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'For Rockwell employees, proactive tax planning strategies, like deferring income and accelerating deductions, can significantly enhance retirement readiness, and working with an advisor like Kevin Landis from The Retirement Group, a division of Wealth Enhancement Group, can help you make the most of these opportunities.'
'As the tax landscape evolves, it's crucial for Rockwell employees to carefully weigh year-end moves such as contributing to retirement accounts or adjusting withholding, and an advisor like Brent Wolf from The Retirement Group, a division of Wealth Enhancement Group, can guide you in optimizing your tax strategy for long-term financial success.'
In this article we will discuss:
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1. Tax strategies for employees and retirees of Rockwell companies, including deferring income and accelerating deductions.
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2. Charitable contributions and their impact on tax returns for individuals who itemize deductions.
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3. The importance of required minimum distributions (RMDs) and year-end investment decisions.
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According to a recent study by the Insured Retirement Institute (IRI), a leading financial research firm, 60% of Baby Boomers plan to continue working in some capacity during retirement. This means that for many employees and retirees of Rockwell companies, tax planning strategies will continue to be relevant well beyond retirement age. It is important for this demographic to consider the impact of their retirement income on their tax liabilities, as well as the tax implications of continuing to work in retirement. With that taken into account, Here are some factors for employees and retirees of Rockwell companies to consider as they evaluate potential tax moves between now and the end of the year.
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1. Defer income to next year
Consider opportunities to defer income until 2023, especially if you believe you will be in a reduced tax bracket in 2023. For instance, you may be able to defer an end-of-year bonus or delay the collection of business debts, rent, and service payments. As an employee of Rockwell, doing so may allow you to defer income tax payment until the following year.
2. Accelerate deductions
Employees and retirees of Rockwell should also seek opportunities to accelerate deductions into the current tax year. If you itemize deductions, paying medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2023) could affect your 2022 tax return.
3. Make deductible charitable contributions
Generally, if you are an employee of Rockwell and itemize deductions on your federal income tax return, you can deduct charitable contributions up to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you donate and the type of organization to which you donate. (Exceeding quantities may be carried forward for a maximum of five years.)
4. Bump up withholding to cover a tax shortfall
If it appears that you will incur federal income tax for the year as an employee of Rockwell, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for Rockwell employees to request a Form W-4 modification and for their employers to implement the change by 2022. The greatest benefit is that withholding is considered to have been paid equitably throughout the year, as opposed to when the dollars are actually deducted from your paycheck. This strategy can be utilized by employees of Rockwell to make up for missed or insufficient quarterly estimated tax payments.
5. Save more for retirement
You can reduce your 2022 taxable income through contributions to a traditional IRA and a 401(k) sponsored by a Rockwell company. If you are an employee of Rockwell and have not already contributed the maximum amount, you should consider doing so. For 2022, Rockwell employees can contribute up to $20,500 to a 401(k) plan ($27,000 if over 50) and up to $6,000 to traditional and Roth IRAs combined ($7,000 if over 50).* The window for 2022 contributions to a Rockwell-sponsored plan typically concludes at the end of the year, whereas the deadline for 2022 IRA contributions is April 18, 2023.
Contributions to a Roth account are not tax-deductible, but qualified Roth distributions are not taxable.
6. Take the required minimum distributions
If you are 72 or older and work for Rockwell, you are generally required to take required minimum distributions (RMDs) from traditional IRAs and Rockwell-sponsored retirement plans (exceptions apply if you are still employed and participating in Rockwell's retirement plan). The deadline for withdrawals is typically the end of the year for most individuals. The penalty for noncompliance is severe: fifty percent of the quantity that was not distributed on time. As an employee of Rockwell, it is imperative that you make these distributions on time to avoid the late payment penalty.
7. Weigh year-end investment moves
Rockwell employees and retirees shouldn't let tax considerations dictate investment decisions. Nonetheless, you should consider the tax implications of any year-end investment decisions. If you have realized net capital gains from the sale of securities at a profit, you may be able to avoid taxation on some or all of these gains by selling negative positions. Any losses in excess of your gains as an employee of Rockwell can be used to mitigate up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your tax liability in future years.
Conclusion
Preparing your taxes is like taking care of your health. Just as you need to stay on top of your physical well-being to prevent future health issues, you also need to plan ahead and take the necessary steps to ensure that you're not hit with unexpected tax liabilities in the future. By deferring income, accelerating deductions, making charitable contributions, and contributing to your retirement accounts, you can ensure that your financial health is in good shape for the years ahead. Just as you wouldn't skip your annual check-up, you shouldn't overlook the importance of taking care of your taxes.
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2. Morgan Stanley. 'Tax-Smart Strategies for Your Retirement.' Morgan Stanley , 2023, https://www.morganstanley.com/articles/tax-strategies-for-retirement?utm_source=chatgpt.com .
3. Vanguard. 'Tax-Efficient Retirement Strategy.' Vanguard , 2023, https://investor.vanguard.com/advice/tax-efficient-retirement-strategy?utm_source=chatgpt.com .
4. Thrivent. '6 Retirement Tax Planning Strategies You Should Know.' Thrivent , 2023, https://www.thrivent.com/insights/taxes/6-retirement-tax-planning-strategies-you-should-know?utm_source=chatgpt.com .
5. New York Life Insurance. 'Tax Planning Strategies for Retirement.' New York Life Insurance , 2023, https://www.newyorklife.com/articles/tax-considerations-in-retirement?utm_source=chatgpt.com .
What retirement planning resources are available to employees of Rockwell Automation that can assist them in understanding their benefits upon retirement, specifically regarding the Pension Plan and Retirement Savings Plan? Discuss how Rockwell Automation provides these resources and the potential impact on an employee's financial security in retirement.
Retirement Planning Resources: Rockwell Automation provides several retirement planning resources to aid employees in understanding their Pension Plan and Retirement Savings Plan benefits. The company offers access to a pension calculator and detailed plan descriptions through their benefits portal. Additionally, employees can seek personalized advice from Edelman Financial Engines, which can guide on Social Security, pensions, and 401(k) management. These tools collectively help in maximizing retirement income, ensuring financial security.
In what ways does Rockwell Automation support employees who are transitioning to retirement to find appropriate health coverage, particularly for those who may be eligible for Medicare? Explore the relationship between Rockwell Automation's healthcare offerings and external resources like Via Benefits and how they assist retirees in navigating their healthcare options.
Health Coverage for Retiring Employees: Rockwell Automation supports transitioning employees by offering pre-65 retiree medical coverage and facilitating access to Via Benefits for those eligible for Medicare. This linkage ensures continuous healthcare coverage and aids retirees in navigating their options effectively. Via Benefits provides a platform to compare and select Medicare supplement plans, ensuring that retirees find coverage that best fits their medical and financial needs.
How does the retirement process affect the life insurance benefits that employees of Rockwell Automation currently hold? Investigate the various options available to retiring employees regarding their life insurance policies and the importance of planning for these changes to ensure adequate coverage post-retirement.
Life Insurance Benefits: Upon retirement, life insurance coverage through Rockwell Automation ends, but employees have options to convert or port their policies. This transition plan allows retirees to maintain necessary coverage and adapt their life insurance plans to meet their changing financial and familial obligations post-retirement, thus ensuring continued protection.
What considerations should Rockwell Automation employees take into account when planning the timing of their pension benefit elections, and how can this timing affect their retirement income? Discuss the implications of pension benefit timing on financial planning and the suggested practices by Rockwell Automation for making these decisions.
Pension Benefit Election Timing: The timing of pension benefit elections can significantly impact retirement income. Rockwell Automation provides resources to model different retirement scenarios using their pension calculator. Employees are advised to consider the timing of benefit elections carefully, as early or delayed starts impact the financial outcome, thereby affecting overall financial stability in retirement.
How can employees of Rockwell Automation estimate their Social Security benefits before retirement, and what tools or resources does Rockwell Automation provide to aid in this process? Delve into the importance of understanding Social Security benefits as part of an overall retirement strategy and how Rockwell Automation facilitates this understanding.
Estimating Social Security Benefits: Employees are encouraged to use resources provided by Rockwell Automation to estimate their Social Security benefits. The company offers tools and external advisory services, including consultations with Edelman Financial Engines through the company’s portal, which help in understanding how Social Security benefits integrate with other retirement income sources for a comprehensive retirement strategy.
What are the health care options available to Rockwell Automation employees who retire before reaching the age of 65, and how do these options differ from those available to employees who retire after age 65? Discuss the eligibility requirements and implications of choosing, or deferring, retiree medical coverage under Rockwell Automation's plans.
Health Care Options for Employees Retiring Before Age 65: Rockwell Automation offers distinct health care plans for employees retiring before age 65, with eligibility dependent on age and years of service. These plans provide substantial support by covering different medical needs until the retiree is eligible for Medicare, illustrating the company’s commitment to ensuring health coverage continuity for its workforce.
In what ways can Rockwell Automation employees effectively prepare for potential cash flow gaps when transitioning into retirement? Evaluate the financial planning strategies recommended by Rockwell Automation to minimize the stress associated with income disruption during this critical period.
Preparing for Cash Flow Gaps: Rockwell Automation addresses potential cash flow gaps during retirement transition through detailed planning resources. The company highlights the importance of budgeting and provides tools to estimate the timing and amounts of retirement benefits. This proactive approach helps employees manage their finances effectively during the transitional phase of retirement.
What resources does Rockwell Automation offer to help employees make informed decisions regarding their retirement income sources, including pensions, savings plans, and Social Security? Examine the tools and guidance supplied by the company and how these can impact the employee's financial readiness for retirement.
Informed Decisions on Retirement Income Sources: Rockwell Automation offers extensive resources, including workshops and personalized counseling through partners like Edelman Financial Engines, to help employees make informed decisions about their retirement income sources. This support is crucial in helping employees optimize their income streams from pensions, savings plans, and Social Security.
How do Rockwell Automation's retirement benefits differ based on an employee's years of service, and what implications do these differences have for planning a secure retirement? Analyze the various tiers of benefits and options available to long-term versus newer employees and the importance of understanding these differences.
Impact of Service Years on Retirement Benefits: The company’s retirement benefits vary with the length of service, affecting the retirement planning of both long-term and newer employees. This tiered benefit structure underscores the importance of understanding how service length impacts pension calculations and eligibility for other retirement benefits, guiding employees in their long-term financial planning.
How can employees contact Rockwell Automation to seek further information about the retirement benefits discussed in the retirement document? Specify the available channels for communication and the types of inquiries that can be addressed through these means, underscoring the company's commitment to supporting employees during the retirement process.
Seeking Further Information: Employees can contact the Rockwell Automation Service Center for further information about retirement benefits. The availability of detailed plan descriptions and direct access to retirement specialists via phone ensures that employees receive support tailored to their specific retirement planning needs, reinforcing the company's commitment to facilitating a smooth transition to retirement.
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