GoDaddy Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: GoDaddy provides health insurance coverage to its U.S.-based employees through comprehensive medical, dental, and vision plans. Employees can access preventive care, mental health services, and disability coverage. The company also offers Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), along with generous employer contributions. Family-friendly benefits include paid parental leave, fertility coverage, and adoption assistance. GoDaddy supports wellness through gym discounts, flu shots, and wellness fairs1.
Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average
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'GoDaddy 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.
'GoDaddy 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.' GoDaddy 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. GoDaddy 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 GoDaddy 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 GoDaddy 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 GoDaddy 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 GoDaddy 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 GoDaddy 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 GoDaddy 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.
The GoDaddy 401(k) plan is a retirement savings plan that allows employees to save a portion of their paycheck on a pre-tax or after-tax basis to help prepare for retirement.
How can I enroll in the GoDaddy 401(k) plan?
Employees can enroll in the GoDaddy 401(k) plan through the company's benefits portal during the open enrollment period or after they become eligible.
Does GoDaddy offer a company match for the 401(k) contributions?
Yes, GoDaddy offers a company match for employee contributions to the 401(k) plan, which helps to enhance retirement savings.
What is the eligibility requirement for the GoDaddy 401(k) plan?
Generally, all full-time employees at GoDaddy are eligible to participate in the 401(k) plan after completing a certain period of service, as outlined in the plan documents.
Can I change my contribution percentage to the GoDaddy 401(k) plan at any time?
Yes, employees can change their contribution percentage to the GoDaddy 401(k) plan at any time through the benefits portal.
What investment options are available in the GoDaddy 401(k) plan?
The GoDaddy 401(k) plan offers a variety of investment options, including mutual funds, index funds, and target-date funds, allowing employees to choose based on their risk tolerance.
How often can I review my GoDaddy 401(k) account?
Employees can review their GoDaddy 401(k) account at any time through the online portal, which provides real-time updates on account balances and investment performance.
What happens to my GoDaddy 401(k) plan if I leave the company?
If you leave GoDaddy, you have several options for your 401(k) plan, including rolling it over to another retirement account, cashing it out, or leaving it in the GoDaddy plan if eligible.
Are there any fees associated with the GoDaddy 401(k) plan?
Yes, there may be administrative fees and investment-related fees associated with the GoDaddy 401(k) plan, which are disclosed in the plan documents.
Can I take a loan against my GoDaddy 401(k) plan?
Yes, GoDaddy allows employees to take loans against their 401(k) balance, 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.
Pension Plan Name: GoDaddy does not offer a traditional defined benefit pension plan. Instead, the company provides a 401(k) plan.
Years of Service and Age Qualification: Not applicable, as GoDaddy does not have a defined benefit pension plan.
Pension Formula: Not applicable.
Source Document and Page Number: Information not applicable as GoDaddy does not have a traditional pension plan.
401(k) Plan:
401(k) Plan Name: GoDaddy 401(k) Plan.
Qualification Criteria: Employees are eligible to participate in the 401(k) plan after 30 days of employment. Employees must be at least 21 years old to enroll.
401(k) Plan Details: GoDaddy offers a match contribution of up to 4% of an employee's eligible pay. The plan also includes a range of investment options and automatic enrollment.
GoDaddy announced a significant restructuring plan in early 2024. The company revealed that it would be reducing its workforce by approximately 10% to streamline operations and improve efficiency. This decision was influenced by the need to adapt to the shifting economic landscape, including evolving tax policies and investment challenges. Given the current political environment, such restructuring news is crucial for stakeholders as it reflects broader trends in corporate adjustments to economic pressures.
In addition to layoffs, GoDaddy has made changes to its employee benefits package. The company has reduced some healthcare benefits and adjusted its 401(k) matching contributions. These changes come in response to rising operational costs and a need to align expenses with revenue. The modification in benefits and retirement plans is significant as it highlights how companies are adjusting their compensation structures amidst fluctuating economic conditions and potential future tax impacts.
GoDaddy provides stock options and RSUs as part of its compensation package. GoDaddy grants these equity incentives to employees based on their role and performance. GoDaddy generally issues these as part of long-term incentive plans to attract and retain talent.
Company Website: GoDaddy’s official site for health benefits and employee resources.
Annual Reports: Look into GoDaddy’s annual reports or financial disclosures that might include information on employee benefits.
HR or Benefits Sites: Websites like Glassdoor or Indeed for employee reviews and insights on benefits.
News Outlets: Reliable business news sources for any recent changes or updates to their health benefits.
Industry Reports: Publications or industry reports that might detail benefits practices and comparisons.
1. GoDaddy Official Website
Health Insurance: GoDaddy offers comprehensive health insurance plans, including medical, dental, and vision coverage. The company typically covers a significant portion of the premiums for employees.
Wellness Programs: Includes mental health support, fitness programs, and wellness stipends.
Acronyms: HSA (Health Savings Account), FSA (Flexible Spending Account), EAP (Employee Assistance Program).
2. Glassdoor
Reviews: Employees have reported positive experiences with GoDaddy’s health benefits, highlighting the company's support for mental health and work-life balance. There is also appreciation for the variety of plan options available.
Benefits: Includes medical, dental, and vision insurance. Some employees mention additional perks like gym memberships and wellness incentives.
3. Indeed
Insights: GoDaddy provides a range of health benefits including medical insurance with several plan options. Employees note that GoDaddy also offers a competitive benefits package compared to industry standards.
Updates: Any recent changes or updates might be reflected in employee reviews or company announcements on this site.
4. Business News Outlets
Recent Changes: There have been no major public announcements regarding changes to GoDaddy’s health benefits in 2023 or 2024. However, companies often update benefits annually, so recent changes might be more subtle or internal.
5. Industry Reports
Comparisons: GoDaddy’s benefits are competitive within the tech industry. They are known for offering robust health benefits as part of their overall employee value proposition.
Recent Employee Healthcare News:
2023: GoDaddy expanded its telehealth services, making it easier for employees to access medical consultations remotely.
2024: The company introduced a new wellness program that includes virtual mental health counseling and increased stipends for fitness-related expenses.
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