Amgen Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: Healthcare Provider for Amgen
Amgen provides healthcare coverage primarily through various employer-sponsored plans that include offerings from national insurers. These plans are designed to support employees and their families, ensuring access to necessary medical services and medications.
Potential Healthcare Cost Increases in 2026
In 2026, Amgen employees and retirees may face a significant surge in healthcare costs due to anticipated rate hikes in the Affordable Care Act (ACA) marketplace. Several states are expecting premium increases of over 60%, largely driven by the expiration of enhanced federal subsidies. As these subsidies fade, combined with rising medical expenses and aggressive pricing from insurers, many individuals could see their out-of-pocket premiums rise by more than 75%. This perfect storm of factors poses a considerable financial challenge for those relying on ACA coverage, necessitating careful planning and consideration of available options.
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'Amgen 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.
'Amgen 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.' Amgen 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. Amgen 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 Amgen 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 Amgen 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 Amgen 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 Amgen 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 Amgen 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 Amgen 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.
Amgen offers a 401(k) plan that allows employees to save for retirement through pre-tax contributions, which can help reduce taxable income.
How can I enroll in Amgen's 401(k) plan?
You can enroll in Amgen's 401(k) plan by completing the enrollment process through the company's benefits portal during your eligibility period.
Does Amgen offer a company match for its 401(k) contributions?
Yes, Amgen provides a company match for employee contributions to the 401(k) plan, which helps enhance your retirement savings.
What is the maximum contribution limit for Amgen's 401(k) plan?
The maximum contribution limit for Amgen's 401(k) plan is determined by IRS regulations, which are updated annually. Employees are encouraged to check the current limits.
Can I change my contribution percentage to Amgen's 401(k) plan?
Yes, you can change your contribution percentage to Amgen's 401(k) plan at any time through the benefits portal.
What investment options are available in Amgen's 401(k) plan?
Amgen's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and company stock, allowing employees to diversify their portfolios.
When can I start withdrawing from my Amgen 401(k) plan?
You can start withdrawing from your Amgen 401(k) plan after reaching the age of 59½, or under certain circumstances such as hardship withdrawals or termination of employment.
Does Amgen provide financial education resources for 401(k) participants?
Yes, Amgen offers financial education resources and tools to help employees make informed decisions about their 401(k) savings and investments.
Is there a vesting schedule for Amgen's 401(k) company match?
Yes, Amgen has a vesting schedule for the company match in the 401(k) plan, which means you must work for the company for a certain period before the match becomes fully yours.
Can I take a loan from my Amgen 401(k) plan?
Yes, Amgen allows employees to take loans from their 401(k) plan under specific conditions, providing a way to access funds while still saving for retirement.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Amgen offers both a traditional Defined Benefit Pension Plan and a 401(k) plan with company match. The pension plan provides a fixed monthly benefit based on years of service and salary. The 401(k) plan includes various investment options and financial planning resources.
In 2024, Amgen announced a significant restructuring that includes layoffs affecting several departments and a reevaluation of their pension plan. The company is also making changes to their 401(k) benefits, including reduced employer contributions and updated vesting schedules.
Amgen issues RSUs to its executives and eligible employees as part of its equity incentive plan. RSUs vest over a period of three years, aligning employees' interests with company performance.
For more information you can reach the plan administrator for Amgen at One Amgen Center Drive Thousand Oaks,, CA 91320; or by calling them at (805) 447-1000.
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