Hershey Employees: Smarter Ways to Manage Taxes on Appreciated Stock
Healthcare Provider Update: Healthcare Provider for Hershey:
The Hershey Company utilizes a comprehensive employee health plan primarily administered by Aetna. This partnership allows Hershey employees and their families access to a wide range of healthcare services, focusing on preventive care, wellness programs, and comprehensive coverage.
Healthcare Cost Increases for Hershey in 2026:
In 2026, Hershey and its employees may face significant increases in healthcare costs, reflecting broader trends within the healthcare landscape. With anticipated ACA premium hikes, many enrollees could see their out-of-pocket costs surge by over 75% due to the potential expiration of enhanced federal premium subsidies. Factors such as rising medical costs, increased utilization of services, and aggressive rate adjustments from insurers contribute to this impending financial pressure, compelling individuals and families to reassess their healthcare choices and budgeting strategies for the upcoming year.
Click here to learn more
'Hershey 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.
'Hershey 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.
1
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.' Hershey 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. Hershey 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 Hershey 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.
2
This could create a challenge for investors who require liquidity. Additionally, these funds are often exclusively accessible to wealthy, accredited investors—something Hershey 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.
3
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 Hershey 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 Hershey 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 Hershey 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 Hershey 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 Hershey 401(k) plan is a retirement savings plan that allows employees to save for their future by contributing a portion of their salary on a pre-tax or post-tax basis.
How does Hershey match employee contributions to the 401(k) plan?
Hershey offers a matching contribution to the 401(k) plan, typically matching a percentage of employee contributions, up to a certain limit.
When can employees at Hershey enroll in the 401(k) plan?
Employees at Hershey can enroll in the 401(k) plan during their initial onboarding period or during specific open enrollment periods throughout the year.
What investment options are available in Hershey's 401(k) plan?
Hershey's 401(k) plan provides a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to help employees diversify their retirement savings.
Can employees at Hershey take loans against their 401(k) savings?
Yes, Hershey allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.
What is the vesting schedule for Hershey's 401(k) matching contributions?
The vesting schedule for Hershey's 401(k) matching contributions typically follows a graduated schedule, meaning employees earn ownership of the match over a specified period of service.
How can Hershey employees access their 401(k) account information?
Hershey employees can access their 401(k) account information through the company's employee benefits portal or by contacting the plan administrator.
What happens to a Hershey employee's 401(k) if they leave the company?
If a Hershey employee leaves the company, they can choose to roll over their 401(k) balance to another retirement account, cash out, or leave the funds in the Hershey plan if eligible.
Are there any fees associated with Hershey's 401(k) plan?
Yes, there may be fees associated with Hershey's 401(k) plan, such as administrative fees or investment management fees, which are disclosed in the plan documents.
How does Hershey educate employees about the 401(k) plan?
Hershey provides educational resources, workshops, and one-on-one consultations to help employees understand their 401(k) options and make informed decisions.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Hershey Employee Pension Plan:
Name of Plan: Hershey Company Pension Plan.
Pension Formula: Hershey's pension formula typically involves a defined benefit formula based on years of service and final average salary. However, specific details about the formula can be complex and may require accessing detailed plan documents.
Years of Service and Age Qualification: Generally, eligibility for the pension plan requires a certain number of years of service and reaching a specific age. The details can vary depending on the plan's provisions for different employee groups.
Qualification Criteria: Typically, employees must reach a specific age (often 55 or older) and have a minimum number of years of service (such as 5 or 10 years) to qualify for full pension benefits.
Hershey 401(k) Plan:
Name of Plan: Hershey 401(k) Savings Plan.
Qualification for Plan: Employees are usually eligible to participate in the 401(k) plan from their date of hire. Contributions are made through payroll deductions, and Hershey may offer matching contributions based on the employee’s contribution rate.
Contribution Limits: The plan generally follows IRS limits for employee contributions and employer matching contributions.
Hershey announced a series of organizational changes aimed at streamlining operations and improving efficiency. This includes a reduction in workforce as part of a broader restructuring effort. The company stated that these measures are necessary to adapt to changing market conditions and to position itself for future growth. The layoffs and restructuring are a response to the current economic climate, which demands greater agility and cost management. Given the evolving economic and political landscape, staying informed about these changes is crucial for understanding their impact on the company's strategic direction and employee relations.
Stock Options: Hershey offers stock options as part of its employee compensation packages. The options are typically granted to senior executives and key employees based on performance metrics and tenure. (Source: Hershey 2022 Annual Report, p. 58)
RSUs: Restricted Stock Units are granted to employees as a form of long-term incentive. RSUs at Hershey are usually awarded to senior management and high-potential employees, vesting over a period of time. (Source: Hershey 2023 Proxy Statement, p. 34)
Eligibility: Hershey's stock options and RSUs are generally available to senior executives, directors, and sometimes high-performing employees. These incentives are designed to align employee interests with company performance. (Source: Hershey 2024 Form 10-K, p. 45)
Employee Reviews: Employees have noted positive aspects of Hershey’s health benefits, including the comprehensive nature of their health coverage and wellness programs. However, there have been occasional comments about the high costs associated with some of the plans.
Recent Changes: There has been no significant news about major changes to Hershey’s health benefits from employee reviews on Glassdoor.
/General/General%203.png?width=1280&height=853&name=General%203.png)
-2.png?width=300&height=200&name=office-builing-main-lobby%20(52)-2.png)
.webp?width=300&height=200&name=office-builing-main-lobby%20(27).webp)
-2.png)
.webp)