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Essential Year-End Tax Strategies for AbbVie Employees: What You Need to Know Before 2023

Here are some things for AbbVie 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
AbbVie 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 AbbVie employee, doing so may enable you to postpone payment of tax on the income until next year.

2. Accelerate deductions
AbbVie 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 AbbVie 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 AbbVie 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 AbbVie employees to request a Form W-4 change and for their employers from AbbVie 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 AbbVie 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 AbbVie-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, AbbVie 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 AbbVie-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 AbbVie employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and AbbVie-sponsored retirement plans (special rules apply if you're still working and participating in AbbVie'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
AbbVie 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 AbbVie 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

How does AbbVie Ltd define "Eligible Employee" as described in the AbbVie Puerto Rico Pension Plan, and what criteria do employees need to meet in order to qualify as eligible participants? Additionally, what exclusions apply, and how might these affect an employee's ability to access retirement benefits through AbbVie Ltd?

Eligibility for AbbVie Ltd Pension Plan: Employees become eligible to participate in the AbbVie Puerto Rico Pension Plan upon reaching the age of 21. Eligibility requires the employee to be treated as such for the purposes of employment taxes and wage withholding. Excluded categories are temporary employees, independent contractors, leased employees, and interns. These exclusions could affect access to retirement benefits since individuals in these categories do not accrue benefits under the plan.

In the context of AbbVie Ltdâ€™s Pension Plan, what are the different retirement options available to employees, and how do these options affect their monthly benefit calculations? Specific attention should be given to the distinctions between normal retirement, early retirement, and deferred benefits, as well as any implications for employees who choose different forms of payment.

Retirement Options and Benefit Calculations: AbbVie offers various retirement options including normal, early, special, and deferred retirement, each affecting the benefit calculations differently. For instance, early retirement allows withdrawal post age 55 given sufficient vesting service, whereas normal retirement is scheduled at age 65. Benefits are calculated based on a combination of final earnings and service years, with adjustments for early or late retirements impacting the monthly benefits.

What role does the AbbVie Divisional Vice President of Total Rewards play in administering the AbbVie Puerto Rico Pension Plan, and what authority do they have in terms of plan changes or benefits administration? It's crucial to understand how this position interacts with other aspects of employee benefits within AbbVie Ltd.

Role of the Divisional Vice President of Total Rewards: This executive oversees the administration of the pension plan, including the implementation of changes or adjustments to benefits. Their role is crucial in ensuring the plan's compliance with governing laws and in addressing the needs and rights of the participants.

As an employee approaching retirement at AbbVie Ltd, what steps should be taken to ensure that all necessary paperwork is submitted accurately and timely to secure retirement benefits? This should include information about how to access benefit estimates and the importance of notifying HRConnect regarding changes in personal circumstances.

Steps for Securing Retirement Benefits: Employees should ensure all necessary paperwork is submitted timely by maintaining up-to-date records with HRConnect, particularly regarding changes in personal circumstances. Accessing benefit estimates and understanding the timeline for paperwork submission are critical steps toward securing designated benefits.

AbbVie Ltd outlines provisions for beneficiaries in the event of an employeeâ€™s death prior to retirement. What benefits are provided to surviving spouses or domestic partners, and what steps must be taken by employees to ensure these benefits are properly designated under the AbbVie Puerto Rico Pension Plan?

Provisions for Beneficiaries: In the event of an employee's death prior to retirement, the plan provides surviving spouses or domestic partners with benefits, which are determined based on the employee’s accrued benefits as of death. Employees must designate these beneficiaries and might need to provide written consent to waive certain beneficiary provisions.

In the event of termination of employment with AbbVie Ltd before retirement eligibility is achieved, what rights do employees have regarding their vested benefits, and how does the number of years of service impact this? This question addresses critical financial planning aspects for employees who may anticipate job changes before retirement.

Rights on Termination Before Retirement Eligibility: Employees with at least five years of vesting service are entitled to a deferred vested benefit, even if employment terminates before retirement age. The number of service years impacts the nature of this benefit.

How can employees at AbbVie Ltd maximize their benefits under the AbbVie Puerto Rico Pension Plan, particularly in relation to the different types of service credited (vesting, benefit, and seniority)? This involves understanding how each type of service affects pension calculations and overall retirement strategy.

Maximizing Benefits: Employees can maximize their pension by understanding how different types of credited services (vesting, benefit, and seniority) influence their pension calculations. Strategic planning regarding the type and timing of retirement can also optimize pension outcomes.

What considerations should AbbVie Ltd employees take into account when determining whether to accept a lump-sum distribution of their retirement benefits? This discussion could include the implications of such decisions on future retirement income and the potential tax consequences that may arise.

Considerations for Lump-Sum Distributions: Choosing a lump-sum distribution involves understanding potential tax implications and the impact on future income. Employees should consider their financial situation and retirement goals when deciding between lump-sum payments and regular pension disbursements.

How does the appeal process work for claims denied under the AbbVie Puerto Rico Pension Plan, and what role does the plan administrator play in this process? Understanding the steps involved can empower employees to effectively navigate any disputes they encounter regarding their retirement benefits.

Appeal Process for Denied Claims: The pension plan outlines a clear appeals process for denied claims, involving a submission of a written appeal to the Plan Administrator. Understanding this process is vital for addressing any disputes regarding benefit entitlements or claim denials effectively.

For employees seeking additional information on their rights and benefits under the AbbVie Puerto Rico Pension Plan, what is the process for contacting AbbVie Ltd's HRConnect? This question highlights the importance of clear communication channels and accessibility to benefits information for all employees.

Contacting HRConnect for Plan Information: Employees seeking information about their rights and benefits under the pension plan should contact AbbVie Ltd's HRConnect. This resource is crucial for obtaining comprehensive benefits information and for navigating the complexities of the pension plan.

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For more information you can reach the plan administrator for AbbVie at 1 North Waukegan Road North Chicago, IL 60064; or by calling them at (847) 932-7900.