Acuity Brands Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: Healthcare Provider for Acuity Brands
Acuity Brands, a leading provider of lighting and building management solutions, primarily offers its healthcare benefits through large national insurers such as UnitedHealthcare. Employees may access these plans to cover a variety of medical needs, reflecting the competitive landscape for employer-sponsored health insurance.
Potential Healthcare Cost Increases in 2026
Looking ahead to 2026, Acuity Brands employees should brace for significant healthcare cost increases. Record premium hikes are anticipated in the Affordable Care Act (ACA) marketplace, with some states experiencing increases as steep as 66%. Coupled with the expiration of enhanced federal premium subsidies, many employees may see their out-of-pocket costs soar by over 75%. Companies across the U.S. are responding to rising healthcare expenses by adjusting benefit structures, which may further impact the affordability of coverage for employees.
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'Acuity Brands employees with concentrated stock positions may benefit from thoughtful tax planning that allows for tax deferral while balancing liquidity, compliance, and long-term compounding,' Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.
'Acuity Brands employees who hold highly-appreciated stock may want to consider tax-efficient strategies that help mitigate their liabilities while aligning with their overall retirement goals,' Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
How taxes can affect investment returns, particularly on concentrated stock positions.
Exchange funds and options-based strategies as methods for tax deferral and diversification.
Alternative planning techniques outside ETFs, including charitable trusts and gifting strategies.
By Carlos Hernandez, Wealth Enhancement advisor
When it comes to driving portfolio returns, many investors aim to keep management fees low by investing in low-cost index funds and exchange-traded funds (ETFs). While fees matter, however, the real culprit for lower-than-anticipated performance is taxes.
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Wealth Enhancement advisor Carlos Hernandez explains: 'By losing less to taxes each year, investors have access to more capital that can continue to compound over time. This makes tax deferral an important part of an effective financial plan.' Acuity Brands employees looking for long-term growth strategies could benefit by understanding how to better manage their investment tax burdens.
Trade Money
One area where taxes can take a toll is on the sale of company stock or other concentrated investment positions. Acuity Brands professionals looking to diversify could face significant capital gains taxes on an outright sale. One way to diversify without triggering immediate capital gains is through exchange funds. By contributing their highy-appreciated stock to a pooled fund, investors can trade their concentrated holdings for shares in a diverse basket of securities. This method can be used by Acuity Brands employees who want to diversify while postponing taxable events.
Although this method allows for tax deferral, it also requires investors to hold the exchange fund for a period of time, typically seven years.
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This could create a challenge for investors who require liquidity. Additionally, these funds are often exclusively accessible to wealthy, accredited investors—something Acuity Brands executives should carefully evaluate.
Funds Based on Options
Another way to mitigate taxes on the sale of highly-appreciated stock is by using options contracts. The idea is to hedge risk with put options while covering the cost of those puts by selling call options—a strategy called 'collaring'. From there, the strategy reverses, with investors selling put options and using the proceeds to buy call option on an equity or bond index.
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If managed effectively, this helps to diversify a concentrated portfolio while still maintaining liquidity.
Given the complexity of this strategy, meticulous planning is necessary. It's generally recommended that investors work with an experienced financial advisor before pursuing this approach.
Things to Be Aware of
Although these strategies can be beneficial for Acuity Brands employees who hold highly-appreciated stock, caution is recommended. There are costs associated with these approaches, and potential liquidity risks. Additionally, the IRS may eventually contest such arrangements because their tax status has not been thoroughly examined—something Acuity Brands retirees should keep top of mind.
'Tax drag reduction strategies can be effective, but they must be assessed through the lens of risk, liquidity, cost, and compliance,' warns Carlos Hernandez. What is appealing in theory must hold up to inspection in the real world.
Alternative Strategies
Although they show promise, investors with highly-appreciated stock or those looking to postpone gains have other alternatives besides exchange funds or options. Other tactics could include:
- Prepaid variable forwards (subject to IRS regulations, contracts to sell at predetermined terms in the future).
- Charitable remainder trusts (CRTs), which allow investors to donate appreciated stock to a charitable trust and receive a stream of regular income in return.
- Donor-advised funds (DAFs), which provide investors with a tax deduction for the fair market value of the appreciated stock they donate.
- Other gifting techniques, such as direct donations to charity or family.
Each has its own set of guidelines, advantages, and disadvantages. To limit unnecessary taxes or violating the constructive sale regulations, careful planning is necessary for Acuity Brands professionals managing complex portfolios.
The Bottom Line
Although the movement to mitigate the tax burden on investments is not new, the instruments are changing. Both exchange funds and options-based structures offer investors a way to manage tax liabilities, especially for Acuity Brands employees who hold highly-appreciated stock.
In the end, taxes are unavoidable. However, with the correct set of instruments, they can be controlled and postponed. 'The real value comes from aligning tax strategy with investment strategy,' summarizes Carlos Hernandez.
What is the 401k/Savings Plan offered by Acuity Brands?
The 401k/Savings Plan at Acuity Brands is a retirement savings plan that allows employees to save a portion of their paycheck on a pre-tax or after-tax basis for their future retirement.
How can I enroll in the Acuity Brands 401k/Savings Plan?
Employees can enroll in the Acuity Brands 401k/Savings Plan by completing the online enrollment process through the company's benefits portal or by contacting HR for assistance.
Does Acuity Brands offer a company match for the 401k/Savings Plan?
Yes, Acuity Brands offers a company match for contributions made to the 401k/Savings Plan, which helps employees boost their retirement savings.
What is the vesting schedule for the Acuity Brands 401k/Savings Plan?
The vesting schedule for the Acuity Brands 401k/Savings Plan typically outlines the period an employee must work at the company to fully own the employer's contributions, which can vary based on tenure.
Can I take a loan against my Acuity Brands 401k/Savings Plan?
Yes, Acuity Brands allows employees to take a loan against their 401k/Savings Plan, subject to specific terms and conditions outlined in the plan documents.
What investment options are available in the Acuity Brands 401k/Savings Plan?
The Acuity Brands 401k/Savings Plan offers a variety of investment options, including mutual funds, target date funds, and other asset classes to help employees diversify their portfolios.
How often can I change my contribution amount to the Acuity Brands 401k/Savings Plan?
Employees can change their contribution amount to the Acuity Brands 401k/Savings Plan at any time, typically through the benefits portal or by contacting HR.
What happens to my Acuity Brands 401k/Savings Plan if I leave the company?
If you leave Acuity Brands, you have several options for your 401k/Savings Plan, including rolling it over to another retirement account, cashing it out (subject to taxes and penalties), or leaving it in the plan if eligible.
Is there a minimum contribution requirement for the Acuity Brands 401k/Savings Plan?
Yes, Acuity Brands may have a minimum contribution requirement for the 401k/Savings Plan, which is typically outlined in the plan documents.
Can I contribute to the Acuity Brands 401k/Savings Plan if I am part-time?
Yes, part-time employees at Acuity Brands may be eligible to contribute to the 401k/Savings Plan, depending on the specific eligibility criteria set by the company.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Acuity Brands announced a significant restructuring plan aimed at optimizing its operational efficiency. This involves layoffs of approximately 10% of its workforce, primarily in the manufacturing and administrative sectors. Additionally, the company is revising its pension plan to reduce future liabilities and enhancing its 401(k) match to retain key employees.
For more information you can reach the plan administrator for Acuity Brands at 1170 Peachtree Street NE, Suite 2300 Atlanta, GA 30309; or by calling them at (404) 853-1400.
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