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

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

Healthcare Provider Update: Stepan provides health insurance through Blue Cross Blue Shield of Illinois, along with dental, vision, and wellness programs 3. As ACA premiums surge, Stepans employer-sponsored plans may offer more predictable costs and better coverage, especially for employees with chronic care needs. Click here to learn more

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

2. Accelerate deductions
Stepan 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 Stepan 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.)

Featured Video

Articles you may find interesting:

4. Bump up withholding to cover a tax shortfall
As a Stepan 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 Stepan employees to request a Form W-4 change and for their employers from Stepan 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 Stepan 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 Stepan-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, Stepan 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 Stepan-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 Stepan employee age 72 or older, you generally must take required minimum distributions (RMDs) from traditional IRAs and Stepan-sponsored retirement plans (special rules apply if you're still working and participating in Stepan'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
Stepan 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 Stepan 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 purpose of the 401(k) plan at Stepan?

The purpose of the 401(k) plan at Stepan is to help employees save for retirement by allowing them to contribute a portion of their salary on a tax-deferred basis.

How can Stepan employees enroll in the 401(k) plan?

Stepan employees can enroll in the 401(k) plan by completing the enrollment form provided by the HR department or through the company’s benefits portal.

Does Stepan offer a company match on 401(k) contributions?

Yes, Stepan offers a company match on 401(k) contributions, which helps employees maximize their retirement savings.

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

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

Can Stepan employees change their contribution percentage at any time?

Yes, Stepan employees can change their contribution percentage at any time, subject to the plan's guidelines.

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

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

When can Stepan employees take a loan against their 401(k) savings?

Stepan employees can take a loan against their 401(k) savings after meeting specific eligibility criteria set forth in the plan documents.

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

If you leave Stepan, you have several options for your 401(k), including rolling it over to an IRA or another employer’s plan, or cashing it out, subject to taxes and penalties.

Does Stepan provide any educational resources about the 401(k) plan?

Yes, Stepan provides educational resources and workshops to help employees understand their 401(k) options and make informed investment decisions.

Are there any fees associated with the Stepan 401(k) plan?

Yes, there may be administrative fees associated with the Stepan 401(k) plan, which are disclosed in the plan documents.