Genesco Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: For Genesco, the healthcare provider is primarily through Aetna, which is part of CVS Health and provides a range of health insurance plans and services tailored to meet the needs of Genesco employees and their families.
In 2026, the healthcare landscape could see significant challenges for Genesco due to anticipated insurance premium hikes driven by multiple factors. With the potential expiration of enhanced federal subsidies for Affordable Care Act (ACA) plans, over 22 million Americans could face out-of-pocket premium increases of more than 75%. In addition, rising medical costs, including hospital and prescription drug prices, are expected to further burden employees, potentially leading Genesco to reconsider its benefits strategy, such as shifting more costs onto workers to mitigate rising expenditures. These cumulative factors suggest a critical need for strategic planning in navigating the financial impact of healthcare in the coming year.
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'Genesco 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.
'Genesco 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.' Genesco 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. Genesco 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 Genesco 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 Genesco 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 Genesco 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 Genesco 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 Genesco 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 Genesco 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 Genesco's 401(k) Savings Plan?
The primary purpose of Genesco's 401(k) Savings Plan is to help employees save for retirement by providing a tax-advantaged way to set aside money.
How can Genesco employees enroll in the 401(k) Savings Plan?
Genesco employees can enroll in the 401(k) Savings Plan by completing the enrollment process through the company's designated benefits portal.
Does Genesco offer a company match for contributions made to the 401(k) Savings Plan?
Yes, Genesco offers a company match for employee contributions to the 401(k) Savings Plan, which helps enhance retirement savings.
What types of investment options are available in Genesco's 401(k) Savings Plan?
Genesco's 401(k) Savings Plan typically includes a variety of investment options, such as mutual funds, target-date funds, and other investment vehicles.
Can Genesco employees change their contribution percentage to the 401(k) Savings Plan?
Yes, Genesco employees can change their contribution percentage to the 401(k) Savings Plan at any time, subject to certain guidelines.
What is the minimum age requirement for Genesco employees to participate in the 401(k) Savings Plan?
Genesco employees must be at least 21 years old to participate in the 401(k) Savings Plan.
Are there any fees associated with Genesco's 401(k) Savings Plan?
Yes, there may be administrative fees and investment fees associated with Genesco's 401(k) Savings Plan, which are disclosed in the plan documents.
How often can Genesco employees access their 401(k) account statements?
Genesco employees can access their 401(k) account statements quarterly through the benefits portal.
What happens to Genesco employees' 401(k) savings if they leave the company?
If Genesco employees leave the company, they can roll over their 401(k) savings into another qualified retirement account or withdraw the funds, subject to tax implications.
Does Genesco allow for loans against the 401(k) Savings Plan?
Yes, Genesco allows employees to take loans against their 401(k) Savings Plan balance, subject to specific terms and conditions.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Genesco offers its employees both a 401(k) plan and a pension plan to support their financial future. The company provides a matching contribution for the 401(k), with eligible employees receiving a match of $1 for every $1 contributed up to 3%, and an additional $0.50 for every $1 contributed on the next 2% of salary. This creates a significant incentive for employees to maximize their savings within the plan. The company offers several investment options for employees to allocate their funds.
In terms of the pension plan, the Genesco Master Plan has been structured to provide long-term benefits for employees who meet specific age and service requirements. Eligibility typically involves full-time employees who have completed a certain number of years of service, though exact details of the formula and qualifying criteria may vary depending on the employee's role and hire date
Restructuring and Layoffs: In early 2024, Genesco announced a significant restructuring plan involving the closure of several retail locations and a reduction of their workforce by approximately 10%. This move is part of their strategy to streamline operations and improve financial performance amidst a challenging retail environment.
Genesco provides stock options and RSUs primarily to its executives and key employees. The stock options are granted with an exercise price equal to the market price on the grant date, while RSUs vest over four years. Genesco's RSUs and stock options are designed to reward long-term performance and retention.
Benefits Overview: Genesco’s official website provides an overview of their employee benefits, including healthcare coverage. Check the company’s careers or benefits section for detailed information on health plans, coverage options, and employee resources.
Healthcare Terms: Look for specific terms like PPO (Preferred Provider Organization), HMO (Health Maintenance Organization), FSA (Flexible Spending Account), and HRA (Health Reimbursement Account).
Glassdoor
Employee Reviews: Employees often share insights about their healthcare benefits on Glassdoor. Look for reviews mentioning health insurance plans, deductibles, and employee satisfaction with the benefits package.
Healthcare News: Check for any recent changes or updates in the benefits package as mentioned by current or former employees.
Indeed
Company Reviews: Indeed provides reviews from employees that might include information on health benefits. Look for specific mentions of health insurance options, provider networks, and employee feedback.
Benefits Information: Sometimes, benefits information is summarized in company reviews or Q&A sections.
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