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

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

2. Accelerate deductions
Compass 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 Compass 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 Compass 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 Compass employees to request a Form W-4 change and for their employers from Compass 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 Compass 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 Compass-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, Compass 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 Compass-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 Compass employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and Compass-sponsored retirement plans (special rules apply if you're still working and participating in Compass'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
Compass 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 Compass 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 is the 401(k) plan offered by Compass?

The 401(k) plan at Compass is a retirement savings plan that allows employees to save a portion of their salary on a tax-deferred basis.

How can I enroll in the Compass 401(k) plan?

You can enroll in the Compass 401(k) plan by completing the online enrollment form available on the employee portal.

Does Compass match contributions to the 401(k) plan?

Yes, Compass offers a matching contribution to the 401(k) plan, which helps employees boost their retirement savings.

What is the maximum contribution limit for the Compass 401(k) plan?

The maximum contribution limit for the Compass 401(k) plan is in line with IRS guidelines, which are updated annually.

When can I start contributing to the Compass 401(k) plan?

Employees at Compass can start contributing to the 401(k) plan after completing their eligibility period, typically within the first few months of employment.

What investment options are available in the Compass 401(k) plan?

The Compass 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.

Can I take a loan against my Compass 401(k) plan?

Yes, Compass allows employees to take loans against their 401(k) plan, subject to certain terms and conditions.

What happens to my Compass 401(k) if I leave the company?

If you leave Compass, you have several options for your 401(k), including rolling it over to an IRA or a new employer's plan, or cashing it out.

Is there a vesting schedule for the Compass 401(k) plan?

Yes, Compass has a vesting schedule for employer contributions, which determines how much of the company's contributions you own based on your years of service.

How often can I change my contributions to the Compass 401(k) plan?

Employees can change their contribution amounts to the Compass 401(k) plan at any time, subject to payroll processing deadlines.

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

Compass has announced a significant restructuring plan, including a 10% reduction in workforce and changes to employee benefits. The restructuring aims to streamline operations and improve profitability in a competitive real estate market. These changes are crucial to address due to the current economic uncertainty, which affects investment stability and may impact tax policies.