Flowers Foods Employees: Exploring Exchange Funds and Tax-Efficient Strategies for Deferred Gains
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'Flowers Foods 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.
'Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods is a retirement savings plan that allows employees to save a portion of their salary on a pre-tax basis, helping them prepare for retirement.
Does Flowers Foods offer a company match for the 401(k) contributions?
Yes, Flowers Foods offers a company match for employee contributions to the 401(k) plan, which helps boost employees' retirement savings.
What is the eligibility requirement to participate in the Flowers Foods 401(k) plan?
Employees of Flowers Foods are eligible to participate in the 401(k) plan after completing a specified period of service, typically 30 days.
How can employees of Flowers Foods enroll in the 401(k) plan?
Employees can enroll in the Flowers Foods 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.
What types of investment options are available in the Flowers Foods 401(k) plan?
The Flowers Foods 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to diversify their retirement savings.
Can employees change their contribution percentage to the Flowers Foods 401(k) plan?
Yes, employees can change their contribution percentage to the Flowers Foods 401(k) plan at any time, subject to the plan’s guidelines.
When can employees of Flowers Foods take a loan from their 401(k) plan?
Employees can take a loan from their Flowers Foods 401(k) plan under certain conditions, such as financial hardship or specific personal needs, as outlined in the plan documents.
What happens to the Flowers Foods 401(k) plan if an employee leaves the company?
If an employee leaves Flowers Foods, they can either roll over their 401(k) balance to a new employer's plan, an IRA, or withdraw the funds, subject to taxes and penalties.
Is there a vesting schedule for the company match in the Flowers Foods 401(k) plan?
Yes, Flowers Foods has a vesting schedule for the company match, meaning employees must work for a certain number of years before they fully own the matched contributions.
How often can employees of Flowers Foods review their 401(k) account statements?
Employees can review their Flowers Foods 401(k) account statements quarterly, and they can also access their accounts online at any time.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Flowers Foods offers a 401(k) Retirement Savings Plan through Empower for its employees, known as the FLOWERS FOODS, INC. 401(K) RETIREMENT SAVINGS PLAN. This plan covers approximately 11,266 employees. Flowers Foods, headquartered in Thomasville, Georgia, has been in operation since 1919, specializing in the production of bread, buns, cakes, and pastries. Their 401(k) plan includes a company match program, encouraging employees to contribute towards their retirement. Employees have the option to roll over their 401(k) into an IRA or a new 401(k) if they no longer work at the company (Jobs at Flowers Foods) (Capitalize).
The specific eligibility criteria for the 401(k) plan at Flowers Foods includes full-time employment, and the company offers professional growth opportunities as part of their benefits package. For 2023 and 2024, Flowers Foods has maintained this plan under Empower with consistent matching contributions
Restructuring Layoffs: Flowers Foods has recently undergone significant restructuring, resulting in the elimination of approximately 250 positions across various departments. This move is part of a broader strategy to streamline operations, reduce complexity, and improve profitability. Despite the layoffs, Flowers Foods continues to pursue growth opportunities through innovation and strategic investments, indicating a focus on long-term sustainability. It's crucial to address these restructuring efforts due to the current economic pressures and the need for companies to adapt to changing market conditions. Benefit Changes and Pension/401(k) Updates: The company has also made adjustments to its employee benefits, including pension plans. They recently purchased an annuity to complete the termination of a pension plan, which aligns with their strategy of focusing resources on more profitable ventures. Additionally, Flowers Foods continues to provide a standard 401(k) match of up to 6%, although the program remains underutilized by employees. This highlights the importance of staying informed about benefit changes, especially in an uncertain economic and political environment. Addressing these updates is crucial as they directly impact employees' financial security and retirement planning.
2022: Flowers Foods granted Time-Based Restricted Stock Units (TBRSUs) under its 2014 Omnibus Equity and Incentive Compensation Plan. These RSUs vest based on continued employment over a specific period, typically three years. The RSUs do not carry voting rights or dividend rights until they vest and convert into actual shares of Flowers Foods stock (Justia).
2023: The company continued to offer similar equity incentives, focusing on performance-contingent RSUs. These RSUs vest based on the company's performance metrics, such as Return on Invested Capital (ROIC) and Total Shareholder Return (TSR). The vesting periods for these RSUs run through 2024, ensuring that recipients remain with the company while contributing to its long-term success (Nasdaq).
2024: The company has not significantly altered its stock options and RSU offerings, continuing to use performance-based vesting criteria to motivate and retain key personnel. The RSUs remain a key component of compensation for Flowers Foods’ executives and upper management (Justia) (Nasdaq).
Flowers Foods offers a comprehensive health benefits package aimed at supporting the long-term well-being of its employees and their families. The company provides two main medical plan options: PPO and PPO Plus, the latter of which is associated with a Health Savings Account (HSA). Other benefits include Flexible Spending Accounts (FSA) for healthcare and dependent care, dental and vision insurance, short-term disability coverage, and voluntary long-term disability insurance. The company also offers an Employee Assistance Plan (EAP) and various supplemental insurance options
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