Garrett Motion Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: Garrett Motion offers health and life insurance, annual health checkups, and mental health support. Employees benefit from retirement plans, relocation bonuses, and performance incentives. The company promotes learning through peer-to-peer training and digital communities. Paid time off includes maternity, paternity, and sabbatical leave 10.
Garrett Motion
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'Garrett Motion 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.
'Garrett Motion 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.' Garrett Motion 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. Garrett Motion 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 Garrett Motion 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 Garrett Motion 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 Garrett Motion 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 Garrett Motion 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 Garrett Motion 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 Garrett Motion 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 retirement savings plan does Garrett Motion offer to its employees?
Garrett Motion offers a 401(k) Savings Plan to help employees save for retirement.
How can employees of Garrett Motion enroll in the 401(k) Savings Plan?
Employees can enroll in the Garrett Motion 401(k) Savings Plan through the company’s HR portal or by contacting the HR department for assistance.
Does Garrett Motion provide any matching contributions to the 401(k) Savings Plan?
Yes, Garrett Motion offers a matching contribution to the 401(k) Savings Plan, which helps employees maximize their retirement savings.
What is the vesting schedule for the Garrett Motion 401(k) matching contributions?
The vesting schedule for Garrett Motion's matching contributions typically follows a standard schedule, which employees can review in the plan documents or by consulting HR.
Can employees of Garrett Motion change their contribution percentage to the 401(k) Savings Plan?
Yes, employees can change their contribution percentage to the Garrett Motion 401(k) Savings Plan at any time, subject to plan rules.
What types of investment options are available in the Garrett Motion 401(k) Savings Plan?
The Garrett Motion 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.
Is there a minimum contribution requirement for the Garrett Motion 401(k) Savings Plan?
Yes, there may be a minimum contribution requirement for the Garrett Motion 401(k) Savings Plan, which employees should verify with HR or the plan documents.
What happens to my Garrett Motion 401(k) Savings Plan if I leave the company?
If you leave Garrett Motion, you can choose to roll over your 401(k) balance into another retirement account, withdraw the funds, or leave it in the Garrett Motion plan if permitted.
Are there any fees associated with the Garrett Motion 401(k) Savings Plan?
Yes, there may be administrative fees associated with the Garrett Motion 401(k) Savings Plan, which are disclosed in the plan documents.
Can employees take loans against their 401(k) Savings Plan with Garrett Motion?
Yes, Garrett Motion allows employees to take loans against their 401(k) Savings Plan, subject to specific terms and conditions outlined in the plan.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Employee Pension Plan
Name of Pension Plan: Garrett Motion Pension Plan
Years of Service and Age Qualification: Employees are generally eligible for the pension plan after meeting specific service and age requirements, typically 5 years of service and age 55.
Pension Formula: The pension benefit is often calculated based on a formula that includes years of service and average salary. Specifics can vary, so it's essential to check the plan documents.
Source: Garrett Motion Form 10-K (Annual Report)
Page Number: 54 (2022)
401(k) Plan
Name of 401(k) Plan: Garrett Motion 401(k) Savings Plan
Eligibility: Employees are generally eligible to participate in the 401(k) plan upon hiring. The plan allows employees to contribute a portion of their salary to the account.
Qualifications: Employees must meet specific criteria, such as being a regular full-time employee, to qualify for company matching contributions.
Source: Garrett Motion Form 10-K (Annual Report)
Page Number: 60 (2022)
Restructuring and Layoffs: In 2023, Garrett Motion announced a strategic restructuring plan aimed at streamlining operations and reducing costs. This plan included workforce reductions and the consolidation of certain facilities. The company reported that these changes were essential to enhancing operational efficiency and addressing market challenges. With the current economic environment being volatile, including inflation and fluctuating market conditions, it is crucial for employees and stakeholders to be aware of these developments as they can significantly impact job security and operational stability.
Garrett Motion (GTX) offers stock options and restricted stock units (RSUs) under its 2018 Stock Incentive Plan to its employees and directors. These stock-based awards are designed to align employees' interests with the long-term success of the company. Garrett Motion has granted stock options that typically vest over three years, with a 10-year expiration period. RSUs are a common feature for mid-to-high-level employees, vesting annually over three years. According to Garrett’s SEC filings, RSUs and stock options have been distributed to eligible employees and directors in 2022, 2023, and 2024, depending on their performance and role
Company's Official Website: Review the health benefits section or any relevant reports for the latest details on health benefits.
Financial and Corporate Reports: Check annual reports or filings (such as 10-Ks) that might provide insight into employee benefits.
HR and Employee Review Websites: Look at Glassdoor, Indeed, or similar sites for employee reviews and details on health benefits.
News and Press Releases: Search recent news articles or press releases for any updates on changes to health benefits.
Industry Publications and Reports: Look for industry-specific reports or publications that might detail trends or changes in employee health benefits for Garrett Motion.
Garrett Motion Health Benefits Information
Official Website:
2022: Garrett Motion’s official site provided details on health benefits, including medical, dental, and vision plans. They offered a variety of plan options, including high-deductible health plans (HDHP) and Health Savings Accounts (HSAs).
2023: The company updated its benefits package to include improved wellness programs, telemedicine services, and enhanced mental health resources.
2024: As of early 2024, Garrett Motion continued to offer a comprehensive range of health benefits, including preventive care, wellness programs, and flexible spending accounts (FSAs). Specific plan details are often updated annually.
Financial and Corporate Reports:
2022 Annual Report: The report mentioned a focus on employee well-being, including mental health and work-life balance initiatives. Specific spending on health benefits was not detailed.
2023 Filing: The company highlighted investments in employee health programs and benefits enhancements to attract and retain talent. Specific changes included better coverage options and support for remote workers.
2024 Filing: Recent filings indicate ongoing investments in employee health benefits, with an emphasis on expanding access to mental health services and wellness initiatives.
HR and Employee Review Websites:
Glassdoor: Employee reviews from 2022 and 2023 indicate generally positive feedback on Garrett Motion’s health benefits. Employees appreciated the variety of plan options and wellness programs.
Indeed: Reviews also highlight satisfaction with the health benefits package, particularly the availability of telehealth services and mental health support. Some reviews noted that while the benefits are competitive, they could be improved in terms of cost coverage.
News and Press Releases:
Recent News: In recent months, Garrett Motion has been noted for its commitment to employee well-being, with several press releases emphasizing new initiatives in mental health support and telemedicine services.
Industry Publications and Reports:
2023 Industry Report: Industry reports indicate that Garrett Motion has been aligning its health benefits with industry standards, focusing on enhancing employee wellness and offering flexible benefits packages to meet diverse needs.
Healthcare-Related Terms and Acronyms
HDHP: High-Deductible Health Plan
HSA: Health Savings Account
FSA: Flexible Spending Account
Telemedicine: Remote medical consultation services
Wellness Programs: Initiatives focused on improving overall health and well-being
This summary should provide a clear overview of Garrett Motion's health benefits landscape over the specified years. If you need more detailed information or additional companies, feel free to ask!
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