UPS Retirement Planning: Pension, 401(k), Retiree Health

Your UPS pension no longer grows, but the decisions that affect your retirement income continue. How you handle your 401(k), the date you leave and any company stock can all change the financial picture you carry into retirement.

Before you choose a retirement date, learn what you have earned, what you could leave behind and how those benefits turn into retirement income. For non-union employees, plan changes since 2016 make those decisions more involved than they first appear.

Details here come from UPS filings with the Securities and Exchange Commission, including its 2025 annual report and 401(k) plan reports. Plan terms have changed several times since 2016. Your own plan documents control.

Who This Page Covers

This page covers non-union and management employees of UPS. Union-represented employees, including members of the Teamsters, may be in different retirement plans, and this page does not describe them.

What Happened to the UPS Pension for Non-Union Employees?

UPS sponsors a pension plan for non-union employees, called the UPS Retirement Plan. It closed to new non-union participants on July 1, 2016. Benefits stopped growing for future service and pay on January 1, 2023, and benefits earned through that date remain part of the plan.

The UPS Retirement Plan: What You Earned and What Stopped

If you were in the pension plan, the benefit you earned through December 31, 2022, is the amount to find. Your pension statement or the UPS benefits site should show it.

The plan documents describe the forms of payment, and your choice can be hard to change later. Look at survivor benefits, taxes and the rest of your income, not only the size of the first payment. The pension versus lump sum decision explains how payment choices are compared once you know which ones your plan offers. Your pension statement and plan documents show when payments may begin.

The UPS 401(k) Savings Plan and the Retirement Contribution

The UPS match is a share of what you contribute. UPS matches 50% of pre-tax and Roth contributions up to 6% of pay. That is a maximum match of 3% of pay. UPS plan filings describe this formula for the plan today. Earlier plan provisions differed, so confirm the formula that applies to you in your plan documents.

A separate employer contribution, called the Retirement Contribution, goes into the 401(k) for eligible non-union employees. Since 2023, it has been 5% to 8% of pay. The rate depends on years of vesting service. For certain employees hired or rehired on or after January 1, 2025, it is a flat 3%.

The Retirement Contribution vests after three complete years of service. For employees hired or rehired on or after January 1, 2025, it vests at age 62 if that comes first. Under plan terms in effect since 2025, you generally must be employed on the last day of the plan year to receive that year’s Retirement Contribution or transition contribution. The match has its own quarterly rule. Check your plan’s rules before you pick a leave date.

If you are thinking about a leave date in November or December, ask what you would get under each date before you give notice.

Certain participants who were still earning pension benefits at the end of 2022 receive transition contributions. Plan documents filed with the SEC show 5% of eligible pay for 2023 through 2027, rising to 7% from 2028. Eligibility depends on how your pension benefit was calculated and when you were hired, so check your plan documents.

Since 2025, eligible new employees are generally enrolled automatically within 90 days of hire at 3% of pay unless they opt out or choose another rate. The default rate rises 1% a year up to 15%. Money in the 401(k) is invested, so its value can rise or fall. Employer contributions are not a promise of any return.

UPS Stock in Your Retirement Accounts

UPS stopped accepting new purchases in its stock fund on April 4, 2025. Before 2023, the match was paid in UPS stock. It is now paid in cash.

If you hold UPS shares inside your 401(k), special tax rules for employer stock may apply when you leave. Net unrealized appreciation rules may let you tax gains on employer stock differently than an IRA rollover would. The rules are restrictive, so compare the after-tax results before you move the shares, because a rollover can change how the gains are taxed. For how gains are taxed, see the guide to capital gains tax planning.

A large share of your savings in one company’s stock adds risk. A single company’s share price can fall even when the broader market does not.

What Could You Be Overlooking?

A UPS employee who is ready to retire may still have open questions. Would working a few more months change the employer contributions added to your account? Does moving UPS shares in a rollover create a tax cost you could avoid? How much income can your savings support before Social Security begins? These decisions affect each other. Getting one right on its own does not mean the whole plan works.

Retiree Medical at UPS

UPS filings say retiree medical generally covers employees with at least 10 years of service who have reached age 55. UPS can change or end certain plans. Many retirees pay some or all of the cost. Meeting those thresholds does not by itself mean you qualify, so confirm the plan terms.

If you retire before Medicare eligibility, find out what health coverage will be available and what it will cost. Include that expense when comparing retirement dates.

Ask UPS for the current terms before you set a retirement date. Once you know the likely cost, include it in your retirement income planning.

Decisions to Settle Before You Retire from UPS

• Find your pension benefit earned through December 31, 2022, if you have one.
• Learn the payment options that apply to you and when payments can start.
• Review your 401(k) balance, your match and your Retirement Contribution.
• Check the vesting rule and the employment rule before you pick a leave date.
• Ask whether you qualify for transition contributions.
• Check retiree medical eligibility and cost.
• Decide what to do with any UPS shares you hold.

Retiring from UPS Is More than a Benefits Decision

You can understand every UPS benefit and still choose a retirement date that does not fit your finances. Your pension, 401(k), Social Security, taxes and investments need to work together. The question is not only how much you have saved. It is how much you can reasonably spend, when you can afford to stop working and what could strain the plan.

M. Chad Holland, CFA, CFP®, is the investment adviser at Holland Capital Management, an independent registered investment adviser that acts as a fiduciary. He looks at those decisions together, including retirement timing, pension payment options, investment risk, taxes and the order of withdrawals.

The aim is a retirement plan built around your circumstances, not a stack of separate benefit statements. Many employers raise the same questions, as described in the guide to employer and government retirement planning. The guide to retirement planning covers the wider process, which helps you stay grounded in the plan when a deadline, a market decline or a big choice arrives.

Frequently Asked Questions

Does UPS Still Offer a Pension to Non-Union Employees?

Not for new participants. The UPS Retirement Plan still exists, but it closed to new non-union participants on July 1, 2016. Benefits stopped growing for non-union participants on January 1, 2023. Benefits earned through that date remain.

What Is the UPS 401(k) Match?

UPS matches 50% of pre-tax and Roth contributions up to 6% of pay. That is a maximum of 3% of pay. Earlier plan provisions differed, so confirm the formula that applies to you. Before 2023, the match was paid in UPS stock. It is now paid in cash.

What Is the UPS Retirement Contribution?

It is a separate employer contribution to the 401(k) for eligible non-union employees. Since 2023 it has been 5% to 8% of pay, depending on years of vesting service. For certain employees hired or rehired on or after January 1, 2025, it is a flat 3%.

When Does the UPS Retirement Contribution Vest?

It vests after three complete years of service, or at age 62 if that comes first for employees hired or rehired on or after January 1, 2025. Under plan terms in effect since 2025, you generally must be employed on the last day of the plan year to receive that year’s contribution, which also applies to transition contributions. Check your plan’s rules before you choose a leave date.

Can I Still Buy UPS Stock in the 401(k)?

No. UPS stopped accepting new purchases in its stock fund on April 4, 2025. If you hold UPS shares, ask about the tax rules for employer stock before you move the account.

Does UPS Offer Retiree Medical Coverage?

UPS filings say retiree medical generally covers employees with at least 10 years of service who have reached age 55. UPS can change or end certain plans, and many retirees pay some or all of the cost. Meeting those thresholds does not by itself mean you qualify. Ask UPS for the current terms.

Do These Rules Apply to Teamsters and Other Union Employees?

Not necessarily. Union-represented employees, including members of the Teamsters, may be in different retirement plans. Check with your union or plan administrator for the rules that apply to you.

What Should I Do with My UPS 401(k) When I Leave?

You will have choices, and the plan rules set which ones are open to you. Common choices include leaving the money in the plan if it allows that, moving it to an IRA or to a new employer plan, or taking cash. A 401(k) rollover may keep the money tax-deferred, while cash withdrawals may be taxed and may carry a penalty. Before you decide, compare investment choices, fees, withdrawal rules and creditor protections, and note that Roth balances are treated differently.

Holland Capital Management is an independent advisory firm. We are not affiliated with UPS and do not administer its pension or retirement plans. If you are looking for information about your benefit, please contact UPS benefits directly.