Here Are Thirteen States That Do Not Tax Windstream Holdings Retirement Income

'Windstream Holdings employees choosing their retirement relocation options should also take into consideration the tax issues of the state where they plan to retire, as this will have a great deal of impact on their retirement finances in the long run,' advises Paul Bergeron, a financial expert at The Retirement Group, a division of Wealth Enhancement Group.

'Selecting a retirement destination is based on more than just climate preferences; tax effects on your retirement benefits are an important factor in consideration,' says Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group, advising Windstream Holdings employees to thoroughly research state tax regulations.

In this article, we will discuss:

Tax Variations by State: Information on how states tax retirement income, including 401(k) distributions and IRA withdrawals, is important for Windstream Holdings employees making plans for their retirement destinations.
State-Specific Tax Exemptions: Emphasizing the states that do not impose taxes on retirement income, with examples of the states that do not have state income tax or exempt pension from tax.
Other Factors: Other financial factors like property and sales taxes and how these affect other aspects of life when choosing a retirement location are discussed.

It is very important for the Windstream Holdings employees who are planning on retiring to realize that the large majority of retirees will have to make the decision of where to spend their retirement years. It is crucial to understand the cost of living in different areas and, depending on where you live, you might have to pay different taxes. It is important to note that states tax retirement income like 401(k) distributions and IRA withdrawals differently. The following information is important for the Windstream Holdings employees who are planning to relocate to a more tax-friendly state:

States without a state income tax:

This way, 401(k) and IRA distributions are considered as taxable income. Does this mean that there are no states in the United States that do not tax income? Fortunately, Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming are included in the list of states that do not tax retirement distributions. New Hampshire is another state that excludes retirement income from taxation; interest and dividends are taxed. Because these types and many others are among the most common types of income in retirement portfolios, those looking to relocate to New Hampshire may want to take note of this. The tax could also be avoided by a distribution. There is a distribution that would qualify as income and therefore would not be taxed by New Hampshire if the income-generating assets were held in a tax-advantaged plan.

States that don’t tax pension income

In addition to traditional income tax withholding states, Windstream Holdings employees and retirees should look at the number of states that don’t touch retirement income. The following four states do not tax retirement income; the following information is pertinent.

Illinois Illinois has a flat state income tax of 4.95% and exempts from taxation nearly all retirement income, including Social Security retirement benefits, pension income, and retirement savings account income. Sales and property taxes are also through the roof, so if you’re retiring from Windstream Holdings and thinking of moving to Illinois, you should know this is one of the nation’s highest taxed states. The Illinois state sales tax rate is 6.25%, and local governments can levy another 5.25% on top of that. The Tax Foundation says this is an average combined rate of 8.73% in this state. The median property tax rate is also quite high at $2,073 per $100,000 of assessed property value per individual.

However, Windstream Holdings retirees are allowed a homestead exemption of up to $5,000 ($8,000 in Cook County and beginning in 2023, in neighboring counties as well). A person must be 65 years of age or older and meet certain other qualifications to qualify for these exemptions. Seniors with a household income of $65,000 or less can have the assessed value of their property frozen. In addition, qualified residents aged 65 or over with a household income of $65,000 or less can defer property tax payments of up to $7,500. Cities, villages, or incorporated towns may also refund property taxes paid by certain senior citizens, 65 years of age or older.

Iowa

A new law that will take effect in 2023 will exclude all individuals over 55 years of age who retire and move to any of the Windstream Holdings companies and relocate to Iowa from paying taxes on their retirement income. As of 2023, the income tax rate in the state of Iowa has 4.4% - 6%. It will decrease until it reaches the minimum of 3.9% in 2026. The median property tax rate in Iowa is $1,501 per $100,000 of the assessed property value.

Like Illinois, property tax exemptions are offered to senior citizens by Iowa. Homeowners and occupants 65 years of age or older are eligible for a property tax credit of up to $1,000. Effective 2022, the citizens who are 70 years of age or older and whose total household income does not exceed 250% of the federal poverty level, the credit shall be computed as follows:

Mississippi

The income tax rates in Mississippi are 0% to 5%, and retirement income is exempt from tax if the plan meets the requirements. This means that early distributions from retirement plans may not be considered retirement income and may be subject to tax and penalty for Windstream Holdings employees. Another point of interest is that the median property tax rate in Mississippi is $753 for every $100,000 of the market value of the home. Also, seniors’ tax exemptions exist in this state as well. Property tax exemption applies to homeowners who are 65 years of age or over and totally disabled, or to homeowners who are 65 years of age or over. Also, there is no estate or inheritance tax in this state.

Pennsylvania

To understand the tax environment in Pennsylvania, Windstream Holdings retirees should know that the state has a flat income tax of 3.07 percent. Retirement income is taxed exempt in Pennsylvania provided that plan requirements are met; however, early withdrawals from retirement plans are treated as normal distributions and may be subject to taxation. Also worthy of mention is the median property tax rate in Pennsylvania is $1,358 per $100,000 of the value of the home. An individual must be 65 or older, or be a widow or widower aged 50 or over to qualify for the Property Tax/Rent Rebate Program, which offers rebates on property taxes or rent paid. In general, the maximum standard rebate is $650, but extra rebates can bring the total to $975 for owners of property with high taxes.

The income limits are as follows: a household must not earn more than $35,000 ($15,000 for renters), but 50% of Social Security and Railroad Retirement benefit payments are not counted toward the eligibility income. Some school districts also provide property tax credits to senior volunteers. There are restrictions on who can claim the credits: age 60 or older; legal residency in Pennsylvania for at least 90 days; ownership of real property within the school district; and participation in the school district’s volunteer program.

Other aspects of retirement income tax

While the above states exclude retirement income from taxation, you may also want to check if other states offer exemptions for Windstream Holdings retirees. Some states treat pension income differently from other retirement distributions, and others exclude military duty pay from taxation. Moreover, some countries tax Social Security benefits while others do not, and most countries do not tax these benefits at all. First, however, Windstream Holdings retirees searching for a permanent residence must know the tax consequences of the area they choose. Other factors like sales and property taxes are also important. When considering the pros and cons, you may decide that paying a higher tax rate is worthwhile if the state offers other advantages.

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Conclusion

This paper has identified 13 states that do not tax retirement income for Windstream Holdings employees, and still many more that provide exemptions. It is important that Windstream Holdings employees check the tax consequences when planning to relocate to avoid surprises. It should also be noted that, while a low tax liability is desirable for a comfortable retirement, it is not the only factor to consider. If you are unsure of which state to retire in, you may want to consult with a professional. To get a free cash flow analysis and speak with a consultant who can help you determine which decision is best for you, contact The Retirement Group.

Sources:

1. Kiplinger Staff. 'Thirteen States With Zero Tax on Retirement Income.' Kiplinger , 2021, www.kiplinger.com/taxes/state-tax/603293/states-with-no-tax-on-retirement-income .

2. SmartAsset Editorial Team. 'States That Do Not Tax Retirement Income.' SmartAsset , 2022, smartasset.com/retirement/states-that-do-not-tax-retirement-income.

3. EZTaxReturn Editorial Team. '10 States That Don't Tax Retirement Income.' EZTaxReturn.com , 2022, www.eztaxreturn.com/blog/states-that-dont-tax-retirement-income/ .

4. Truss Financial Group Analysts. 'Tax Free Retirement: States that Don't Tax Pensions.' Truss Financial Group , 2021, www.trussfinancialgroup.com/tax-free-retirement-states .

5. eTaxReturn Editorial Team. '10 States That Don't Tax Retirement Income.' eTaxReturn.com , 2022, www.eztaxreturn.com/blog/10-states-that-dont-tax-retirement-income/ .

What are the implications of the Windstream Pension Plan for employees who wish to retire early, specifically regarding the eligibility criteria and benefit calculations that will affect their financial planning? How does Windstream address concerns for employees who may be contemplating retirement before reaching the defined Normal Retirement Age of 65?

Early Retirement and Financial Planning: Employees may retire early at age 55 with 20 or more years of service, though the pension benefit will be reduced. The reduction is by 1/180th for the first 60 months and 1/360th for each of the next 60 months that commencement precedes the normal retirement date of age 65. This ensures early retirees can still receive benefits, though at a lower amount than if they had waited until age 65(Windstream_Pension_Plan…).

In what ways does the Windstream Pension Plan protect the interests of employees during a potential plan termination? Specifically, how does the plan ensure that accrued benefits are preserved and what procedures are in place to inform employees about their rights under the Employee Retirement Income Security Act of 1974 (ERISA)?

Plan Termination Protections: In the event of plan termination, Windstream ensures all accrued pensions are fully vested. The plan assets will be used exclusively to meet accrued pension obligations before any surplus may revert to the company. Participants are also protected by the Pension Benefit Guaranty Corporation (PBGC), which guarantees most pension benefits(Windstream_Pension_Plan…).

How does Windstream determine the necessary contributions to the Pension Plan, and what role does an independent actuarial assessment play in this process? Additionally, how does this funding approach impact the overall financial stability of the Windstream Pension Plan and the benefits it promises to its participants?

Contribution Determination and Actuarial Role: Windstream’s contributions to the pension plan are determined by an independent actuary who evaluates the plan annually to recommend adjustments based on experience. This approach ensures that the plan remains financially stable and capable of meeting its promised benefits(Windstream_Pension_Plan…).

What options are available to employees of Windstream regarding the forms of pension benefit payouts upon retirement, and how do these options like the Joint and Survivor Annuities differ in terms of financial implications for both the retiring employee and their spouse?

Benefit Payout Options: Windstream offers several pension payout options, including Joint and 100% Survivor Annuity, Joint and 50% Survivor Annuity, and a 10-Year Certain and Life Annuity. These options differ in terms of the benefit reduction applied to ensure payments continue for the life of the spouse, impacting both the retiree’s and the spouse’s financial planning(Windstream_Pension_Plan…).

How should Windstream employees approach the process of claiming pension benefits, especially if their claims have been denied? What recourse is available for employees who are facing issues with their pension claim and wish to understand their rights and the appeal process?

Claiming Pension Benefits and Denied Claims: If an employee's pension claim is denied, they will receive a written notice explaining the reasons for the denial and the specific plan provisions involved. Employees may appeal the decision within 60 days, and the appeal process must be completed within 60 days of the request, with the right to file a civil lawsuit if necessary(Windstream_Pension_Plan…).

Given the frozen status of the Windstream Pension Plan, what should employees understand about their service years and how these years contribute to their pension benefits? How does Windstream communicate these rules to ensure clarity among its employees?

Service Years and Frozen Status: Since the Windstream Pension Plan is frozen, no additional benefits accrue after December 31, 2007. However, employees continue to earn years of service, which count toward eligibility for early retirement and vesting. Windstream provides clear communication through its summary plan description and resources to ensure employees understand these rules(Windstream_Pension_Plan…).

What strategies can Windstream employees employ to maximize their pension benefits and ensure they are making informed decisions about their retirement? How does Windstream support its employees in accessing the necessary resources and information to facilitate effective retirement planning?

Maximizing Pension Benefits: Employees are encouraged to consider their timing of retirement carefully, as delaying retirement closer to the normal retirement age of 65 reduces benefit reductions. Windstream supports retirement planning through its pension resources and access to Merrill Service Representatives who can assist with planning tools(Windstream_Pension_Plan…).

How does Windstream ensure that employees are aware of their obligations under the plan regarding the filing of claims and maintaining updated personal information? What measures does the company take to keep communication channels open for any inquiries or updates employees might need?

Maintaining Updated Information: Windstream emphasizes the importance of keeping personal information up to date, including changes to contact information. Employees are responsible for filing claims in a timely manner, and failure to do so may result in delays or forfeiture of benefits(Windstream_Pension_Plan…).

In the event of the death of a vested Windstream employee, what benefits are guaranteed to eligible spouses under the plan, and how do survivors initiate the process for claiming these benefits? What steps should surviving spouses take to ensure they receive the necessary support and information from Windstream?

Survivor Benefits and Claim Process: In the event of the death of a vested employee, the spouse is entitled to receive a pre-retirement survivor annuity, which may start on or after the employee’s earliest retirement age. The spouse must contact Windstream to initiate the claim process and may receive a lump sum if the benefit’s present value is below certain thresholds(Windstream_Pension_Plan…).

How can Windstream employees reach out to the companyâ€™s Benefits Committee or Plan Administrator for detailed inquiries about their pension benefits? What contact methods are available, and what information should employees prepare to facilitate effective communication regarding their pension inquiries? These questions will help employees navigate the complexities of the Windstream Pension Plan and ensure they are well-informed as they approach retirement.

Reaching the Benefits Committee: Windstream employees can contact the Benefits Committee or Plan Administrator at Windstream Services, LLC in Little Rock, Arkansas, or via the Merrill Service Center at 1-800-228-4015. Employees should have relevant information, such as personal and employment details, ready to facilitate efficient communication(Windstream_Pension_Plan…).