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Bright Health Group Employees: Smarter Ways to Manage Taxes on Appreciated Stock

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'Bright Health Group 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.

'Bright Health Group 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. ¹

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.' Bright Health Group 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. Bright Health Group 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 Bright Health Group 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. ² This could create a challenge for investors who require liquidity. Additionally, these funds are often exclusively accessible to wealthy, accredited investors—something Bright Health Group 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. ³ 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 Bright Health Group 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 Bright Health Group 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 Bright Health Group 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 Bright Health Group employees who hold highly-appreciated stock.

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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.

Sources:

1. BlackRock Advisor Center. ' Investing for After-Tax Returns ,' 2025.

2. Kiplinger. ' Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings ,' by Robert Waskiewicz. Sep. 11, 2025.

3. Financial Planning Association. ' Tax-Efficient Ways to Diversify Concentrated Stock Positions ,' by Peter Lazaroff. Oct. 2024.

What type of retirement plan does Bright Health Group offer to its employees?

Bright Health Group offers a 401(k) retirement savings plan to its employees.

Does Bright Health Group match employee contributions to the 401(k) plan?

Yes, Bright Health Group provides a matching contribution to employee 401(k) plan contributions, subject to certain limits.

What is the eligibility requirement for employees to participate in Bright Health Group's 401(k) plan?

Employees of Bright Health Group are eligible to participate in the 401(k) plan after completing a specified period of service, typically within the first year of employment.

How can employees at Bright Health Group enroll in the 401(k) plan?

Employees can enroll in the Bright Health Group 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

What investment options are available in Bright Health Group's 401(k) plan?

Bright Health Group offers a variety of investment options within its 401(k) plan, including mutual funds, target-date funds, and other investment vehicles.

Can employees at Bright Health Group take loans against their 401(k) savings?

Yes, Bright Health Group allows employees to take loans against their 401(k) savings, subject to the plan's terms and conditions.

What is the vesting schedule for employer contributions at Bright Health Group?

The vesting schedule for employer contributions at Bright Health Group typically follows a graded vesting schedule, which means employees earn ownership of employer contributions over time.

How often can employees at Bright Health Group change their 401(k) contribution amounts?

Employees at Bright Health Group can change their 401(k) contribution amounts at any time, subject to the plan's guidelines.

Does Bright Health Group provide financial education resources for employees regarding their 401(k) plan?

Yes, Bright Health Group offers financial education resources and workshops to help employees understand their 401(k) plan and make informed investment decisions.

What happens to an employee's 401(k) balance if they leave Bright Health Group?

If an employee leaves Bright Health Group, they have several options for their 401(k) balance, including rolling it over to another retirement account, leaving it in the plan, or cashing it out.

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

Bright Health Group announced a major restructuring plan, which includes significant layoffs and changes to their employee benefits. The company is focusing on streamlining operations to address financial challenges.

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For more information you can reach the plan administrator for Bright Health Group at 219 N 2nd St #401 Minneapolis, MN 55401; or by calling them at +1 833-356-1182.