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New Retirement Contribution Limits for Southern California Edison employees in 2023

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Healthcare Provider Update: Healthcare Provider for Southern California Edison: Southern California Edison (SCE) primarily utilizes Blue Shield of California as its healthcare provider for employees. This partnership enables the company to offer a variety of health insurance options to its workforce, including comprehensive coverage options tailored to meet the diverse needs of its employees. Potential Healthcare Cost Increases in 2026: As the healthcare landscape shifts, Southern California Edison employees may see a significant impact on healthcare costs in 2026. With projected record increases in insurance premiums-some states reporting hikes exceeding 60%-combined with the potential expiration of enhanced federal subsidies, many employees could face out-of-pocket premium spikes exceeding 75%. Factors contributing to this trend include rising medical costs and aggressive rate hikes from major insurers, which underline the importance of strategic planning for healthcare expenses as retirement approaches. Adapting to these changes is essential for maintaining financial stability and ensuring access to necessary healthcare services. Click here to learn more

'The new 2023 retirement contribution limits present Southern California Edison employees with a good prospect to improve their financial position by making the most of tax-deferred investments because this practice helps them build up their retirement funds.' Consulting with Tyson Mavar , a representative of The Retirement Group, a division of Wealth Enhancement Group,  reveals that “

'T he 2023 contribution limits present Southern California Edison employees with a chance to improve their retirement savings so that they can enhance their financial security just before they retire.” Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement Group, says, 'The revised contribution limits in 2023 are a chance for Southern California Edison employees to increase their retirement contributions and, therefore, improve their financial security near the time of their retirement.'

In this article, we will discuss:

1. Some of these cost-of-living adjustments have risen to nearly historical levels due to persistently high inflation and financial instability in the recent past.

2. Keep in mind that this post is intended to provide information only and therefore you should talk to an accounting or tax advisor before modifying your 2023 tax plan.

3. You can also contact your financial advisor to see if he or she can offer information about the changes coming your way.

Last Update:

This blog post was updated to include further guidance on the new year's implications for Southern California Edison employees.

Individual Retirement Accounts (IRAs) Beginning in 2023, traditional IRAs for Southern California Edison workers will allow a maximum contribution of $6,500, which is $500 more than the previous year. The amount of catch-up contributions made by people over fifty remains at $1,000 which makes the total contribution limit $7,500. Individuals must withdraw funds from their Traditional IRA accounts no later than their 73rd birthday because withdrawals are taxed as ordinary income and withdrawals before age 59½ may attract a 10% federal income tax penalty.

Roth IRAs Due to the phase-out inco:me range increased by $9,000, Roth IRA contributions for Southern California Edison employees will phase out for single filers and heads of household between $138,000 and $153,000, and for married couples filing jointly up to $228,000. The phase-out range for married individuals filing separately stays at $0 – $10,000. For Southern California Edison employees to be eligible for tax-free and penalty-free withdrawals of earnings from Roth 401(k) distributions, the plans must have been held for at least five years and the participant must be age 59½ or older; other exceptions include the death of the plan owner.

Workplace Retirement Accounts The 2023 allowance for Southern California Edison employees who participate in 401(k), 403(b), 457 plans, and similar accounts will be $22,500, which is $2,000 more than the previous year. At age 50 participants can contribute an extra $7,500 so their contribution limit becomes $30,000. In most cases, you are obligated to begin taking minimum distributions from your 401(k) or other defined-contribution plans at age 73. Withdrawals are taxed as ordinary income and, if withdrawn prior to age 59½, may incur a 10% federal income tax penalty.

SIMPLE Accounts The limit on contributions to this incentive match plan for Southern California Edison employees will be $15,500 in 2023, after a $1,500 increase. The following are the reasons why you can’t withdraw money from your SIMPLE account: Just like a traditional IRA, you must start receiving your SIMPLE account distribution at age 73. Withdrawals are taxed as ordinary income and, if withdrawn prior to age 59½, may incur a 10% federal income tax penalty.

Important Note:

This post is meant to be informative only and therefore you should seek advice from a tax or accounting professional before you modify your 2018 tax plan.

Stripped Fact:

Here is some new information for employees of Southern California Edison companies in 2023: The annual limit on Health Savings Account (HSA) contributions has risen for the first time. The IRS has raised the HSA contribution limit for people with high-deductible health plans covering only themselves to $3,700 from $3,650 in the previous year. The HSA contribution limit for people with family coverage plans will now be $7,400 which is $100 more. Because of these higher contribution limits, Southern California Edison employees can save more in an HSA in order to fund future healthcare expenses and do so in a way that is taxed far less aggressively, which will serve as a big help in retirement. (Source: IRS.gov, Revenue Procedure 2022-48, November 2022)

Stripped Analogy:

Your retirement savings should be thought of as a perfectly calculated recipe that if properly followed will result in a happy and wealthy future. Just as a good chef will have to put more of this or that into the dish to make it taste better, retirement contributions for Southern California Edison employees also need to be optimized for the best financial result. The 2023 retirement contribution limits are the special ingredient that will make your retirement plan taste better. Just as salt adds flavor to food, then you will be able to put more money into your retirement accounts. Just as it helps to bring out the flavor of a dish, it will be to your benefit to contribute to your retirement accounts up to the new limits. So, use these limits as the key to your retirement recipe and through their help, make sure that you can enjoy your golden years to the fullest.

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Sources:

1. Internal Revenue Service.   'Retirement Topics - IRA Contribution Limits.'  IRS, July 2023,  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits .

2. Internal Revenue Service.   'Publication 969 (2024), Health Savings Accounts and Other Tax-Favored Health Plans.'  IRS, January 2024,  https://www.irs.gov/publications/p969 .

3. Internal Revenue Service.   'Retirement Topics - 401(k) and Profit-Sharing Plan Contribution Limits.'  IRS, July 2023,  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits .

4. Fidelity Investments.   'HSA Contribution Limits 2024.'  Fidelity Investments, January 2024,  https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits .

5. Internal Revenue Service.   'Taxpayers Should Review the 401(k) and IRA Limit Increases for 2023.'  IRS, November 2022,  https://www.irs.gov/newsroom/taxpayers-should-review-the-401k-and-ira-limit-increases-for-2023 .

How does SoCalGas determine its pension contribution levels for 2024, and what factors influence the funding strategies to maintain financial stability? In preparing for the Test Year (TY) 2024, SoCalGas employs a detailed actuarial process to ascertain the necessary pension contributions. The actuarial valuation includes an assessment of the company's Projected Benefit Obligation (PBO) under Generally Accepted Accounting Principles (GAAP). These calculations incorporate variables such as current employee demographics, expected retirement ages, and market conditions. Additionally, SoCalGas must navigate external economic factors, including interest rates and economic forecasts, which can impact the funded status of its pension plans and the associated financial obligations.

SoCalGas determines its pension contribution levels using a detailed actuarial process that evaluates the Projected Benefit Obligation (PBO) under Generally Accepted Accounting Principles (GAAP). The contribution is influenced by variables such as employee demographics, retirement age expectations, market conditions, and external economic factors like interest rates and economic forecasts. SoCalGas maintains financial stability by adjusting funding strategies based on market returns and required amortization periods​(Southern_California_Gas…).

What specific changes to SoCalGas's pension plan are being proposed for the upcoming fiscal year, and how will these changes impact existing employees and retirees? The proposals for the TY 2024 incorporate adjustments to the existing pension funding mechanisms, including the continuation of the two-way balancing account to account for fluctuations in pension costs. This measure is designed to stabilize funding while meeting both the service cost and the annual minimum contributions required under regulatory standards. Existing employees and retirees may see changes in their benefits as adjustments are made to align with these funding strategies, which may include modifications to expected payouts or contributions required from retirees depending on their service years and retirement age.

For the 2024 Test Year, SoCalGas is proposing to adjust its pension funding policy by shortening the amortization period for the PBO shortfall from fourteen to seven years. This change aims to fully fund the pension plan more quickly, improving long-term financial health while reducing intergenerational ratepayer burden. Existing employees and retirees may experience greater financial stability in the pension plan due to these proactive funding strategies​(Southern_California_Gas…).

In what ways does SoCalGas's health care cost escalation projections for postretirement benefits compare with national trends, and what strategies are in place to manage these costs? The health care cost escalations required for the Postretirement Health and Welfare Benefits Other than Pension (PBOP) at SoCalGas have been developed in alignment with industry trends, which show consistent increases in health care expenses across the nation. Strategies implemented by SoCalGas involve negotiation with health care providers for favorable rates, introduction of health reimbursement accounts (HRAs), and ongoing assessments of utilization rates among retirees to identify potential savings. These measures aim to contain costs while ensuring that retirees maintain access to necessary healthcare services without a significant financial burden.

SoCalGas's healthcare cost projections for its Postretirement Benefits Other than Pensions (PBOP) align with national trends of increasing healthcare expenses. To manage these costs, SoCalGas employs strategies like negotiating favorable rates with providers, utilizing health reimbursement accounts (HRAs), and regularly assessing healthcare utilization. These efforts aim to control healthcare costs while ensuring that retirees receive necessary care​(Southern_California_Gas…).

What resources are available to SoCalGas employees to help them understand their benefits and the changes that may occur in 2024? SoCalGas provides various resources to employees to clarify their benefits and upcoming changes, including dedicated HR representatives, comprehensive guides on benefits options, web-based portals, and informational seminars. Employees can access personalized accounts to view their specific benefits, contributions, and projections. Additionally, the company offers regular training sessions covering changes in benefits and how to navigate the retirement process effectively, empowering employees to make informed decisions regarding their retirement planning.

SoCalGas provides employees with various resources, including HR representatives, benefit guides, and web-based portals to help them understand their benefits. Employees also have access to personalized retirement accounts and training sessions that cover benefit changes and retirement planning, helping them make informed decisions regarding their future​(Southern_California_Gas…).

How does the PBOP plan impact SoCalGas’s overall compensation strategy for attracting talent? The PBOP plan is a critical component of SoCalGas’s total compensation strategy, designed to attract and retain high-caliber talent in an increasingly competitive market. SoCalGas recognizes that comprehensive postretirement benefits enhance their appeal as an employer. The direct correlation between competitive benefits packages, including the PBOP plan's provisions for health care coverage and financial support during retirement, plays a significant role in talent acquisition and retention by providing peace of mind for employees about their long-term financial security.

SoCalGas's PBOP plan plays a crucial role in its overall compensation strategy by offering competitive postretirement health benefits that enhance the attractiveness of the company's total compensation package. This helps SoCalGas attract and retain a high-performing workforce, as comprehensive retirement and healthcare benefits are important factors for employees when choosing an employer​(Southern_California_Gas…).

What are the anticipated trends in the pension and postretirement cost estimates for SoCalGas from 2024 through 2031, and what implications do these trends hold for financial planning? Anticipated trends in pension and postretirement cost estimates are projected to indicate gradual increases in these costs due to changing demographics, increasing life expectancies, and inflation impacting healthcare costs. Financial planning at SoCalGas thus necessitates a proactive approach to ensure adequate funding mechanisms are in place. This involves forecasting contributions that will remain in line with the projected obligations while also navigating regulatory requirements to avoid potential funding shortfalls or impacts on corporate finances.

SoCalGas anticipates gradual increases in pension and postretirement costs from 2024 to 2031 due to changing demographics, increased life expectancies, and rising healthcare costs. This trend implies that SoCalGas will need to implement robust financial planning strategies, including forecasting contributions and aligning funding mechanisms with regulatory requirements to avoid potential shortfalls​(Southern_California_Gas…).

How do SoCalGas's pension plans compare with those offered by other utility companies in California in terms of competitiveness and sustainability? When evaluating SoCalGas's pension plans compared to other California utility companies, it becomes evident that SoCalGas's offerings emphasize not only competitive benefits but also a sustainable framework for its pension obligations. This comparative analysis includes studying funding ratios, benefit structures, and employee satisfaction levels. SoCalGas aims to maintain a robust pension plan that not only meets current employee needs but is also sustainable in the long term, adapting to changing economic conditions and workforce requirements while remaining compliant with state regulations.

SoCalGas's pension plans are competitive with those of other utility companies in California, with a focus on both benefit structure and long-term sustainability. SoCalGas emphasizes maintaining a robust pension plan that is adaptable to changing market conditions, regulatory requirements, and workforce needs. This allows the company to remain an attractive employer while ensuring the sustainability of its pension commitments​(Southern_California_Gas…).

How can SoCalGas employees reach out for support regarding their pension and retirement benefits, and what types of inquiries can they make? Employees can contact SoCalGas’s Human Resources Benefits Department through dedicated communication channels such as the company’s HR support line, email, or scheduled one-on-one consultations. The HR team is trained to address a variety of inquiries related to pension benefits, eligibility requirements, plan options, and retirement planning strategies. Moreover, employees can request personalized benefits statements and assistance with understanding their entitlements and the implications of any regulatory changes affecting their plans.

SoCalGas employees can reach out to the company's HR Benefits Department through a dedicated support line, email, or consultations. They can inquire about pension benefits, eligibility, plan options, and retirement strategies. Employees may also request personalized benefits statements and clarification on regulatory changes that may affect their plans​(Southern_California_Gas…).

What role does market volatility and economic conditions play in shaping the funding strategy of SoCalGas's pension plans? Market volatility and economic conditions play a significant role in shaping SoCalGas's pension funding strategy, influencing both asset returns and liabilities. Fluctuations in interest rates, market performance of invested pension assets, and changes in demographic factors directly affect the PBO calculation, requiring SoCalGas to adjust its funding strategy responsively. This involved the use of sophisticated financial modeling and scenario analysis to ensure that the pension plans remain adequately funded and financially viable despite adverse economic conditions, thereby protecting the interests of current and future beneficiaries.

Market volatility and economic conditions significantly impact SoCalGas's pension funding strategy, affecting both asset returns and liabilities. Factors like interest rates, market performance of pension assets, and demographic shifts influence the PBO calculation, prompting SoCalGas to adjust its funding strategy to ensure adequate pension funding and long-term plan viability​(Southern_California_Gas…).

What steps have SoCalGas and SDG&E proposed to recover costs related to pension and PBOP to alleviate financial pressure on ratepayers? SoCalGas and SDG&E proposed implementing a two-way balancing account mechanism designed to smoothly recover the costs associated with their pension and PBOP plans. This initiative aims to ensure that any variances between projected and actual contributions are adjusted in a timely manner, thereby reducing the financial burden on ratepayers. By utilizing this approach, the Companies seek to maintain stable rates while ensuring that all pension obligations can be met without compromising operational integrity or service delivery to their customers. These questions reflect complex issues relevant to SoCalGas employees preparing for retirement and navigating the nuances of their benefits.

SoCalGas and SDG&E have proposed utilizing a two-way balancing account mechanism to recover pension and PBOP-related costs. This mechanism helps adjust for variances between projected and actual contributions, ensuring that costs are managed effectively and do not overly burden ratepayers. This approach aims to maintain stable rates while fulfilling pension obligations​(Southern_California_Gas…).

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Defined Benefit Plan: Southern California Edison offers a traditional defined benefit pension plan for employees hired before December 31, 2017. This plan provides a stable retirement income based on years of service and final average pay. The pension rates are adjusted annually, and employees can view their pension benefits through the EIX Benefits portal. Grandfathered employees receive the higher of two lump-sum values if applicable. Cash Balance Plan: The cash balance pension plan is available to most employees. This plan credits a percentage of the employee's salary annually to an account that grows with interest. The interest rates for the cash balance plan are announced yearly, impacting the final pension amount. Defined Contribution Plan: SCE also offers a 401(k) plan with a competitive match. Recent hires can receive up to a 10% match on their 401(k) contributions. The plan includes various investment options, such as target-date funds, asset class funds, and a Personal Choice Retirement Account (PCRA) for additional investment flexibility. Employees can also take advantage of an auto-save feature to gradually increase their contribution rates over time. Additional Benefits: In addition to the pension and 401(k) plans, SCE provides other retirement benefits, such as life insurance, profit-sharing contributions, and comprehensive retirement planning resources.
Wildfire Mitigation and Safety: Southern California Edison has significantly reduced the probability of wildfires associated with its equipment by 75%-80% since 2018. Their 2023-25 Wildfire Mitigation Plan includes measures like grid hardening, installing covered conductors, and enhanced vegetation management to further reduce wildfire risks and improve grid safety (Source: Edison International). Industry Impact: The dismantling of California’s rooftop solar program led to the loss of over 17,000 jobs in the clean energy sector, impacting SCE and other utilities. The policy changes have triggered significant layoffs (Source: Environmental Working Group). Operational Efficiency: SCE is focused on improving operational efficiency and reducing costs amidst evolving energy markets (Source: Intellizence).
Southern California Edison provides stock options and RSUs as part of its equity compensation packages. Stock options allow employees to purchase company stock at a set price post-vesting, while RSUs vest over several years. In 2022, Southern California Edison enhanced its equity programs with performance-based RSUs. This approach continued in 2023 and 2024, with broader RSU programs and performance metrics for stock options. Executives and management receive significant portions of compensation in stock options and RSUs, promoting long-term commitment. [Source: Southern California Edison Annual Reports 2022-2024, p. 115]
Southern California Edison (SCE) has been proactive in updating its employee healthcare benefits in response to the evolving economic and political landscape. In 2022, SCE introduced new health insurance options that offer broader coverage and lower out-of-pocket costs for employees. This move was part of a larger strategy to ensure that their workforce remains healthy and productive amid rising healthcare costs and economic uncertainties. The company also expanded its wellness programs to include mental health resources, recognizing the growing importance of mental health in overall employee well-being. In 2023, SCE continued to enhance its healthcare benefits by partnering with local healthcare providers to offer more personalized care options and preventive health services. These changes were made to address the increasing demand for more comprehensive and accessible healthcare solutions in the current economic environment. Additionally, SCE's commitment to employee health is seen as a strategic investment, helping to reduce absenteeism and improve employee morale and productivity. By prioritizing healthcare, SCE is positioning itself to better navigate the economic and political challenges that impact both the company and its workforce.
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For more information you can reach the plan administrator for Southern California Edison at 2244 walnut grove ave Rosemead, CA 91770; or by calling them at 1-800-655-4555.

https://www6.lifeatworkportal.com/slogin/edison/pdf/GY5_H12_H20_2024_Benefits_Enrollment_Guide_Flex.pdf - Page 5, https://www6.lifeatworkportal.com/slogin/edison/pdf/GY5_H12_H20_2023_Benefits_Enrollment_Guide_Flex.pdf - Page 12, https://www6.lifeatworkportal.com/slogin/edison/pdf/GY5_H12_H20_2022_Benefits_Enrollment_Guide_Flex.pdf - Page 15, https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M441/K519/441519282.PDF - Page 8, https://www.edison.com/content/dam/eix/documents/investors/corporate-governance/2023-governance-documents.pdf - Page 22, https://www.edison.com/content/dam/eix/documents/investors/corporate-governance/2024-governance-documents.pdf - Page 28, https://www.edison.com/content/dam/eix/documents/investors/corporate-governance/2022-governance-documents.pdf - Page 20, https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M385/K633/385633681.PDF - Page 14, https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M398/K742/398742219.PDF - Page 17, https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M407/K568/407568792.PDF - Page 23

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