'Estate tax exemption rules changed significantly in 2025, and PepsiCo employees should plan ahead,' said Sullivan. The full scope of these changes and early preparation can give you 'great peace of mind and financial security,' says Michael Corgiat, a representative of the Retirement Group, a division of The Retirement Group.

With estate-tax exemptions now permanently raised under the OBBBA, employees have a clear planning horizon -- making this an excellent time to review and optimize estate plans. As The The Retirement Group's Brent Wolf puts it, 'such strategic planning is necessary to protect your financial legacy should the tax regime change.'

In this article we will discuss:

1. Permanently Raised Estate-Tax Exemptions: The One Big Beautiful Bill Act (OBBBA, signed July 4, 2025) has permanently raised the federal estate-tax exemption to $15 million per person, creating lasting planning opportunities for affluent investors.

2. Strategies for Wealth Transfer: We will review strategies that high-net-worth individuals might use to limit possible tax liabilities - through gifts and trust structures.

3. Impact of Legislative Uncertainty: The ambiguity surrounding congressional actions on tax laws points to the importance of proactive financial planning for large assets.

The financial environment for estate planning has been clarified by the OBBBA. Estate-tax exemptions are now permanently elevated, making this a pivotal time for affluent investors to review and optimize their plans.

The federal estate-tax exemption has been permanently raised to $15 million per person ($30 million for couples) under the One Big Beautiful Bill Act (OBBBA, signed July 4, 2025). This represents what a person can leave tax-free without federal estate tax liability.

With the OBBBA permanently securing this elevated exemption, portability rules allowing spouses to transfer unused exemptions remain a powerful planning tool. That does not include the 17 states and the District of Columbia that each have their own inheritance tax and rules, which may still warrant careful estate planning regardless of federal exemption levels.

Even at $15 million per person, proactive estate planning remains important. Today's economic climate means that a combination of retirement accounts, real estate, and other investments can approach this threshold more quickly than many expect.

Whether PepsiCo employees are really on the verge of such a change in estate-tax exemptions is a big question mark. Much is debated about how these exemptions will evolve, as Mr. Eric Bronnenkant, Head of Tax at Betterment.com, puts it aptly. Particularly given the political climate these days, congressional decisions are notoriously volatile. Particular large estate taxes present difficult budget issues.

Though you can wait and see, the deadline will surely spur engagements with estate attorneys and financial planners. So transferring USD 3.5 million is no more straightforward than writing a check for someone with USD 10 million in assets. This requires strategic trust structures and other sophisticated estate-planning methodologies that require experienced professionals. All of these maneuvers cannot be accelerated overnight, especially with December 31, 2025 fast approaching.

Another possibility is that Congress delays action through 2026 and retroactively applies changes. Such retroactivity is possible in legislation but not in individual financial actions.

Those prospective changes create a strategic incentive for PepsiCo employees to transfer assets during one's lifetime. That proactive strategy minimizes future estate taxes while giving you the tangible satisfaction of knowing that your assets will help others in your lifetime as well. If your assets are greater than the specified IRS exemption, the federal government could tax the excess at 40%.

But the irrevocability of virtually all transfer methods makes the transfer of large assets difficult. The future is unpredictable, as Mr. Bronnenkant says. Suppose a person with USD 10 million in assets died after the proposed reduction - the federal estate tax would be levied on that USD 3.5 million surplus. Transferring this amount under the permanently elevated provisions of the One Big Beautiful Bill Act (OBBBA, signed July 4, 2025) would leave a USD 3 million exemption - which may be a smart move if the new threshold is not exceeded. The IRS says there will be no penalties for transfers up to the limit during 2018-2025.

But if exemptions remain unchanged after 2026 (around USD 13 million), transferring USD 3.5 million would leave about USD 9.5 million in lifetime exemption. But be prudent, said Eric J. Einhart, an honorary National Academy of Elder Law Attorneys board officer. Completely exhausting your exemption might put you in a precarious position.

By comparison, the annual gift limit without reducing your lifetime exemption is USD 17,000 per beneficiary in 2023 - up from USD 16,000. Though systematic bequests are possible, aggressive estate reduction requires more planning.

With upcoming estate-tax changes in mind, many soon-to-retire PepsiCo employees analyze when to make large gifts to their families. Those nearing retirement age are increasingly considering early wealth transfers to descendants to take advantage of existing tax exemptions, according to a 2022 study by the Brookings Institution. Yet it notes that such gifts could have multiple tax consequences - including retroactive adjustments - depending on future tax reforms. Hence, even though gifting may seem advantageous under the current tax code, future legislative changes may have unexpected tax implications, and planning is necessary.

In conclusion, the best strategy for PepsiCo employees depends on the situation. Mr. Einhart correctly points out there is no universal solution. Yet there are defined strategies for those who pursue them. For these waters, you need an experienced estate planner with a road map.

Planning a retirement vacation involves considering possible estate-tax changes. Imagine earning a spot on a luxury cruise whose ticket price will go up soon. So you think about buying more tickets for family members at this price and seeing if that is the best value. Yet prices may remain or decline - making your early purchase less profitable. Also, current tax exemptions make gifting assets appealing - but future legislative changes could alter the financial landscape. Like a cruise, you'll need expert advice on how to make sure today's decisions will lead to smooth sailing tomorrow.

Added Fact:

We'll get into the details of how future estate tax changes might affect our target audience of PepsiCo workers and retirees approaching retirement age. A study in the AARP Bulletin in June 2023 noted that possible changes in estate tax laws could also affect how family businesses are passed down to future generations. The shifting estate tax thresholds may place family-owned businesses under additional financial strain and make it even more critical that individuals plan for succession to ensure their businesses survive into the future.

Added Analogy:

The future estate tax changes could be like a captain plotting a course through the maze of retirement planning, like navigating a ship through water. Imagine your retirement nest egg as a stately vessel that carries your wealth and legacy. Like weather, the tax landscape is volatile. Today's clear skies will not guarantee sailing tomorrow.

Just as a captain studies weather reports to determine which route to take, so too must prudent retirees and PepsiCo workers approaching retirement study the changing tax code. The cargo aboard your financial ship represents your family future, and the estate tax changes are the winds of change that blow you forward or lash a dark cloud over your legacy.

As a navigator would need expert advice and the latest navigational aids, so too should you rely on the expertise of experienced estate planners to light your way through these financial waters. You get that customized roadmap so that you can sail safely on your financial voyage and ensure maximum wealth generation for future generations. So, just like a captain would do, put your faith in them to navigate the fiscal seas and keep your legacy in safe harbor amid shifting estate tax tides.

That same shift from growing assets to drawing them down applies directly to the pension decisions in front of you at PepsiCo. PepsiCo maintains an active defined benefit pension plan, meaning eligible employees continue to accrue benefits based on years of service and compensation. If you are eligible for a lump sum payout, IRS Section 417(e) segment rates determine how the future annuity stream converts to a present-value payment - rising rates compress the lump sum, so monitoring the plan's stability period and lookback month is critical before you lock in your election date. The choice between a single-life annuity, a joint-and-survivor option, or a lump sum (where available) is generally irrevocable once made, and timing that decision relative to interest rate conditions can meaningfully affect your retirement income picture.

On the healthcare side, PepsiCo provides continued medical coverage to eligible retirees, which can bridge the gap between retirement and Medicare eligibility at age 65 or serve as a supplement to Medicare thereafter. Confirming the service and age requirements for retiree coverage, and understanding your premium contribution, is an important step in building an accurate healthcare cost projection. Coordinating PepsiCo's retiree coverage with Medicare Part B and Part D enrollment timing can also reduce duplication and avoid late-enrollment penalties. Connecting your specific PepsiCo benefits situation to a comprehensive retirement income plan - and understanding how each component interacts - gives you the most complete picture of what retirement will look like.

Sources:

1. 'Estate Tax Exemption 2025: How Does it Work?' SK Financial, 5 Jan. 2025,  www.skfinancial.com/estate-tax-exemption-2025-how-does-it-work .

2. 'Use It or Lose It: Sunset of the Federal Estate Tax Exemption.' , 29 Jan. 2024,  www./news/estate-tax-exemption-sunset.html .

3. '2025 Federal & State Estate and Gift Tax Cheat Sheet.' Wealthspire ,  www.wealthspire.com/2025-estate-and-gift-tax-guide .