New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

DCP Midstream Employees: Strategic Ways to Reduce Capital Gains on Appreciated Stock

Healthcare Provider Update: DCP Midstream Healthcare Provider Information DCP Midstream, a prominent company in the energy sector, typically provides its employees with access to comprehensive healthcare services. They collaborate with various insurance carriers to offer health plans that often include options for medical, dental, and vision coverage, tailored to the needs of their workforce. Anticipated Healthcare Cost Increases for DCP Midstream in 2026 In 2026, DCP Midstream employees may face notable increases in healthcare costs, driven primarily by anticipated premium hikes within the Affordable Care Act (ACA) marketplaces. Projections indicate that some states could experience premium increases exceeding 60%, with a national average expected to rise by around 18%. The expiration of enhanced federal subsidies could severely impact affordability, leading to an estimated 75% increase in out-of-pocket premium costs for many employees. With significant pressures from rising medical expenses and higher insurer rates, DCP Midstream's workforce should prepare for potentially impactful changes to their healthcare expenditures next year. Click here to learn more

'DCP Midstream employees can benefit from understanding that strategies like a Section 351 exchange, charitable donations, and tax loss harvesting may work together to help manage appreciated stock efficiently while aligning with broader long-term financial goals.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

'DCP Midstream employees should recognize that thoughtful planning with tools such as Section 351 exchanges, gifting strategies, and tax loss harvesting can help them manage highly appreciated stock while supporting both personal and philanthropic objectives.' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

How a Section 351 exchange can defer capital gains on highly appreciated stock.
Alternative tax-efficient strategies such as charitable donations, tax loss harvesting, and gifting.
The role of inheritance rules, step-up in basis, and combined approaches in long-term tax planning.

A Tax-Aware Q&A on How to Manage Highly Appreciated Stock

From the Section 351 exchange to other practical approaches, this Q&A addresses key considerations DCP Midstream employees may encounter when dealing with highly appreciated shares.

Section 351 Exchange: The Fundamental Approach

Q: What is an exchange under Section 351?
A: Under certain circumstances, an investor may transfer property, such as highly appreciated shares, to a company in exchange for its stock under a provision of the Internal Revenue Code that allows the deferral of capital gains or losses.

Q: What is the primary advantage of exchanging my appreciated stock through a Section 351 exchange?
A: The main advantage is tax deferral. Gains transferred to corporations may be postponed under Section 351, though this applies only if specific diversification requirements are met, especially when transferring to investment companies like exchange-traded funds (ETFs). ¹

Q: What is meant by the “Control Test”?
A: The investor or group of investors who use their portfolio assets to fund the new entity must own at least 80% of the voting power and 80% of the total number of shares of all other classes of stock in the new company immediately after the exchange. ¹

Q: When seeding an ETF, how is the Control Test usually satisfied?
A: It is typically satisfied by either a single substantial investor making a significant asset contribution or multiple investors pooling assets to create a seeding pool for the ETF’s launch.

Q: What is the ultimate tax payment date for the deferred gain?
A: The deferred gain is recognized when the ETF shares acquired through the exchange are sold; distributions from taxable funds must also be reported in the meantime.

Other Tax-Efficient Techniques

Q: What is a straightforward method, aside from a Section 351 exchange, to sell highly appreciated shares without incurring large taxes?
A: Donating shares directly to a qualified charity is one option that some DCP Midstream employees may benefit from.

Q: What tax advantages come with donating valuable stock to a charity?
A: Subject to holding period and adjusted gross income (AGI) limits, you can bypass capital gains taxes on the appreciation and may receive an income tax deduction for the stock’s full fair market value.

Q: What is a Donor-Advised Fund (DAF)?
A: A DAF allows you to donate appreciated stock, receive an immediate tax deduction, and then recommend grants to charities over time, while the assets in the DAF grow without tax impact. ²

Q: Can I give a family member my appreciated stock as a gift?
A: Yes. In most cases, the cost basis from the donor carries over to the recipient.

Q: Why would I give a family member in a lower tax bracket appreciated stock?
A: If they sell the stock, the lower income could result in a reduced capital gains rate, potentially as low as 0% for long-term gains. ³

Tax Loss Harvesting and Other Approaches

Q: What is harvesting tax losses?
A: Selling investments at a loss to offset gains from other sales is known as tax loss harvesting, a strategy sometimes considered by DCP Midstream employees seeking opportunities to leverage bouts of market volatility.

Q: Can I deduct a certain amount of loss from my regular income?
A: Yes. If your capital losses exceed your gains, you can use up to $3,000 per year ($1,500 if married filing separately) to offset ordinary income, with remaining losses carried forward indefinitely. ⁴

Q: What is a Qualified Opportunity Fund (QOF)?
A: A QOF provides investors with tax incentives for investing in tracts of land designated as 'opportunity zones'. Capital gains reinvested in a QOF within 180 days of being realized can be temporarily tax deferred, while QOF investments helpd for at least 10 years may confer a permanent capital gains exclusion. ⁵ That said, 2025 legislation changes may prompt IRS updates to this rule.

Inheritance and Step-Up in Basis

Q: What is meant by a “step-up in basis”?
A: This adjusts an inherited asset’s cost basis to its fair market value at the time of the owner’s death, eliminating capital gains accumulated during their lifetime. ⁶

Q: If I gift shares while living, will I receive a step-up in basis?
A: No. The original cost basis transfers to the recipient without adjustment.

Determining the Right Strategy

Q: What is the best course of action for me?
A: The most suitable approach will depend on factors such as your gain size, income level, charitable intentions, and liquidity needs.

Q: Do any of these strategies call for professional guidance?
A: Yes. Given the complexity of the tax code, working with a qualified financial advisor and tax professional is strongly recommended before implementing these strategies.

Q: Is it possible to combine these strategies?
A: Yes. For example, you might execute a Section 351 exchange on part of your portfolio for tax-deferred rebalancing while donating another portion to a DAF for an immediate deduction.

Q: Is there a loophole in the Section 351 exchange?
A: No. This is a legitimate tax code provision designed for corporate restructuring and adapted for use in the ETF market. It is intended for tax deferral, not permanent tax elimination.

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Articles you may find interesting:

Sources:

1. Kitces. ' Using Section 351 Exchanges to Tax-Efficiently Reallocate Portfolios With Embedded Gains ,' by Ben Henry-Moreland and Brent Sullivan. 12 Mar. 2025.

2. Kiplinger. “ A Donor-Advised Fund Can Give Your Charitable Giving a Boost ,” by Samuel Gaeta. 9 May 2024.

3. Internal Revenue Service. “ Topic No. 409, Capital Gains and Losses .” IRS.gov , 8 July 2025.

4. Wealth Enhancement. ' 6 Essential Tax-Loss Harvesting Tips ,' by Jim Wiley. 6 April 2022.

5. Congressional Research Service. ' Tax Incentives for Opportunity Zones ,' by Donald Marples. 26 Apr. 2022.

6. Investopedia. “ Carryover Basis: What It Is, How It Works, Gift Taxes ,” by Julia Kagan. 16 Jan. 2023.

What is the primary purpose of DCP Midstream's 401(k) Savings Plan?

The primary purpose of DCP Midstream's 401(k) Savings Plan is to help employees save for retirement by allowing them to contribute a portion of their salary on a tax-deferred basis.

How can employees enroll in DCP Midstream's 401(k) Savings Plan?

Employees can enroll in DCP Midstream's 401(k) Savings Plan through the company's benefits portal during the open enrollment period or within 30 days of their hire date.

What types of contributions can employees make to DCP Midstream's 401(k) Savings Plan?

Employees can make pre-tax contributions, Roth (after-tax) contributions, and, in some cases, catch-up contributions if they are age 50 or older to DCP Midstream's 401(k) Savings Plan.

Does DCP Midstream offer a matching contribution for the 401(k) Savings Plan?

Yes, DCP Midstream offers a matching contribution to the 401(k) Savings Plan, which helps employees maximize their retirement savings.

What is the vesting schedule for DCP Midstream's matching contributions?

The vesting schedule for DCP Midstream's matching contributions typically follows a graded vesting schedule, where employees become fully vested after a certain number of years of service.

Can employees take loans from their 401(k) Savings Plan at DCP Midstream?

Yes, DCP Midstream allows employees to take loans from their 401(k) Savings Plan, subject to specific terms and conditions outlined in the plan documents.

What investment options are available in DCP Midstream's 401(k) Savings Plan?

DCP Midstream's 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and company stock, allowing employees to diversify their portfolios.

How often can employees change their contributions to DCP Midstream's 401(k) Savings Plan?

Employees can change their contributions to DCP Midstream's 401(k) Savings Plan at any time throughout the year, subject to payroll processing timelines.

What is the minimum contribution percentage for DCP Midstream's 401(k) Savings Plan?

DCP Midstream typically requires a minimum contribution percentage, which is outlined in the plan documents, but employees are encouraged to contribute more if possible.

Are there any fees associated with DCP Midstream's 401(k) Savings Plan?

Yes, there may be fees associated with managing DCP Midstream's 401(k) Savings Plan, which are disclosed in the plan's fee disclosure statement.

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

DCP Midstream offers comprehensive retirement benefits, including both a 401(k) plan and a pension plan, to its employees for the years 2022, 2023, and 2024. The company's 401(k) plan includes catch-up contributions for employees aged 50 and above, allowing them to contribute an additional $6,500 on top of the regular annual limit, which is $22,500 for 2023. This feature helps employees nearing retirement to bolster their savings (Home Page) (Benefits Law Advisor). DCP Midstream's pension plan, on the other hand, is based on a formula that typically factors in years of service and final average salary, although specific details about the plan's structure, such as the exact percentage per year of service, were not explicitly provided. The company's pension plan is often referred to in conjunction with its overall deferred compensation strategy (Home Page) (Benefits Law Advisor). Years of service and age qualifications for both the 401(k) and pension plan are structured to incentivize long-term commitment. For instance, the pension benefits generally become more significant as an employee's years of service increase, although exact thresholds are specified in internal corporate documents

In early 2024, DCP Midstream announced a major restructuring plan including a workforce reduction of about 10% and a review of benefit programs and 401k plans.

DCP Midstream offers stock options and Restricted Stock Units (RSUs) to eligible employees as part of their compensation package. In 2022, DCP Midstream provided stock options with vesting schedules based on performance metrics and tenure. For 2023, the company expanded its RSU program, granting units based on individual performance and company milestones.

DCP Midstream provides a range of health benefits, including Health Savings Accounts (HSAs) and various medical insurance options. Employees have access to a PPO (Preferred Provider Organization) plan as well as high-deductible health plans that allow them to pair with HSAs. DCP contributes to HSAs, and employees can choose among different coverage levels, including dental and vision insurance. Acronyms commonly used include HSA (Health Savings Account), PPO (Preferred Provider Organization), and FSA (Flexible Spending Account). Employees have noted that costs can be on the higher side for insurance coverage but appreciate the variety of options. DCP Midstream has also made wellness a priority by offering wellness-focused medical plans, which include preventive care and access to resources for mental health and physical well-being. Recent reviews emphasize that the company continues to provide comprehensive benefits despite market fluctuations. DCP Midstream also encourages participation in their wellness programs, often promoting the importance of maintaining physical and mental health through these benefits