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

2022 Year End Tax Planning Guide For Arconic Employees

Healthcare Provider Update: Healthcare Provider for Arconic Arconic, a leading provider of aluminum and aerospace products, collaborates with various insurance companies to offer healthcare benefits to its employees. The primary healthcare providers that partner with Arconic vary by location and include well-known insurers like UnitedHealthcare, Aetna, and Blue Cross Blue Shield, among others. Healthcare Cost Increases in 2026 In 2026, healthcare costs are expected to rise significantly, impacting employers and employees alike, including those at Arconic. The projected average increase in health benefit costs could reach nearly 8.5%, attributed to a perfect storm of higher medical expenses and the potential expiration of enhanced federal premium subsidies from the Affordable Care Act (ACA). Many employers are responding by considering changes to plan designs that shift more costs to employees. This could lead to out-of-pocket premium increases that may exceed 75% for a large portion of the workforce, making it critical for companies like Arconic to strategize their healthcare offerings effectively to mitigate financial impacts on their employees. Click here to learn more

As we approach the end of the year for Arconic employees, it is important that they optimize their tax planning, from changing their paycheck withholdings to maximizing their retirement account contributions, and consulting with a professional can help with these strategies. According to Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group, 'It's crucial that employees of Arconic companies complete their year-end tasks, such as modifying payroll deductions and maximizing IRAs, and seek professional guidance to optimize these strategies.' As suggested by Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group,

“Arconic employees should take advantage of year-end strategies to minimize their taxable income and consult with an advisor to make sure these actions are in line with their future financial plans.”

Some of the topics included in the article:

1. Paycheck withholdings to avoid tax bill or refund surprises.

2. Ways to decrease your taxable income through retirement savings.

3. Taking required minimum distributions (RMDs) from your retirement accounts if you are 72 or older.

Suggesting to our Arconic clients that they consider preparing for the upcoming 2023 tax season by taking advantage of the following year-end tax planning strategies. I want to make sure my clients from Arconic companies take care of these tips by December 31, 2022, and find out if they can in fact lower their tax burden in the spring.

Check your paycheck withholdings

First of all, we recommend our Arconic clients to review their paycheck withholdings. It's still important for our Arconic clients to understand that an incorrect W-4 form can lead to either a refund or a tax bill at the end of the year. In 2020, the IRS removed the withholding allowances and allowed employees to specify the amount they want to increase or decrease their federal tax withholding directly. We recommend that our Arconic clients use the IRS Tax Withholding Estimator to check whether they are paying the correct amount of tax or not and how much refund they can expect. Take action: For those of our Arconic clients who need to make changes, please submit a new Form W-4 to your workplace indicating the amount of withholding (or withholding) indicated by the Estimator.

Tip:

This is as good a time as any for our Arconic clients to ensure that their state income tax withholding information (if any) is up to date.

Maximize your retirement account contributions

Next, we suggest our Arconic clients to maximize their retirement account contributions. Tax-advantaged retirement accounts like traditional IRA or 401(k) plan are funded with pre-tax amounts and compound over the years. That is a great way of investing in your future. They are also helpful at tax time, since any contributions you make to these plans lower your taxable income.

For the current tax year, the maximum allowable 401(k) contributions are the following: $20,500 for ages 49 and below $27,000 for ages 50 and above (including $6,500 catch-up contribution) For the current tax year, the maximum allowable IRA contributions are as follows: $6,000 for ages 49 and below $7,000 for ages 50 and above (including $1,000 catch-up contribution) For any Arconic clients who have an HSA (health savings account), try to contribute as much as you can to that account (the current limits are $3,650 for individuals, $7,300 for families and an additional $1,000 for individuals 55 years and older).

Take action:

For our Arconic clients who cannot make the maximum contribution to their 401(k), try to contribute the amount that Arconic is willing to match. All 401(k) contributions have to be made by December 31 of every year. But, you can make contributions to IRAs and HSAs until the tax filing date in April 2023, a few years from now.

Take any RMDs from your traditional retirement accounts (if you are 72 or older)

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Arconic-sponsored retirement plans, traditional IRAs, SEP, and SIMPLE IRAs all require RMDs by April 1st of the following year, once you've turned 72. From then on, annual withdrawals must be made by December 31 to prevent a penalty.* RMDs are considered taxable income. If you do not take the RMD, you will face a 50 percent excise tax on the amount you should have withdrawn based on your age, life expectancy, and beginning-of-year account balance.

Take action:

Take your RMD by December 31. Your first withdrawal must be taken on or before April 1 of the following year once you turn 72 to avoid penalties. For those of our Arconic clients who do not require the cash flow and do not wish to increase their taxable income, you may wish to consider a Qualified Charitable Distribution (QCD) from your qualified account to a public charity. However, these Arconic clients will not be able to claim the charitable contribution itemized deduction. QCDs are limited to $100,000 per year. Unlike the rules for RMDs, QCD gifts are allowed as early as age 70 1/2 if you are philanthropic.

Explore Roth IRA conversion

Even though one can open and contribute to a Roth IRA depending on the income level, we would like to remind the clients of Arconic that they can transfer some or all of the assets from a traditional IRA or workplace savings plan (e.g., 401(k)) to a Roth IRA. Roth IRAs can be very helpful to your retirement portfolio; traditional IRAs are taxed at the time of withdrawal in retirement, whereas Roth IRAs are not. This can help you have more control over your cash flow and your future tax planning. An exchange of assets from a qualified account such as 401(k) or traditional IRA to a Roth IRA is classified as a taxable event in the conversion year. The pre-tax amounts converted to the Roth IRA, and all the earnings of the pre-tax amounts, are included in the gross income of the taxpayer and are taxed as ordinary income.

Take action: We propose that these Arconic clients seek the opinion of their tax consultant or financial advisor to establish whether a Roth conversion is feasible for them. The Arconic clients who decide to convert their accounts should try to minimize the tax consequences. A strategy is to convert amounts only to the level that you stay in your current tax bracket. You can do Roth IRA conversions over a period of years to control the tax consequences.

Use any remaining balance in your flexible spending account (FSA) to spend it.

Flexible spending arrangements are basically the savings plans for the out-of-pocket expenses on healthcare. An FSA is a pre-tax differential to your medical expenses, so you pay less in taxes. You can deduct this loss against capital gains elsewhere in your portfolio, which means that the capital gains tax you owe is reduced. The idea of the tax-loss harvesting is to possibly shift the income taxes to the future, preferably when you are not working at Arconic and thus in a lower tax bracket. This way, your portfolio will be able to grow and compound faster than if you had to take the money from it to pay the taxes on its gains.

Take action:

Tax-loss harvesting implies that one must monitor tax loss across a portfolio and the market movements because the opportunity to take tax-loss harvesting can be at any time. These Arconic clients should seek the help of a financial advisor who will assist them in identifying the losses that can be used to offset gains. *Note: Tax-loss harvesting does not apply to tax-advantaged accounts including traditional, Roth and SEP IRAs, 401(k)s and 529 plans.

Bunching your itemized deductions

Certain expenses, such as the following, can be classified as itemized deductions: Medical and dental expenses. Deductible taxes. Qualified mortgage interest, including points for buyers. Interest on investment income. Interest on investment income. Charitable contributions. Casualty, disaster, and theft losses. In order to itemize, your expenses in each category must be higher than a certain percentage of your adjusted gross income (AGI). For instance, let's assume that you want to itemize your medical expenses. For the current tax year, the threshold for itemizing medical expenses is 7.5% of your adjusted gross income. If the medical expenses are 5% of your AGI, then it will not be beneficial to itemize.

Bunching is a way to reach that minimum threshold. In this example, you could delay 2.5% of your expenses to the following year. Thus, you will be more likely to cross the minimum 7.5% of AGI that next tax season which you will be able to itemize. Take action: For any Arconic clients who have been waiting on certain medical and dental expenses or charitable contributions, you might want to group these expenses to take the most advantage of itemizing the deductions.

Use any remaining balance in your flexible spending account (FSA)

FSAs are basically bank accounts for out-of-pocket healthcare costs. An FSA is the amount of money you set aside from your salary for medical expenses before you pay taxes on it. When you inform Arconic how much of each paycheck you want to set aside for your FSA, you should know that any balance remaining in the account on December 31, 2022, will be taxed, and you will also be unable to access the money unless Arconic permits a certain amount to be carried over to the following year.

Take action:

We propose that our Arconic clients make sure to schedule any last-minute check-ups and eye exams by December 31, 2022. Get prescription drugs for you and your family. For those of our Arconic clients who have a balance, try to purchase items allowed under FSA (e.g., contact lenses, glasses, bandages).

Sources:

1. Fidelity Investments. 'Tax-Savvy Withdrawals in Retirement.' Fidelity . www.fidelity.com/viewpoints/retirement/tax-savvy-withdrawals . Accessed 15 Feb. 2025.

2. Adams, Hayden. '5-Step Tax-Smart Retirement Income Plan.' Charles Schwab , 5 Aug. 2024, www.schwab.com/learn/story/5-step-tax-smart-retirement-income-plan . Accessed 15 Feb. 2025.

3. Weltman, Barbara. '5 Tax Planning Strategies for Your Retirement Income.' Investopedia , 23 Sept. 2024, www.investopedia.com/retirement/tax-strategies-your-retirement-income . Accessed 15 Feb. 2025.

4. Vanguard. 'Tax-Efficient Retirement Strategy.' Vanguard , www.investor.vanguard.com/advice/tax-efficient-retirement-strategy . Accessed 15 Feb. 2025.

5. Ameriprise Financial. 'Tax Planning for Retirement.' Ameriprise Financial , www.ameriprise.com/financial-goals-priorities/taxes/how-to-minimize-taxes . Accessed 15 Feb. 2025.

What retirement benefits and options are available to employees of Arconic Corporation under the Arconic Corp. Pension Plan A, and how do these benefits change based on factors such as age, service length, and retirement category? Employees of Arconic Corporation should understand their eligibility requirements for normal retirement, early retirement, and disability benefits as outlined in the company's pension plan documentation.

The Arconic Corp. Pension Plan A provides retirement benefits based on a formula that considers average earnings and service length, with normal retirement eligibility at age 65 and at least five years of service. Early retirement is available at age 55 with 10 years of service, with benefits reduced based on actuarial assumptions. Disability benefits are available after 10 years of service, and preretirement death benefits offer 50% of accrued benefits to surviving spouses(Arconic Corporation_ Ja…).

How does the frozen state of benefits and service accruals impact current and future retirees at Arconic Corporation? Employees should evaluate how the freeze, effective April 1, 2018, affects their retirement planning and what measures they can take based on their individual circumstances to optimize their retirement benefits.

The frozen state of benefits and service accruals, effective April 1, 2018, means no new service credits or compensation increases are factored into pension calculations for current employees. This freeze affects retirement planning as employees must now rely on frozen benefits and other savings plans to meet retirement needs. It’s important for employees to reassess their financial goals and consider additional investments to optimize retirement benefits(Arconic Corporation_ Ja…).

In what ways can Arconic Corporation employees ensure they meet the requirements for spousal benefits outlined in the pension plan, especially regarding preretirement and postretirement scenarios? Understanding the specifics of eligibility and benefits, such as the surviving spouse benefit calculations, is crucial for employees planning for retirement.

To ensure eligibility for spousal benefits, employees need to meet certain requirements. Preretirement surviving spouse benefits require at least five years of service, and postretirement spousal benefits reduce the participant’s monthly benefit by 5%, with 50% of the reduced amount paid to the spouse if the participant dies first. Employees should understand these provisions to plan for their family’s financial security in retirement(Arconic Corporation_ Ja…).

What are the implications of the actuarial assumptions used by Arconic Corporation in valuing its pension obligations, and how do these assumptions affect the funding of the retirement plan? Arconic Corporation employees should examine how changes in interest rates and mortality tables influence the company's ability to meet its pension obligations.

Actuarial assumptions used in Arconic Corp.’s pension valuations, such as interest rates and mortality tables, directly impact the funding of retirement plans. Changes in these assumptions can affect the pension plan’s obligations and the amount of required contributions, making it important for employees to understand how these factors influence the stability and sufficiency of their retirement benefits(Arconic Corporation_ Ja…).

Can you explain the process by which Arconic Corporation employees can appeal decisions related to their pension benefits, and what support does the company provide during this process? Understanding the proper channels for appeals and the types of documentation required can be vital for employees facing issues with their pension benefits.

Employees can appeal pension benefit decisions through Arconic Corporation’s formal process, which includes submitting an appeal with supporting documentation. The company provides guidelines on what documentation is required, and employees should follow these closely to ensure their case is reviewed thoroughly. The support provided can include detailed responses to clarify benefit calculations and decisions(Arconic Corporation_ Ja…).

What resources are available to Arconic Corporation employees to help them make informed decisions about their retirement benefits, and how can they access these resources efficiently? Employees should know where to find comprehensive materials and support services concerning their retirement plans.

Arconic Corporation offers various resources to assist employees in making informed decisions about their retirement benefits. Employees can access comprehensive plan documents, financial planning tools, and counseling services through the company’s HR department and retirement plan administrators to ensure they fully understand their options(Arconic Corporation_ Ja…).

How does the Arconic Corporation define "average earnings" for calculating retirement benefits, and what methodologies are in place to ensure accuracy in these calculations? Understanding the basis for average earnings will allow employees to better project their pension benefits and prepare for retirement.

Average earnings, used in calculating retirement benefits, are defined as the average of the five highest consecutive calendar years of compensation within the last ten years for most participants. For certain participants, different rules apply based on service and plan conditions. Employees can review their earnings history to ensure accurate calculations and projections for retirement planning(Arconic Corporation_ Ja…).

What criteria does Arconic Corporation use to determine eligibility for deferred vested benefits, and how can employees maximize their advantages in this area? Employees need to be aware of the vesting schedule and how to plan for potential career transitions while maintaining their benefits.

Eligibility for deferred vested benefits in Arconic Corporation’s plan requires five years of service, and benefits can commence as early as age 55, with reductions based on actuarial calculations. Employees should plan career transitions carefully to maximize their vested benefits, especially when considering leaving the company before retirement(Arconic Corporation_ Ja…).

How can Arconic Corporation employees prepare for the potential tax implications of their pension benefits upon retirement, especially in light of IRS regulations for 2024? Being informed about tax strategies related to retirement income can significantly enhance retirees' financial wellbeing.

Employees preparing for retirement should understand the tax implications of pension benefits, particularly in light of IRS regulations for 2024. Strategies such as tax deferral and proper timing of distributions can help minimize the tax burden on retirement income, significantly enhancing financial outcomes(Arconic Corporation_ Ja…).

What contact methods does Arconic Corporation provide for employees wishing to learn more about their pension plan details, and how can employees best utilize these methods to get their queries resolved? Understanding the effective ways to communicate with the company for assistance is key for employees navigating their retirement benefits.

Arconic Corporation provides multiple contact methods for pension-related inquiries, including direct access to HR representatives and pension plan administrators. Employees are encouraged to utilize these resources effectively by preparing questions in advance and keeping detailed records of their communications for follow-up and clarity(Arconic Corporation_ Ja…).

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

Arconic has announced a major restructuring plan that includes significant layoffs across its North American facilities. The restructuring is aimed at streamlining operations and reducing costs amid ongoing economic uncertainties. Additionally, Arconic is revising its pension and 401(k) benefits in response to shifting market conditions and regulatory changes.