfied.
Level Income Annuity (Participants eligible before age 62)
This option is designed to work alongside Social Security. It provides a higher pension payment before age 62 and then the benefit is reduced once you’re eligible to begin Social Security retirement benefits, helping create a more consistent level of retirement income throughout retirement.
Each option balances lifetime income, survivor protection, and financial flexibility differently. Before making a distribution election, consider consulting your financial advisor to ensure your pension decision supports your long-term retirement goals.
Your Pension Payment Options
Balancing Income, Survivor Protection & Flexibility
Lump Sum
Investors wanting control and rollover flexibility.
Life Annuity
Maximizing guaranteed lifetime income.
50% Joint & Survivor
Providing ongoing income for a spouse or beneficiary.
75% Joint & Survivor
Those seeking stronger survivor protection.
10-Yr Certain & Continuous
Participants wanting a guaranteed minimum payout term.
Level Income Annuity
Eligible before age 62Coordinating pension income with Social Security.
Starting Your Pension
Once you’ve decided which option is right for you, follow these steps to begin the election process.
Submit Your Election
Start your pension online through the Fidelity NetBenefits portal or by calling the Fidelity Retirement Service Center for representative assistance.
Receive Confirmation
After your benefit election is finalized, you’ll receive a formal confirmation letter outlining your selected options and official benefit commencement date.
Payment Distribution
Payments generally issue 6–8 weeks after all required forms are processed:
- Annuity: Monthly payments begin.
- Lump Sum: Sent via direct rollover or mailed check.
Lump Sum vs. Monthly Pension
Choosing between a lump sum distribution and a monthly lifetime income stream depends on your personal financial priorities.
A Lump Sum May Make Sense If You:
- Want to roll the money directly into an IRA
- Prefer investment control and growth flexibility
- Have other reliable guaranteed income sources
- Wish to preserve and leave assets to your heirs
A Monthly Pension May Make Sense If You:
- Want predictable, guaranteed lifetime income
- Prefer complete protection from market volatility
- Expect a long retirement horizon
- Value guaranteed, automated monthly cash flow
Note: Neither option is universally better. The right choice depends on your specific retirement income needs, tax bracket, investment experience, health, and legacy goals.
Final Thoughts
The WEC Energy Group Retirement Account Plan can represent a significant component of your overall retirement benefits. Understanding benefit credits, interest credits, grandfathered protections, and payout options can help you optimize the value of your pension and make more informed retirement decisions.
Whether you’re ten years from retirement or ready to elect benefits today, taking the time to compare your options can have a lasting impact on your financial future.
This material is provided for informational and educational purposes only and should not be construed as personalized investment, legal, or tax advice. Information presented is general in nature and may not be appropriate for all investors. You are encouraged to consult a qualified professional before implementing any strategy discussed herein. All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results.
WEC Retirement Ready Checklist
A step-by-step checklist to help WEC Energy Group employees navigate pension options, 401(k) rollovers, and key retirement timelines.
Important Disclosures
Annex Wealth Management is not affiliated with or endorsed by WEC Energy Group. Corporate benefits may change at any point in time. Be sure to consult with human resources and review Summary Plan Description(s) before implementing any strategy discussed herein. Annex Wealth Management, LLC (“Annex”) is an SEC registered investment adviser with its principal place of business in the State of Wisconsin. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that Annex has attained a certain level of skill, training, or ability.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own CPA or tax professional before engaging in any transaction. The effectiveness of any of the strategies described will depend on your individual situation and should not be construed as personalized investment advice. Past performance may not be indicative of future results and does not guarantee future positive returns.
For additional information about Annex, including fees and services, request our Firm Disclosure Brochures as set forth on Form ADV Part 2A and Part 3 by contacting the Firm directly. You can also access our Firm Brochures at www.adviserinfo.sec.gov. Please read the disclosure brochures carefully before you invest or send money.