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Charting the Course: How UPS Employees Can Navigate the New Senior Tax Deduction

“UPS employees who leverage strategic income coordination and Roth conversion timing can fully benefit from the 2025 senior bonus deduction and increased standard deductions—though they should consult a tax advisor for individualized guidance.” – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

“By modeling various income scenarios—balancing part-time earnings with Roth conversions and RMD timing—UPS employees can optimize their benefit from the four-year senior bonus deduction window.” – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

The new four-year “senior bonus” deduction and increased standard deduction.
Tax exclusions for part-time employment and strategic income coordination.
Roth conversion timing and RMD considerations to optimize MAGI.

President Donald Trump’s 2025 Tax Law

President Donald Trump signed a historic tax policy into law on July 4 that takes effect in 2025, providing taxpayers age 65 and older with a significant planning opportunity. Instead of fully exempting Social Security benefits from taxes, the law preserves existing rules while introducing a temporary, increased standard deduction to lower seniors’ taxable income.

New Senior Bonus Deduction

UPS employees who qualify can claim a $6,000 “senior bonus” deduction for each eligible individual through the 2028 tax year, provided their modified adjusted gross income (MAGI) stays within specified limits.

Increased Income and Deduction Caps

Single filers with a MAGI up to $75,000 can claim the full $6,000 bonus deduction; the benefit phases out entirely once MAGI reaches $175,000. Married couples filing jointly may each deduct $6,000 if their combined MAGI is under $150,000, with the deduction phasing out by $250,000. ¹ Wealth Enhancement financial advisor Tyson Mavar notes, “This is a meaningful opportunity.” Every dollar of tax reduction directly strengthens retirement assets for those on fixed incomes.

Increases in Standard Deduction

Beginning in 2025, the basic standard deduction rises to $15,750 for single returns and $31,500 for joint returns, ² in addition to any senior bonus deduction. Retirees age 65+ already receive age-based increases—$2,000 for single filers and $3,200 for married couples. As a result, a married couple under the income threshold could deduct up to $46,700 before any itemized deductions.

Exclusions from Taxes for Part-Time Employment

The legislation also provides sector-specific limits for hourly and tipped workers. Certain service roles may exclude up to $25,000 in tip income and $12,500 in overtime pay from taxable income. Retirees who continue part-time work in service or hospitality may find this particularly transformative, as Tyson Mavar suggests, since it allows additional earnings without jeopardizing deduction eligibility.

Considerations for Roth Conversion

While converting traditional IRA assets to a Roth IRA can yield long-term benefits, it increases taxable income in the conversion year. UPS retirees may inadvertently exceed MAGI limits, negating the $6,000 deduction. Patrick Ray, a financial advisor with Wealth Enhancement, suggests carefully structuring any Roth conversions to avoid exceeding limits, or potentially postponing the conversion until after the senior bonus phases out in 2028.

Required Minimum Distributions with Roth Accounts

RMDs from traditional IRAs begin at age 73 and fully count as taxable income, raising AGI. In contrast, Roth IRA withdrawals are tax-free and have no distribution mandate. Brent Wolf at Wealth Enhancement emphasizes that “the tax-free feature is crucial” for supporting flexible income planning through Roth accounts.

Management of Strategic Income

Coordinating revenue sources is essential to leverage this four-year window. UPS employees might ask, “Can we adjust withdrawals and earnings to keep MAGI below the cutoff and capture substantial tax reductions?” as Mavar frames it.

Next Actions

UPS retirees should forecast income streams—including earned income, Social Security, IRA distributions, pensions, and Roth conversion schedules—and model scenarios to identify optimal withdrawal ranges and part-time earnings. Engaging tax and wealth planning specialists helps confirm that plans are in place when the law takes effect.

The Bigger Picture

At a time when living costs may be rising, this four-year boost to the standard deduction offers a rare chance to lower tax bills. Over 2025–2028, disciplined planning—balancing MAGI against new thresholds, leveraging tip-income exclusions, and judicious Roth use—could yield tens of thousands in savings for those prepared to chart their course.

Personalized Guidance

UPS employees seeking tailored strategies should consult advisors at Wealth Enhancement today to craft a retirement plan optimized for the enhanced deduction and broader tax changes.

Managing Medicare Surcharges

The same MAGI limits for the senior bonus also apply to Medicare premium surcharges. For instance, a single filer whose MAGI exceeds $106,000 by just $1 may face IRMAA penalties that add over $1,000 to annual Part B and Part D premiums.

In Summary

Examine the 2025 tax law’s retirement-planning options—including the $6,000 bonus deduction, higher standard deductions, MAGI thresholds, Roth timing, and tip-income exclusions—to optimize after-tax income through 2028.

Analogy

Navigating this new tax landscape is like steering a sailboat through a series of canal locks: you must time your income withdrawals and Roth conversions precisely to avoid rising water levels (MAGI phase-outs and Medicare surcharges), harness every current (the enhanced deductions and higher standard deduction) for forward motion, and explore side channels (tip-income and overtime exclusions) to gain extra distance. By keeping that careful course, UPS employees can sail smoothly through 2025–2028 with optimal savings.

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p data-start='4780' data-end='4932' data-is-last-node='' data-is-only-node=''> Sources:

1. Tax Foundation. “ How Does the Additional Senior Deduction Compare to No Tax on Social Security? ,” by Alex Durante, 4 July 2025.

2. Bipartisan Policy Center. “ The 2025 Tax Bill: Additional $6,000 Deduction for Seniors, Simplified. ” by Emerson Sprick, 12 June 2025.

3. CBS News. “ Does the ‘Big, Beautiful Bill’ Eliminate Taxes on Social Security? ” by Mary Cunningham, 9 July 2025.

How can employees take full advantage of the retirement benefits offered by UPS, including the pension plan enhancements implemented in 2024, and what specific eligibility criteria must they meet to secure these benefits? In your experience, how have changes in the UPS pension plan over the years, especially the recent increases to service pension benefits, impacted the financial planning of UPS employees nearing retirement?

To fully take advantage of the UPS retirement benefits, including the pension plan enhancements implemented in 2024, employees must meet specific eligibility criteria, such as length of service and retirement age, which are outlined in the company's pension plan documents. Recent increases in service pension benefits, particularly for employees nearing retirement, have allowed UPS workers to better secure their financial future, giving them a more stable foundation as they transition out of the workforce. These changes have made financial planning more predictable for those close to retirement.

What are the steps that part-time employees at UPS need to follow to transition to full-time status, and how does this transition affect their eligibility for the UPS Pension Plan? Additionally, can you outline how the accrual of Credited Service works for both part-time and full-time UPS employees under the current plan rules?

Part-time employees at UPS must follow an established process to transition to full-time status, often based on seniority, availability, and performance reviews. Once they transition to full-time, their eligibility for the UPS Pension Plan improves, allowing for faster accrual of service credits. Accrual of Credited Service for part-time employees is typically prorated based on the hours worked, while full-time employees accumulate service credits more quickly, based on a 40-hour workweek under the current plan rules.

Considering the rise in healthcare costs, what healthcare options are available to UPS employees upon retirement, and how do the TeamCare plans differ between full-time and part-time retirees? How does the retiree medical coverage through TeamCare ensure that UPS employees maintain health insurance access without significant financial burden after retirement?

UPS offers comprehensive healthcare options through TeamCare for retirees, which vary for full-time and part-time employees. Full-time retirees generally receive more extensive coverage, while part-time retirees may have more limited options. TeamCare ensures that UPS retirees have access to affordable healthcare coverage post-retirement by providing plans designed to reduce the financial burden of rising healthcare costs, helping retirees maintain health insurance with manageable out-of-pocket expenses.

How does the UPS pension plan accommodate employees who have worked in multiple states or for different employers within the Teamsters system? What provisions are in place to ensure that their service credits are recognized and valued, particularly for those who may approach retirement age with a patchwork of employment history?

The UPS pension plan accommodates employees who have worked in multiple states or for different employers within the Teamsters system by recognizing their service credits across various jurisdictions. This ensures that even employees with patchwork employment histories can count their service toward pension eligibility, helping them qualify for retirement benefits despite moving between employers or locations within the Teamsters network.

What specific provisions exist for retirees at UPS who may choose to return to part-time employment post-retirement? Can you detail how this affects their pension benefits and any other retirement-related income they might receive, alongside UPS's policies regarding reemployment for retirees?

UPS retirees who choose to return to part-time work after retirement can do so under certain conditions without affecting their pension benefits. However, there may be limits on how much they can work without reducing their pension income. UPS’s policies on reemployment allow retirees to maintain some of their retirement-related income while taking on part-time roles, ensuring financial stability alongside continued employment.

How can employees at UPS navigate the process of filing a grievance if they feel their retirement benefits have not been administered fairly? What are the resources available to them, and how does the grievance procedure relate to the overall benefits they receive under the UPS pension and welfare plans?

If employees feel their retirement benefits have been unfairly administered, they can file a grievance through the UPS grievance procedure. This process often begins with discussions between the employee and management, with the option to escalate the issue to the union for formal dispute resolution. Resources such as union representatives and detailed plan documents are available to help employees navigate these disputes under the UPS pension and welfare plans.

With the introduction of new benefit contribution rates in 2024, how do these changes reflect UPS's commitment to its employees' financial futures? In what ways are employees encouraged to participate in decision-making regarding their benefits, and how might this shift impact employee satisfaction and retention rates at UPS?

The new benefit contribution rates introduced by UPS in 2024 reflect the company’s commitment to securing the financial futures of its employees. These changes encourage employees to be more engaged in the decision-making process regarding their benefits, which can lead to greater satisfaction and retention. UPS fosters this involvement by providing clear communication about how benefits are structured and how employees can contribute to their long-term financial health.

For employees looking to enhance their retirement savings beyond the UPS Pension Plan, what additional options are available, such as 401(k) or health savings accounts, and how do these integrate with the retirement benefits provided by UPS? Additionally, how can employees get the most out of these supplemental plans during their working years at UPS?

Beyond the UPS Pension Plan, employees have additional retirement savings options, such as 401(k) plans and health savings accounts (HSAs). These plans complement the pension benefits and allow employees to further enhance their retirement savings during their working years. UPS offers matching contributions for the 401(k), and employees are encouraged to maximize these plans to ensure robust retirement savings.

How does UPS support employees facing long-term disabilities in relation to their pension plans and health care coverage? Can you explain the interaction between long-term disability benefits and retirement benefits, particularly for employees who may leave the workforce earlier than anticipated due to health issues?

For employees facing long-term disabilities, UPS provides both long-term disability benefits and continued healthcare coverage, which are integrated with their pension plans. Employees who leave the workforce early due to health issues can rely on these benefits to maintain financial stability, as the long-term disability benefits help bridge the gap until they reach retirement age and are eligible for pension payments.

For employees seeking more information on their retirement benefits and options available through UPS, what channels are best for contacting the benefits department? Are there specific representatives dedicated to assisting employees with retirement questions to ensure they understand the nuances of their benefits effectively?

UPS employees seeking more information about their retirement benefits can contact the benefits department through designated channels, such as the employee portal or direct phone lines. UPS also provides representatives who specialize in retirement benefits, ensuring employees receive personalized guidance to understand the nuances of their pension plans and other retirement options effectively.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

UPS offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan includes a cash balance component, where benefits grow based on years of service and compensation, with interest credits added annually. The 401(k) plan offers company matching contributions and various investment options such as target-date funds and mutual funds. UPS also provides financial planning resources and tools to help employees manage their retirement savings.

UPS offers RSUs that vest over time, giving employees shares upon meeting vesting conditions. Stock options are also provided, allowing employees to purchase shares at a fixed price.