Lilly Employee FAQs
Common Questions. Clearer Decisions.
Lilly benefits and compensation can create several decisions at once. These answers provide a starting point. The right strategy depends on your tax situation, goals, time horizon, and overall financial plan.
Should I contribute to the Roth 401(k) option?
Roth 401(k) contributions are made after tax, while traditional 401(k) contributions may reduce taxable income today. Qualified Roth withdrawals are generally tax-free in retirement, while traditional withdrawals are generally taxable. The right mix depends on your current tax rate, expected future tax rate, cash flow, and retirement plan. In some cases, using both can make sense.
What can I do if I hold a lot of Lilly stock in my 401(k)?
A large company-stock position can create concentration risk, especially as retirement approaches. We look at the amount of Lilly stock you own, your other investments, your risk preferences, and your retirement timeline. We can then evaluate diversification options and, when appropriate, whether an NUA strategy deserves consideration.
Can I access funds from my 401(k) without unnecessary taxes or penalties?
Possibly. The answer depends on your age, employment status, the type of distribution, and the rules that apply to your situation. Some exceptions may reduce or avoid an early-withdrawal penalty, but taxes can still apply. Before taking a distribution, it is worth reviewing the available options and their tax consequences.
What is the self-directed option in my 401(k), and should I use it?
The self-directed option can provide access to a broader investment menu. That flexibility can be useful, but it also requires more decisions and more discipline. Whether it makes sense depends on your investment strategy, risk tolerance, and how the account fits with the rest of your portfolio.
I have several types of equity awards. What should I do with them?
Each award can have different vesting rules, tax treatment, and planning considerations. An RSU vest, for example, can create taxable compensation and additional Lilly stock exposure at the same time. We look at upcoming vesting, taxes, cash-flow needs, concentration risk, and your broader investment plan before deciding whether to hold, sell, or diversify shares.
What if I own highly appreciated Lilly stock with a very low cost basis?
A low cost basis can make diversification more complicated because selling may create a significant capital-gains tax bill. At the same time, holding too much of one company can create meaningful risk. Depending on your circumstances, planning may involve staged sales, charitable strategies, tax-aware diversification, or other approaches designed to balance concentration, taxes, liquidity, and long-term goals.