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Diageo 401k plan – what you need to know in 5 minutes!

Writer: Charlie Horonzy
Charlie Horonzy
Jan 12
6 min read

Updated: Sep 22

The Diageo 401(k) Plan: Your Guide to Retirement Benefits

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The Diageo 401(k) plan is an essential part of the retirement benefits offered to employees. In this article, I’ll share the five major things you need to know to retire from Diageo with the dignity you deserve!


But first – hello! I’m Charlie.


Charlie Horonzy is a financial advisor and he works with Diageo employees.

I help people retire in Chicagoland and across the country in a tax-efficient way. You may want to earmark these other blogs about financial planning for people in Illinois and other places in the United States.



Overview of the Diageo Retirement Benefits Package


Here’s an overview of the Diageo retirement benefits package in five minutes or less. Before we dive in, please remember that this is general guidance. It should not be interpreted as advice specific to any individual. If you want personalized advice, set up a time and let’s talk.


Key Features of the Diageo 401(k) Plan


Let’s get started!


  1. No 401(k) Match: Diageo does not offer a 401(k) match. However, the company contributes 10% of your earnings into a pension. These contributions vest after three years.


  2. Contribution Limits: The contribution limit for 2026 is $24,500 for the 401(k) plan. That’s the maximum amount you can contribute from your salary. If you are over age 50, you can contribute an additional $7,500, bringing the total to $32,000.


  3. Custodian: The 401(k) plan is custodied at Fidelity. Your assets will be held in an account in your name at Fidelity. Diageo will not take custody of your money.


  4. Accessing Your Holdings: You can access your 401(k) plan holdings through Fidelity NetBenefits.


The Diageo 401(k)’s Investment Options Are Fabulous!


The Diageo 401(k) plan offers a broad range of investments. This provides employees with a valuable opportunity to build wealth for the future. Here’s how I would categorize them:


  • Stock Funds: These include domestic, international, and blended options. Stocks tend to be more volatile than other asset classes, like bonds and cash.

  • Bond Funds: There are various options, including stable value bond funds and inflation-protected bonds. Generally, bonds with shorter maturities are less volatile, while longer maturities are more sensitive to interest rate changes.


  • Blended Funds: These hold a mix of stocks and bonds. They may also include other categories like commodities, real estate, or even crypto in some cases.


  • Target Date Funds: These funds adjust their strategy over time based on your age and projected retirement date. While they may seem attractive, proceed with caution. Not all assumptions based on age are correct.


What Happens After I Contribute to My 401(k)?


Another common question is: “How should I manage my Diageo 401(k) contributions?”


This isn’t specific advice, so take it with a grain of salt. But generally, here’s some guidance on what to do after you contribute to a 401(k) plan.


Instead of randomly investing your hard-earned money, take a strategic approach. Create an asset allocation that fits your risk profile. This means finding the right mix of stocks, bonds, and other investment types.


If you choose to have your paycheck contributions automatically invested, you may benefit from dollar-cost averaging. This means you invest a defined amount consistently over time. Each month, you put in 2%, 3%, or 10% into your 401(k). The market conditions don’t matter; the money goes in regardless. To learn more about this, read our blog about investing.


Roth vs. Traditional Contributions


You have the option to contribute on a Roth basis. Contributions to the Diageo 401(k) plan can be made traditionally or as Roth contributions.


Traditional 401(k) contributions are made from your pre-tax earnings. The money grows tax-deferred. When you reach age 73, you must take Required Minimum Distributions (RMDs) as per IRS rules. These are taxed at your ordinary income tax rate.


Roth contributions are made with money that has already been taxed. Like traditional contributions, Roth money grows tax-deferred. When you reach age 73, you must take RMDs, but no taxable event occurs since you’ve already paid tax on the contributions.


“Why does this matter?” you may ask. Roth IRAs typically have income limits, but Roth 401(k) plans do not. This is great news for high-earning Diageo employees!


The Diageo Executive Long-Term Incentive Plan


Through the Diageo Executive Long-Term Incentive Plan, also called DELTIP, you may receive shares of company stock as a reward for your contributions. Your award is based on your salary and other factors, including your expected future performance.


Your DELTIP award can come in one of two forms, or a combination of both:


  • Diageo Restricted Stock Units (RSUs): You receive Diageo shares that transfer into your name after three years at no cost.

  • Share Options: You get the right to purchase shares of Diageo stock at a specified price. You may exercise these options within seven years of the vesting date. If not exercised, they become obsolete.


You can choose from the following options for your award:


  • 100% RSUs, 0% share options

  • 50% RSUs, 50% share options

  • 0% RSUs, 100% share options


These awards are typically made in September each year. You must be level L3 or above to be eligible for DELTIP, with a few exceptions.


Whew! That was pretty technical. The Diageo Executive Long-Term Incentive Plan can get complicated. If you’d like to meet with us and discuss this in more depth, let us know!


Diageo Pension Plan


Diageo employees also have access to the Diageo Cash Balance Pension Plan. This is a defined benefit plan and a key retirement benefit for Diageo employees.


How Does It Work?


  • You can participate in the Diageo pension plan the month after you start working.

  • You become vested after three years. If you leave the company after three years, you can take the amount the company has contributed to your pension account.

  • You must start receiving your pension benefits after age 65.

  • Diageo automatically enrolls you if you meet certain criteria (e.g., US Citizen or lawful resident, salaried).

  • The interest rate credited is based on the 30-year US Treasury bond.


In a defined benefit plan, the employer calculates a certain amount of your paycheck each pay period and invests it on your behalf. When you reach retirement age, you receive a predetermined amount back (a “defined benefit”). In the Diageo pension, the contribution is 10% of your salary, added quarterly.


The contributed money grows over time according to an investment strategy set by the plan sponsor. Upon retirement, you can choose between a lump sum or a series of annuitized payments.


You don’t make the investment decisions; they do. This is very different from the 401(k) plan, where you control your fund options.


The Diageo pension plan is a fantastic benefit. However, remember that when you receive your pension benefits, they will be taxed. You’ll owe ordinary income tax on the distributions. Many people don’t realize how much they’ll pay in taxes at retirement. Don’t be in the dark about this! If you’re close to retirement, it’s best to clarify your tax bill. A financial advisor can help you create a tax plan that considers all your Diageo retirement benefits, Social Security, and any other income sources.


Have You Run the Numbers?


Diageo retirement benefits are wonderful. Take full advantage of them, whether you’re just starting out, an executive, or somewhere in between. As you can see, there are many dimensions to the Diageo 401(k) and retirement benefits package. It’s best to run the numbers and create a clear financial plan to guide you in this important decision.


My name is Charlie, and I help people retire in a way that minimizes what they pay to Uncle Sam, whether they’re retiring in Illinois or elsewhere. I’m a CPA and a financial planner. If you’d like to set up a time to talk about tax-efficient retirement planning for people in Illinois or elsewhere, please schedule a time.


Sources

Diageo DELTIP Factsheet

Diageo North America, Inc. Cash Balance Pension Plan Summary Plan Document


Disclaimers


Focused Up Financial is not affiliated with Diageo in any way. All information herein may be subject to change, and Focused Up Financial is not required to notify readers. All information reflects the views of Focused Up Financial and does not reflect the position of Diageo.

 
 
 

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