Fiserv Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: Healthcare Provider for Fiserv: Fiserv is engaging in the healthcare sector through its Clover platform, which is set to launch PracticePay in early 2026. This service aims to cater specifically to small and medium-sized healthcare providers, partnering with Rectangle Health to offer tailored payment solutions that comply with healthcare regulations.
Potential Healthcare Cost Increases in 2026: As 2026 approaches, healthcare costs are expected to surge sharply, driven by multiple economic pressures. Insurers anticipate an average increase of 7.5% to 8.5% in individual and group medical costs, attributed to rising medical service expenses, labor shortages, and the potential termination of enhanced federal premium subsidies. Without intervention, many individuals enrolled in ACA plans may face premium hikes exceeding 75%, significantly affecting their out-of-pocket healthcare expenses and access to affordable coverage as we enter this challenging financial landscape.
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'Fiserv 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.
'Fiserv 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.' Fiserv 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. Fiserv 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 Fiserv 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 Fiserv 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 Fiserv 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 Fiserv 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 Fiserv 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 Fiserv 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 primary purpose of Fiserv's 401(k) plan?
The primary purpose of Fiserv's 401(k) plan is to help employees save for retirement by providing a tax-advantaged savings vehicle.
How can Fiserv employees enroll in the 401(k) plan?
Fiserv employees can enroll in the 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.
Does Fiserv offer matching contributions to its 401(k) plan?
Yes, Fiserv offers matching contributions to its 401(k) plan, which helps employees increase their retirement savings.
What types of investment options are available in Fiserv's 401(k) plan?
Fiserv's 401(k) plan typically offers a range of investment options, including mutual funds, target-date funds, and company stock.
What is the vesting schedule for Fiserv's 401(k) matching contributions?
The vesting schedule for Fiserv's 401(k) matching contributions may vary, so employees should refer to the plan documents for specific details.
Can Fiserv employees take loans against their 401(k) savings?
Yes, Fiserv employees may have the option to take loans against their 401(k) savings, subject to the plan's terms and conditions.
What is the minimum contribution percentage for Fiserv employees participating in the 401(k) plan?
The minimum contribution percentage for Fiserv employees is typically set at 1%, but employees are encouraged to contribute more to maximize their savings.
Are there any fees associated with Fiserv's 401(k) plan?
Yes, there may be fees associated with Fiserv's 401(k) plan, including administrative fees and investment management fees, which are disclosed in the plan documents.
How often can Fiserv employees change their contribution amounts?
Fiserv employees can change their contribution amounts at any time, subject to the plan's guidelines.
What happens to Fiserv employees' 401(k) savings if they leave the company?
If Fiserv employees leave the company, they can roll over their 401(k) savings to another retirement account, withdraw the funds, or leave the savings in the Fiserv plan if allowed.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Fiserv offers a comprehensive retirement program for its employees, which includes both a 401(k) plan and a pension plan. The 401(k) plan allows employees to contribute on a pre-tax basis, or on a post-tax basis through the Roth 401(k) feature. Fiserv matches 100% of the first 1% of an employee's contribution, and 50% of the next 4% of eligible compensation, providing a potential match up to 3% (Working at Fiserv, Inc.). This 401(k) plan, named the Fiserv Employee Savings Plan, is administered through Vanguard (Working at Fiserv, Inc.).
In addition to the 401(k), Fiserv also offers a defined benefit pension plan for long-serving employees, depending on their hire date (Working at Fiserv, Inc.). This plan typically includes employees who were part of First Data Corporation before its acquisition by Fiserv. The pension plan's eligibility criteria involve a combination of years of service and age qualification; typically, employees need at least five years of service and must be of retirement age, which is usually defined as 65 (Working at Fiserv, Inc.). However, specific details regarding the pension formula and years of service requirements were not explicitly stated on the documents accessed.
Restructuring and Layoffs: In early 2024, Fiserv announced a significant restructuring plan, which included a workforce reduction affecting approximately 5% of its global employees. This move was part of a broader effort to streamline operations and focus on core business areas amid challenging economic conditions. The decision to reduce the workforce reflects the company's strategy to adapt to shifting market demands and improve operational efficiency.
Fiserv provides stock options and RSUs as part of its compensation package. Fiserv issues stock options under the acronym SO and RSUs under the acronym RSU.
In 2022, 2023, and 2024, Fiserv employees, especially executives and key personnel, are eligible for these benefits. The specifics are detailed in the company's compensation sections of annual reports.
Fiserv Health Benefits Overview
1. Official Fiserv Website:
Health Insurance: Fiserv provides a range of health insurance options, including medical, dental, and vision plans. These options include PPO (Preferred Provider Organization) and HDHP (High Deductible Health Plan) plans.
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): Available for employees to save on out-of-pocket expenses.
Wellness Programs: Includes resources for mental health support, fitness programs, and preventive health services.
2. Glassdoor:
Employee Reviews: Employees appreciate the comprehensive benefits package which includes a range of health insurance plans and wellness incentives. Some have noted that while the benefits are robust, they may come with high deductibles depending on the plan chosen.
3. Indeed:
Health Benefits: Reviews indicate that Fiserv’s health benefits are competitive, offering multiple plan choices with various coverage levels. Employees also mention access to telemedicine services as a plus.
4. LinkedIn:
Benefits Overview: Includes detailed information on Fiserv’s health benefits such as medical, dental, and vision plans. Also highlights their emphasis on work-life balance and employee wellness programs.
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