Healthcare Provider Update: For Gannett, the healthcare provider is UnitedHealthcare, which has been affiliated with the company and serves its employees. In 2026, healthcare costs are expected to rise substantially, with many states experiencing dramatic premium increases for Affordable Care Act (ACA) plans. With the potential expiration of enhanced federal premium subsidies, more than 22 million Americans could face out-of-pocket premium hikes exceeding 75%. Contributing factors include escalating medical costs, projected increases in provider reimbursements, and aggressive rate hikes from major insurers, resulting in an overall perfect storm pushing affordability beyond reach for many families. As these factors coalesce, it's crucial for Gannett employees and ACA marketplace enrollees to stay informed and consider their healthcare options carefully for the upcoming year. Click here to learn more
'Gannett employees navigating concentrated stock positions should view strategies like collars as part of a broader wealth and tax planning discussion that requires careful coordination with qualified professionals.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.
'Gannett employees with significant stock holdings can benefit from understanding how thoughtful planning techniques provide both flexibility and time to make informed decisions about future diversification.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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How an options collar can help manage concentrated stock positions without triggering immediate taxes.
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Key considerations for constructive sale treatment under Section 1259.
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Practical examples and alternatives for Gannett employees holding appreciated stock.
By Tyson Mavar, advisor at Wealth Enhancement
The Difficulty of Keeping Valuable Stock
Many Gannett employees hold highly valued company stock, which may have been built up over years of employment or from investments that performed better than expected. Leaving these shares without a hedge exposes them to downside risk if the stock price falls, but selling would create a significant capital gains tax liability.
One method of limiting potential losses without selling outright is an options collar. Even if the stock is not sold, certain hedging techniques can be treated as taxable sales under Section 1259 of the Internal Revenue Code, which governs 'constructive sales.'
The Operation of an Options Collar
A collar strategy combines shares already owned with two option positions:
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Put option: Purchasing a put option gives you the right to sell shares at a set strike price. For example, if you own stock at $100 and buy a $90 put, you can still sell at $90 even if the price falls further.
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Covered call: Selling a call requires selling at a higher strike price. For instance, selling a $120 call limits gains above $120.
When paired, the call premium can offset the put’s cost. This creates a range where downside is limited and upside is capped. Additionally, with careful planning, the collar can often be cost-neutral.
The Use of Collars by Investors
Gannett stockholders and others might use collars in the following cases:
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Concentrated positions: A large portion of wealth tied to one company.
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Market uncertainty: When downside management is needed but selling isn’t desirable.
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Estate and legacy planning: Preserving value while postponing capital gains.
The Problem of Constructive Sales
Section 1259 defines some hedges as constructive sales, including:
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- Short sales of stock you already own.
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- Contracts for future delivery of the stock.
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- Deep in-the-money calls and puts that eliminate both risk and reward.
If the IRS views a collar as removing nearly all economic exposure, it can be treated as a constructive sale, triggering immediate recognition of capital gains.
Collar Design to Steer Clear of Constructive Sales
To reduce the risk of Section 1259 issues, Gannett employees can structure collars with careful attention:
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- Keep strike prices wide enough to allow both risk and reward.
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- Use out-of-the-money calls and puts rather than in-the-money options.
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- Roll collars forward instead of holding outdated positions.
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- Document investment intent with an advisor.
An Example
Suppose you hold $2 million in stock purchased years ago for $200,000. Selling outright could result in over $400,000 in federal taxes, depending on your state.
Instead, you might sell calls at 120% of the stock’s value and purchase puts at 80%. In this design:
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- Losses are limited to 20%.
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- Gains are capped above 120%.
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- The position retains risk and reward, so it generally avoids being classified as a constructive sale.
This approach can provide time to manage sales across multiple tax years or to wait for a more favorable tax environment.
Considerations
Gannett employees considering collars should note:
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Liquidity: Large-cap companies usually have strong options markets.
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Rolling: Positions can be extended as expiration approaches.
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Alternatives: Other hedging tools include donor-advised funds, charitable remainder trusts, gifting strategies, or exchange funds.
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Advisory guidance: Given the complexity of constructive sale rules, consulting tax and legal professionals is critical.
The Bottom Line
Options collars can help Gannett employees preserve the value of appreciated stock while limiting downside and postponing taxable events. This strategy allows time for thoughtful diversification while maintaining both risk and opportunity. However, collars must be carefully designed to reduce the chance of triggering constructive sale treatment under the Internal Revenue Code.
Disclaimer: This material is for educational purposes only. Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes, and potential illiquidity. Investing involves risk, including possible loss of principal. Always consult your tax professional before making decisions, as tax laws are complex and subject to change.
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Sources:
1. United States Congress. 26 U.S. Code §1259 - Constructive Sales Treatment for Appreciated Financial Positions. Cornell Law School, Legal Information Institute, 5 Aug. 1997, amended 4 Oct. 2004. https://www.law.cornell.edu/uscode/text/26/1259.
2. Internal Revenue Service. Revenue Ruling 2003-7, 2003-1 C.B. 363. 2003. https://www.irs.gov/pub/irs-drop/rr-03-7.pdf.
3. Options Industry Council (OIC). Options Strategies Quick Guide. The Options Clearing Corporation, 2021. https://www.optionseducation.org/getattachment/007fe864-029a-490d-8dc1-3b58bd558f64/options-strategies-quick-guide.pdf?lang=en-US
4. Internal Revenue Service. 2024 Instructions for Form 5227, Split-Interest Trust Information Return. 26 Nov. 2024. https://www.irs.gov/pub/irs-pdf/i5227.pdf
How does The Newspaper Guild International Pension Plan ensure that members are informed about their pension benefits, and what steps should an employee take to understand their earned Pension Credits within this Plan?
Member Information on Pension Credits: Members are informed about their pension benefits and earned Pension Credits through an annual statement provided by the Board of Trustees. This statement includes details about years of service, vesting status, and accrued Pension Credits. Members are encouraged to keep their contact information updated to ensure they receive all pertinent information.
In what ways are the contribution rates structured under The Newspaper Guild International Pension Plan, and how do these rates impact the monthly benefits that members receive upon retirement?
Contribution Rates Structure: The pension contributions by employers are structured based on collective bargaining agreements. These contributions are pivotal in determining the monthly benefits members receive upon retirement. The rate of contributions, along with the number of years of service and accumulated Pension Credits, directly influences the calculation of retirement benefits.
Can you elaborate on the different types of pensions offered by The Newspaper Guild International Pension Plan, including the eligibility criteria and the benefits associated with each type?
Types of Pensions Offered: The plan offers several types of pensions: Regular Pension, Early Pension, Disability Pension, and Deferred Pension. Each type has specific eligibility criteria: Regular Pension is available upon reaching Normal Retirement Age, generally age 65. Early Pension can be taken from age 55, provided certain service and Pension Credit conditions are met. Disability Pension is awarded if a member becomes disabled as per the plan's criteria and Social Security Administration’s confirmation. Deferred Pension applies if a member leaves employment after vesting but before qualifying for early or regular pension.
How does The Newspaper Guild International Pension Plan address the calculation of pensions for members who have participated in more than one pension contribution plan, and what specific guidelines govern these calculations?
Multiple Pension Plans Participation: If a member has participated in more than one pension contribution plan, their pensions are calculated by taking into account all the Pension Credits accumulated across different plans. Specific guidelines ensure that the benefits from all plans are integrated correctly to reflect total earnings and contributions.
What implications does the merger of the NewsGuild-CWA Adjustable Pension Plan into The Newspaper Guild International Pension Plan have for current and future pension benefits for employees covered under both plans?
Implications of Plan Mergers: The merger of the NewsGuild-CWA Adjustable Pension Plan into The Newspaper Guild International Pension Plan ensured that no accrued benefits were reduced. All benefits from the merged plan are honored, with provisions made to integrate the benefits and maintain the financial integrity of the merged plan.
How should an employee of The Newspaper Guild International Pension Plan respond if they experience a change in employment status that may affect their pension eligibility and what steps do they need to take to maintain their benefits?
Change in Employment Status: Members experiencing a change in employment status that might affect their pension eligibility should immediately notify the plan administrators. Steps include reviewing the impact on their Pension Credits and adjusting their retirement planning accordingly.
In the event of an employee’s death, what provisions are made under The Newspaper Guild International Pension Plan for survivor benefits, and how can family members navigate the process of claiming these benefits?
Provisions for Survivor Benefits: In case of a member’s death, the plan provides survivor benefits to the spouse or domestic partner. These benefits are structured based on the type of pension the member was receiving or entitled to receive, ensuring ongoing support for the beneficiaries.
How does The Newspaper Guild International Pension Plan define what constitutes "disqualifying employment," and what are the consequences for a member if they engage in such employment before reaching normal retirement age?
Disqualifying Employment Definition: Disqualifying employment under The Newspaper Guild International Pension Plan refers to any job that might affect a member's pension benefits if engaged in before reaching the normal retirement age. Engaging in such employment could potentially suspend or reduce pension benefits.
What resources does The Newspaper Guild International Pension Plan provide for employees seeking assistance with their pension plans, and who specifically should they contact for detailed inquiries regarding their benefits?
Resources for Assistance: Members seeking assistance with their pension plans are encouraged to contact the Board of Trustees directly. The plan’s office provides detailed inquiries and support regarding benefit calculations, eligibility, and other pension-related questions.
How can an employee contact The Newspaper Guild International Pension Plan for further information about their pension benefits, and what specific inquiries should they be prepared to discuss during their interaction with the Office?
Contacting for Further Information: Members can contact The Newspaper Guild International Pension Plan office via provided contact details for further information about their pension benefits. When interacting with the office, members should be prepared to discuss their employment history, Pension Credit details, and any specific questions about their retirement benefits.
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