Dana Employees: Exploring Exchange Funds and Tax-Efficient Strategies for Deferred Gains
Healthcare Provider Update: For the company Dana, the healthcare provider is likely UnitedHealthcare. This insurer is known for offering a range of health coverage options, including plans in several ACA marketplaces.
Looking ahead to 2026, significant increases in healthcare costs are anticipated. Rising medical expenses, combined with the potential expiration of enhanced federal subsidies, could lead to steep premium hikes for ACA marketplace enrollees. Reports suggest that some states may experience increases exceeding 60%, resulting in many individuals facing more than 75% higher out-of-pocket costs. Such drastic changes could create considerable financial strain for millions, emphasizing the importance of proactive healthcare planning in 2025.
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'Dana employees should view capital gains management as part of a broader retirement strategy as flexible, tax-efficient planning tailored to individual circumstances can help preserve wealth over the long term.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.
'Dana employees may benefit from retirement planning strategies that incorporate adaptable approaches. Flexibility in planning can better align financial decisions with evolving personal and economic circumstances.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article we will discuss:
Personalized and adaptable tax-efficient planning for Dana employees.
Deferred gains and tax-free diversification strategies, including §721 Exchange Funds and §351 ETF conversions.
Additional methods such as charitable donations, remainder trusts, and collars for managing capital gains.
Patrick Ray, a Wealth Enhancement financial advisor, highlights the importance of personalized tax-efficient planning when determining the best way to mitigate capital gains taxes on a highly valued position. 'Retirement planning is not a one-size-fits-all approach,' he notes. 'It requires tailored strategies that address unique factors such as tax-efficient withdrawals.' For Dana employees, effective planning—which can include using tax-efficient tools like donor-advised funds or donating appreciated shares to charity selectively—means taking a customized approach based on your unique tax bracket, liquidity requirements, and long-term objectives, particularly when it comes to managing significant capital gains.
For his part, Wealth Enhancement advisor Tyson Mavar emphasizes the necessity of adaptable planning tools, pointing out that traditional guidance could be misaligned. 'Retirement planning is particularly complex for investors juggling estate considerations and significant capital gains,' he says. For Dana professionals, this viewpoint encourages investigating tactics that provide customization, timing flexibility, and tax efficiency based on your financial needs, such as charitable remainder trusts, tax-loss harvesting, or conversions into exchange traded funds (ETFs).
Tax-deferred diversification
: Allows you to receive shares in a diversified portfolio without paying capital gains tax immediately by contributing a concentrated stock position to a pooled exchange fund.
Deferred gain
: Your initial cost basis carries over pro rata, and taxes are postponed until you sell the shares of the diversified portfolio.
Accessibility
: Usually restricted to qualified or accredited buyers, frequently requiring sizeable minimum deposits (between $100,000 and $1 million or more).
Hold period
: Prior to redemption, funds typically impose a seven year lock-up.
Diversification structure
: To prevent being classified as an “investment company,” which would otherwise result in immediate taxation, exchange funds are frequently structured with about 20% in non-stock assets, such as real estate.
For Dana employees holding concentrated stock, this can provide a structured way to defer taxes while broadening exposure.
Restrictions
Limited liquidity—capital remains locked in for the time being.
High-net-worth investors are generally the only ones able to meet the fees and entry requirements.
You still retain diluted exposure to your original position following the exchange, known as residual exposure.
2. Tax-Free Seeding Into Tax-Efficient Vehicles via Section 351 ETF Conversions
Mechanism and Advantages
Tax-free transfer
: If IRS regulations are followed, you can trade shares of an ETF for a diversified portfolio (such as separately managed account holdings) without recognizing a gain.
Diversification guidelines
: The portfolio must satisfy §368(a)(2)(F)'s 25/50 diversification test, which states that no single holding may account for more than 25% of the portfolio’s value and that the top five holdings cannot exceed 50%.
Control requirement
: Immediately after the exchange, contributors must jointly own at least 80% of voting power and 80% of all share classes.
Continuous in-kind rebalancing
: The ETF structure allows for tax-efficient rebalancing through in-kind transactions, postponing future gains until ETF shares are sold.
For Dana investors, these mechanisms can be especially valuable if they are already well diversified and seeking long-term tax efficiency.
Restrictions
Eligibility
: Only well-diversified portfolios qualify; concentrated single-stock holders may not benefit unless already diversified.
Cost and complexity
: Requires operational, fund-structuring, and legal setup, often used by institutions or wealthy investors.
3. Collars and Charitable Giving Strategies
High-income investors often use strategies like charitable giving, donor-advised funds, charitable remainder trusts, and collars with borrowing to manage capital gains taxes.
Giving to charity
: Donating appreciated stock directly or through a donor-advised fund can result in a charitable deduction and reduce exposure to capital gains tax.
Charitable remainder trusts (CRTs)
: These generate income while deferring capital gains taxes, with the remainder eventually donated to charity.
Borrowing and collars
: Borrowing against stock provides liquidity without a taxable sale, while collars set boundaries on downside risk. These tactics must be properly structured to prevent constructive sale treatment under §1259.
The 401(k) plan at Dana is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.
How does Dana match employee contributions to the 401(k) plan?
Dana offers a matching contribution up to a certain percentage of the employee's salary, which helps to enhance the retirement savings.
When can employees at Dana enroll in the 401(k) plan?
Employees at Dana can enroll in the 401(k) plan during their initial onboarding period or during the annual open enrollment period.
What are the eligibility requirements for Dana's 401(k) plan?
To be eligible for Dana's 401(k) plan, employees must be at least 21 years old and have completed a minimum period of service with the company.
Can employees at Dana take loans against their 401(k) savings?
Yes, Dana allows employees to take loans against their 401(k) savings, subject to specific terms and conditions.
What investment options are available in Dana's 401(k) plan?
Dana's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and company stock.
How can employees at Dana access their 401(k) account information?
Employees can access their 401(k) account information through Dana's online benefits portal or by contacting the HR department.
What is the vesting schedule for Dana's 401(k) matching contributions?
Dana has a vesting schedule for matching contributions, meaning employees earn ownership of the matched funds over a specified period of service.
Can employees at Dana change their contribution percentage to the 401(k) plan?
Yes, employees at Dana can change their contribution percentage at any time, subject to the plan's guidelines.
What happens to the 401(k) savings if an employee leaves Dana?
If an employee leaves Dana, they can choose to roll over their 401(k) savings to another retirement account or withdraw the funds, subject to taxes and penalties.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
For Dana Inc., the primary pension plan was the "Dana Retirement Plan," which underwent significant changes in 2019 when Dana transferred its pension liabilities to insurance companies through annuity purchase agreements. This action involved securing pension obligations for plan participants without altering their benefits. The company has not made significant updates to its pension plan offerings since this transfer, focusing instead on fully funding existing obligations.
Regarding the 401(k) plan, Dana offers a competitive 401(k) with matching contributions. Employees can contribute up to 8% of their salary, with Dana providing a 4.5% match. This plan is available to all full-time employees. Dana emphasizes the stability and security of its retirement offerings, aligning with the company’s broader strategy to maintain financial health and meet its obligations.
Restructuring Layoffs: Dana Incorporated has been undergoing restructuring efforts in 2023 and 2024, which included several layoffs across different divisions to streamline operations and reduce costs. These layoffs are part of the company's strategy to remain competitive amid economic uncertainties and evolving market conditions. It's important to address this news because the current economic environment, characterized by high inflation and geopolitical tensions, requires companies to adjust their workforce to maintain financial stability. Benefit and Pension Changes: Dana has also made significant changes to its employee benefits and pension plans. In 2023, the company revised its pension formula and adjusted the contribution limits for 401(k) plans in response to the SECURE Act 2.0. The changes were made to align with new federal regulations and to provide more robust retirement options for employees. This news is crucial as the investment climate and tax regulations are evolving, and such changes directly impact employees' retirement planning. Employees should be aware of how these changes affect their future financial security and retirement readiness.
Dana Incorporated offers a variety of stock options and Restricted Stock Units (RSUs) as part of its compensation package to eligible employees. In 2022, 2023, and 2024, Dana continued to use stock options and RSUs to incentivize and retain key talent within the company. The specific stock options at Dana Incorporated are designed to allow employees to purchase shares at a predetermined price, often reflecting the stock price at the time of the grant. These options typically vest over a set period, ensuring that employees remain with the company to gain the full benefit.
RSUs at Dana Incorporated are another critical part of the company's equity compensation. RSUs are granted with a vesting schedule, where the employee receives shares after meeting specific service conditions, usually tied to the employee’s tenure or company performance. The company's RSUs do not require employees to pay an exercise price, unlike stock options, which is advantageous for employees as they are guaranteed the value of the shares upon vesting.
Eligibility for stock options and RSUs at Dana Incorporated is typically extended to employees who are in managerial or higher-level positions, though the exact criteria may vary by year and specific company needs. In 2022, 2023, and 2024, Dana continued to refine these programs to align employee incentives with company performance, which was evident in their continued financial growth and strategic achievements during these years.
The detailed information on these stock options and RSUs, along with the company's ongoing updates, can be found in Dana's annual reports and investor communications, specifically in documents like the 10-K filings. These reports typically outline the terms, eligibility criteria, and the vesting schedules for these equity-based compensation plans. For further details, reviewing the annual reports and quarterly earnings releases on Dana's official website is recommended.
In 2022, Dana, like many companies, faced increasing healthcare costs due to various factors, including inflation and the ongoing impacts of the COVID-19 pandemic. These challenges led to an emphasis on high-deductible health plans (HDHPs), which remained popular among employees, with a notable increase in the median in-network deductible for these plans. Dana also focused on behavioral health benefits, recognizing the importance of supporting employees' mental health in the post-pandemic era.
By 2023 and 2024, Dana continued to adapt its health benefits strategy by exploring self-insured health plans, a move aimed at giving the company more control over healthcare costs and the flexibility to tailor benefits to employees' needs. The company also highlighted the importance of accountable care organizations (ACOs) and personalized healthcare services, aiming to improve the quality of care while managing costs.
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