ITW Retirement Benefits: 401(k), Pension, and NUA Stock

ITW retirement benefits come in two forms: a 401(k) savings plan that every current employee can use, and a legacy defined benefit pension that still pays long-tenured workers and retirees who were eligible before the plan closed to new hires. The 401(k) does the heavy lifting today, with immediate eligibility, automatic enrollment at 6% of pay, and a company match that vests the moment it hits your account.¹

The 401(k) Savings Plan

New salaried hires can participate in the ITW Savings and Investment Plan right away. Do nothing and the plan enrolls you at 6% of pay, then bumps that rate up 1% each year until you opt out or hit the plan ceiling.¹ You can split contributions among pre-tax, Roth, and traditional after-tax buckets depending on how you want to handle taxes now versus later.

ITW matches a portion of the first 6% of pay you contribute. The exact formula varies by business unit, but the match is 100% vested immediately, meaning you keep every dollar even if you leave shortly after starting.¹ Many large employers phase vesting in over three or four years, so this is more generous than the norm.

If you are covered by a collective bargaining agreement, your plan may look different. The ITW Bargaining Savings and Investment Plan generally requires six months of service before enrollment, and the company contribution follows the terms of the applicable bargaining agreement.²

How Much You Can Contribute in 2026

The IRS lets you defer up to $24,500 of your own pay into the plan in 2026. If you are 50 or older by year-end, you can add $8,000 in catch-up contributions, pushing your personal maximum to $32,500.³

SECURE 2.0 opened a bigger catch-up window for people aged 60 through 63. If you fall in that range during 2026, your catch-up limit is $11,250 instead of $8,000, for a total personal deferral of up to $35,750.³ The window closes at age 64, when the standard $8,000 catch-up resumes.

One change to plan for: beginning with the 2027 tax year, employees who earned $150,000 or more in the prior year must make all catch-up contributions on a Roth basis. Some plans may apply the rule earlier, so high earners making catch-up contributions in 2026 should confirm with the plan administrator before year-end.⁴

Where Your Money Can Go

The plan offers two investment paths. Path 1 uses the ITW Target Retirement Funds. You pick the fund closest to the year you plan to retire and the fund manager shifts your mix from stocks to bonds automatically as that date approaches. Path 1 also lets you put up to 20% of your balance in the ITW Common Stock Fund if you want extra exposure to company shares.¹

Path 2 is the self-directed route, where you build your own portfolio from a lineup of core funds. The ITW Common Stock Fund invests entirely in ITW shares. Concentrating a large share of your retirement savings in a single company’s stock is risky, and more so when that company also writes your paycheck: a bad stretch for the business hits your income and your savings at once. Most financial planners suggest keeping company stock under 10% of total retirement savings. You can change elections or move money between funds at any time.

The Defined Benefit Pension

The pension is separate from the 401(k) and works on an older model: rather than building up a personal account balance, you earn a right to a specific monthly payment in retirement, calculated from a formula based on your years of credited service and your compensation. ITW funds the pension; nothing comes out of your paycheck for it. The plan is generally closed to new hires, but for employees who were eligible during the accrual period it remains a major source of retirement income.

When you retire you choose how to take the benefit:

An annuity, which pays fixed monthly amounts for life. For married participants the default is a joint and survivor annuity, which continues paying your spouse a reduced amount after your death.
A lump sum representing the present value of the future benefit, which can be rolled into an IRA or the ITW 401(k) to keep tax deferral intact.

Federal law makes the joint and survivor annuity the default form for married participants. Your spouse must provide written consent, witnessed by a plan representative or a notary, before you can elect anything else.⁵ The waiver is irrevocable once payments begin, so take it seriously.

The pension is insured by the Pension Benefit Guaranty Corporation, a federal agency that steps in if a sponsor can no longer fund its pension obligations. For 2026 the PBGC guarantees a maximum monthly benefit of $7,789.77 for a 65-year-old receiving a straight-life annuity, with a lower cap of $7,010.79 for a joint and 50% survivor annuity assuming both spouses are the same age.⁶ Pensions below the cap are fully protected.

Getting at Your Money While Still Employed

The 401(k) permits two ways to access money before you leave: loans and hardship withdrawals. Both carry real costs.

Plan Loans

You can borrow against your vested 401(k) balance. Federal law caps the loan at the lesser of $50,000 or half your vested balance, with a $10,000 floor.⁷ The ITW plan allows up to three outstanding loans at once, but you can initiate only one new loan every 12 months.¹

You repay the loan through payroll deductions, with interest going back into your own account. Fall behind, or leave ITW with a balance still outstanding, and the unpaid amount is treated as a taxable distribution. That means income tax on the full amount plus a 10% early withdrawal penalty if you are under 59½. The quieter cost is the one most borrowers overlook: the money you borrowed stops earning investment returns while the loan is open, and that gap compounds for the rest of your working life.

Hardship Withdrawals

If you face an immediate and heavy financial need, the plan may allow a hardship withdrawal. Unlike a loan, this money is not repaid. The IRS recognizes seven categories of qualifying hardship: unreimbursed medical expenses for you, your spouse, or dependents; costs tied to buying your principal residence; tuition and related fees for the next 12 months of post-secondary education; payments needed to prevent eviction or foreclosure from your primary home; funeral or burial expenses; certain repairs to casualty damage at your principal residence; and expenses from a federally declared disaster affecting your home or workplace.⁸

Hardship withdrawals are limited to the amount you actually need. The withdrawal counts as taxable income, so expect federal and state income tax plus the 10% early withdrawal penalty if you are under 59½. Federal rules no longer require you to exhaust plan loans before taking a hardship withdrawal, but the ITW plan may still impose its own prerequisites, so check your summary plan description first.⁹

Net Unrealized Appreciation on Company Stock

If you hold a meaningful amount of the ITW Common Stock Fund inside the 401(k), there is a tax rule worth knowing about before you distribute it. Net unrealized appreciation, or NUA, lets you take the shares out of the plan and pay ordinary income tax only on the original cost basis. The appreciation above that basis is not taxed until you sell the stock, and when you do sell, that gain is taxed at the long-term capital gains rate regardless of how long you held the shares after distribution.¹⁰

To qualify, you must take a lump-sum distribution of the entire balance from all employer plans of the same type in a single tax year, triggered by one of four events: separation from service, reaching 59½, disability, or death. If your ITW shares have a low basis and have appreciated significantly, NUA can save a substantial amount of tax. If appreciation is modest, a straightforward rollover to an IRA may be cleaner. Run the numbers with a tax professional before the distribution, because the choice is hard to undo.

What Happens When You Leave ITW

Your vested 401(k) balance belongs to you. You have four basic choices:

Leave it in the ITW plan, available if your balance is $1,000 or more.¹
Roll it to a new employer’s plan if that plan accepts incoming rollovers.
Roll it directly to a traditional or Roth IRA for the widest set of investment choices.
Cash it out, which is almost always the worst option. The plan must withhold 20% for federal income tax on any distribution not sent directly to another plan or IRA, and you may owe additional tax plus the 10% early withdrawal penalty at filing time.¹¹

If your balance is under $1,000 and you do not elect a rollover, the plan will cash you out automatically. The 20% withholding still applies, and you have 60 days to redeposit the money into an IRA on your own to avoid the tax hit. Missing that 60-day window is a common and expensive mistake.

For the pension, contact the plan administrator to start your benefit. You can begin payments or defer them, and the same lump-sum-versus-annuity decision and spousal consent rules apply.⁵

Required Minimum Distributions

Both the 401(k) and the pension are subject to required minimum distributions. When you must start depends on your birth year:

Born 1951 through 1959: RMDs must begin by April 1 of the year after you turn 73.
Born 1960 or later: RMDs must begin by April 1 of the year after you turn 75, which takes effect starting in 2033.¹²

If you are still working at ITW past your RMD age, the 401(k) generally lets you delay distributions until you actually retire. The pension may require payments to begin at normal retirement age regardless of whether you are still on the payroll, so check the plan documents.

Missing an RMD triggers a 25% excise tax on the shortfall, dropping to 10% if you correct the mistake within the two-year correction window.¹³ SECURE 2.0 brought these penalties down from 50%, but 25% on top of regular income tax is still painful. Set a yearly calendar reminder.

Beneficiary Designations

Your beneficiary designation on the 401(k) controls who gets the money if you die before spending it down. For married participants, federal law treats your spouse as the beneficiary by default. Naming anyone else requires your spouse’s written consent, witnessed by a plan representative or notary.⁵

Beneficiary forms override your will. An ex-spouse listed on an old form will receive the money, not the current spouse or children named in your will. Review designations after any major life event: marriage, divorce, a birth, or a spouse’s death.

The pension carries a separate protection. If you die before pension payments begin, your surviving spouse is entitled to a qualified preretirement survivor annuity. This is a federal requirement, not something the plan can waive.⁵

Health Coverage After You Leave

Retiring before 65 means a gap between employer coverage and Medicare. COBRA lets you continue your group health plan for 18 to 36 months depending on the qualifying event, but you pay the full premium plus a 2% administrative fee.¹⁴ The sticker shock is real, because ITW had been covering a large share of the cost while you were employed.

Retirees who are at least 55 with 10 or more years of service may qualify for the ITW Retiree Health Care Contribution Plan, which provides monthly credits that offset the cost of retiree medical coverage.¹ If you are closing in on those thresholds, the timing of your departure matters. Leaving a few months short can cost you years of subsidized coverage.

1
ITW Retirement Plans. ITW Savings and Investment Plan – Summary Plan Description
2
ITW Retirement Plans. ITW Bargaining Savings and Investment Plan Details
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
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Internal Revenue Service. Treasury, IRS Issue Final Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions
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GovInfo. United States Code Title 29 – Section 1055
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Pension Benefit Guaranty Corporation. Maximum Monthly Guarantee Tables
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Office of the Law Revision Counsel. United States Code Title 26 – Section 72
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Internal Revenue Service. Retirement Plans FAQs Regarding Hardship Distributions
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Internal Revenue Service. Retirement Topics – Hardship Distributions
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Office of the Law Revision Counsel. United States Code Title 26 – Section 402
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eCFR. 26 CFR 31.3405(c)-1 – Withholding on Eligible Rollover Distributions
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Office of the Law Revision Counsel. United States Code Title 26 – Section 401
13
Office of the Law Revision Counsel. United States Code Title 26 – Section 4974
14
U.S. Department of Labor. COBRA Continuation Coverage