New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Essential Year-End Tax Strategies for A.O. Smith Employees: What You Need to Know Before 2023

Healthcare Provider Update: Healthcare Provider for A.O. Smith A.O. Smith primarily offers healthcare benefits to its employees through a selection of insurance plans, which include both individual and family coverage options. Specific details on the providers or plans may vary based on location and employee level, but many employees utilize major providers like Blue Cross Blue Shield or Aetna for their healthcare needs. Potential Healthcare Cost Increases in 2026 In 2026, A.O. Smith employees may face significant healthcare cost increases, primarily driven by anticipated hikes in Affordable Care Act (ACA) premiums. Reports indicate that some states are expecting increases of over 60%, affecting the insurance landscape as federal subsidizations expire. As many as 22 million marketplace enrollees-constituting about 92% of policyholders-could see their out-of-pocket premiums rise by more than 75%. This drastic increase in healthcare costs is compounded by rising medical expenses and pressure from major insurers, resulting in a challenging financial environment for employees planning their healthcare budgets. Click here to learn more

Here are some things for A.O. Smith employees and retirees to consider as they weigh potential tax moves between now and the end of the year.

1. Defer income to next year
A.O. Smith employees must consider opportunities to defer income to 2023, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rent, and payments for services. As a A.O. Smith employee, doing so may enable you to postpone payment of tax on the income until next year.

2. Accelerate deductions
A.O. Smith employees and retirees should also look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as medical expenses, qualifying interest, and state taxes before the end of the year (instead of paying them in early 2023) could make a difference on your 2022 return.

3. Make deductible charitable contributions
As a A.O. Smith employee, if you itemize deductions on your federal income tax return, you can generally deduct charitable contributions, but the deduction is limited to 50% (currently increased to 60% for cash contributions to public charities), 30%, or 20% of your adjusted gross income (AGI), depending on the type of property you give and the type of organization to which you contribute. (Excess amounts can be carried over for up to five years.)

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4. Bump up withholding to cover a tax shortfall
As a A.O. Smith employee, if it looks as though you will owe federal income tax for the year, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for A.O. Smith employees to request a Form W-4 change and for their employers from A.O. Smith to implement it in time for 2022. The biggest advantage in doing so is that withholding is considered as having been paid evenly throughout the year instead of when the dollars are actually taken from your paycheck. This strategy can be implemented by A.O. Smith employees to make up for low or missing quarterly estimated tax payments.

5. Save more for retirement
Deductible contributions to a traditional IRA and pre-tax contributions to a A.O. Smith-sponsored retirement plan such as a 401(k) can reduce your 2022 taxable income. As a fortune 500 employee, if you haven't already contributed up to the maximum amount allowed, consider doing so. For 2022, A.O. Smith employees can contribute up to $20,500 to a 401(k) plan ($27,000 if you're age 50 or older) and up to $6,000 to traditional and Roth IRAs combined ($7,000 if you're age 50 or older).* The window to make 2022 contributions to a A.O. Smith-sponsored plan generally closes at the end of the year, while you have until April 18, 2023, to make 2022 IRA contributions.

*Roth contributions are not deductible, but Roth-qualified distributions are not taxable.

6. Take the required minimum distributions
If you are a A.O. Smith employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and A.O. Smith-sponsored retirement plans (special rules apply if you're still working and participating in A.O. Smith's retirement plan). You have to make the withdrawals by the date required — the end of the year for most individuals. The penalty for failing to do so is substantial: 50% of the amount that wasn't distributed on time. As a fortune 500 employee, making these distributions in a timely manner is essential as to avoid the late penalty.

7. Weigh year-end investment moves
A.O. Smith employees and retirees shouldn't let tax considerations drive investment decisions. However, it's worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by selling losing positions. As a A.O. Smith employee, any losses over and above the number of your gains can be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce your taxes in future years.

Tags: Financial Planning , Tax , Retirement , 2022

What type of retirement savings plan does A.O. Smith offer to its employees?

A.O. Smith offers a 401(k) retirement savings plan to its employees.

How can employees of A.O. Smith enroll in the 401(k) plan?

Employees of A.O. Smith can enroll in the 401(k) plan through the company’s HR portal during the enrollment period or when they first become eligible.

Does A.O. Smith match contributions to the 401(k) plan?

Yes, A.O. Smith provides a matching contribution to the 401(k) plan, helping employees maximize their retirement savings.

What is the maximum contribution percentage that employees can contribute to the A.O. Smith 401(k) plan?

Employees can contribute up to the IRS annual limit, which is adjusted each year. A.O. Smith encourages employees to check the latest limits.

Are there any fees associated with the A.O. Smith 401(k) plan?

Yes, like most 401(k) plans, the A.O. Smith 401(k) plan may have administrative fees, investment fees, and other related costs. Employees should review the plan documents for specific details.

Can employees take loans against their 401(k) savings at A.O. Smith?

Yes, A.O. Smith allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.

What investment options are available in the A.O. Smith 401(k) plan?

The A.O. Smith 401(k) plan offers a range of investment options, including mutual funds, target-date funds, and other investment vehicles.

When can employees of A.O. Smith start withdrawing from their 401(k) accounts?

Employees can typically start withdrawing from their A.O. Smith 401(k) accounts at age 59½, although there are provisions for hardship withdrawals and loans.

What happens to the 401(k) plan if an employee leaves A.O. Smith?

If an employee leaves A.O. Smith, they can either roll over their 401(k) balance to another qualified plan, cash out, or leave the funds in the A.O. Smith plan if eligible.

Is there a vesting schedule for the A.O. Smith 401(k) plan?

Yes, A.O. Smith has a vesting schedule for employer contributions, which means employees must work for a certain period to fully own those contributions.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

In July 2024, A.O. Smith announced a restructuring plan that includes workforce reductions affecting approximately 5% of its employees globally. This decision follows a period of declining sales and a strategic shift to focus on high-growth markets.

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For more information you can reach the plan administrator for A.O. Smith at 11270 West Park Place, Suite 170 Milwaukee, WI 53224; or by calling them at (414) 359-4000.