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Healthcare Provider Update: FedEx's healthcare provider is primarily Cigna, which partners with the company to offer health insurance solutions to its employees through a range of plans, including High Deductible Health Plans paired with Health Savings Accounts. In 2026, FedEx employees may face significant healthcare cost increases, mirroring a broader trend across the nation. With the expected elimination of enhanced ACA premium subsidies, some workers could see their out-of-pocket premium costs surge by over 75%. Coupled with the anticipated double-digit rate hikes from major insurers and rising medical expenses, the financial burden on employees is poised to escalate sharply, potentially impacting their overall healthcare affordability. Click here to learn more
'Thoughtful multigenerational planning can help FedEx employees navigate GSTT considerations more effectively, making it an essential part of preparing families for long-term financial transitions.' -- Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.
'Carefully structuring multigenerational wealth transfers can help FedEx employees stay aligned with GSTT rules and should be considered when discussing long-term family planning priorities.' -- Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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Key concepts behind the generation-skipping transfer tax (GSTT).
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Common exemptions and exclusions that may lessen transfer tax exposure.
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Planning methods that can help families pass wealth across generations.
Important Takeaways on How to Transfer Wealth Across Generations
The generation-skipping transfer tax (GSTT) is relevant for any FedEx employees transferring wealth to grandchildren or other individuals that skip over your children's generation.
Both GSTT and gift or estate taxes may apply when transferring assets to heirs more than one generation below the transferor.
Exemptions may lower transfer tax liability if planning is structured thoughtfully.
Federal gift and estate taxes—applicable to transfers during life or at death—are familiar to many FedEx employees. However, when assets move to people more than one generation below the transferor, such as a gift from a grandparent to a grandchild, the federal generation-skipping transfer tax (GSTT) may also apply.
Generation-Skipping Transfer Tax: What Is It?
Transfers to “skip persons,” those more than one generation below the transferor or more than 37½ years younger, are subject to the GSTT. This federal tax applies in addition to any federal gift or estate tax due and equals the highest federal gift and estate tax rate in effect—a flat rate of 40%—which is relevant for FedEx employees engaging in multigenerational planning.
The GSTT was introduced in 1976 to address concerns that affluent families could shift assets in ways that bypassed estate taxes at each generational level. 1
Lifetime Exemptions and Gift Tax Exclusions
Transfers made during life or at death to anyone other than a spouse or qualified charity may be subject to federal gift or estate tax. Key exclusions include several that may benefit FedEx employees:
Annual gift tax exemption: In 2026, individuals may give up to $19,000 per recipient without incurring federal estate or gift tax. Couples may combine exclusions for a total of $38,000 per beneficiary. 2 For example, a married couple with two children could give $76,000 total ($38,000 to each child) annually without gift tax.
Qualified transfers: Payments made directly to educational institutions for tuition or to medical providers for medical expenses are not considered taxable gifts. There is no dollar limit on these transfers. 1
Lifetime unified exclusion: Individuals may transfer up to $13.99 million (or $27.98 million per married couple) during life or at death without federal gift or estate tax. 2 Lifetime gifts reduce the remaining exclusion available at death.
Transfers exceeding these exclusions are taxed at the top federal estate and gift tax rate of 40%.
Exclusions & Exemptions from GSTT
The GSTT has rules similar to traditional gift tax laws, which can influence planning for FedEx families:
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- Grandparents may give up to $19,000 directly to a grandchild in 2026 without triggering gift tax or GSTT.
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- Each individual has a $13.99 million lifetime GSTT exemption ($27.98 million per couple), though this exemption is not independent from estate or gift tax rules.
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Transfers above exemption thresholds are subject to a 40% GSTT.
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GSTT applies only at the federal level, although some states may impose their own estate or inheritance taxes.
When Does the GSTT Start to Apply?
The GSTT applies to three types of taxable events, all of which may arise in multigenerational planning for FedEx families:
Direct skips: Transfers made directly to a skip person or to a trust for their exclusive benefit. The transferor or their estate pays the tax.
Taxable distributions: Distributions from a trust to a skip person. The beneficiary pays the tax.
Taxable terminations: Occur when a trust interest ends and only skip persons remain as beneficiaries. The trustee pays the tax.
GSTT Exemption Allocations
Transfers—outright or to a trust—may qualify for GSTT exemption as long as the exemption is properly allocated. Once allocated, all future growth on those trust assets is generally free from GSTT, a strategy FedEx families may want to use.
For example, if a person contributed $10 million to an irrevocable trust for grandchildren in 2024 and allocated the GSTT exemption, and the trust later grew to $20 million, future distributions would not incur GSTT. 1
Methods for Lowering GSTT
1. 529 Plan Contributions
Contributions to 529 college savings plans are treated as completed gifts, even though account owners can change the beneficiary. Grandparents may “superfund” a 529 plan with five years of annual exclusions at once—up to $95,000 per beneficiary in 2025 or $190,000 per beneficiary for a married couple filing jointly 3 —which may interest FedEx retirees.
2. Dynasty Trusts
Dynasty trusts are irrevocable trusts designed to last across multiple generations. Some states allow long-term or perpetual trusts, while others limit trust duration under the “rule against perpetuities.” These trusts can combine GSTT planning with long-term asset preservation features and, when fully exempt from GSTT, future distributions or terminations can occur without additional GSTT 4 —an appealing option for extended family planning.
Concluding Remarks
Although GSTT planning can be complex, exemptions and structured transfers may help FedEx employees reduce or eliminate federal taxes on wealth passed to grandchildren or other skip persons.
The Retirement Group can assist you with wealth transfer planning and retirement income strategies. Call our team at (800) 900-5867 for guidance.
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Sources:
1. Fidelity Investments. “Understanding the Generation-Skipping Transfer Tax.” Fidelity , 3 Oct. 2025, www.fidelity.com/viewpoints/wealth-management/insights/generation-skipping-transfer-tax .
2. Internal Revenue Service. “ IRS releases tax inflation adjustments for tax year 2027 .” IRS.gov , 9 Oct. 2025.
3. Bendig, Erin. “How This 529 ‘Superfund’ Strategy Can Transform Your Estate Plan.” Kiplinger , 12 Sept. 2025, www.kiplinger.com/personal-finance/this-super-529-strategy-can-help-you-jumpstart-college-savings .
4. Investopedia. ' What Is a Dynasty Trust? ' by Will Kenton. 31 March 2025.
What are the implications of the Funding Target Attainment Percentage for FedEx Corporation employees, and how does it impact the security of the pension benefits offered by FedEx Corporation? This question seeks to explore the nuances of the funding target attainment percentage as reported in the annual funding notice, examining how this metric not only reflects the financial health of FedEx Corporation's pension plan but also how it affects employee confidence in future benefit payments and retirement planning.
Funding Target Attainment Percentage: The Funding Target Attainment Percentage for FedEx Corporation indicates the degree to which the pension plan is funded. A percentage of 101.33% for 2022 suggests that the plan has sufficient assets to cover its liabilities, providing security for employees' pension benefits. This high percentage likely increases employee confidence in the stability and reliability of their future pension payouts, essential for long-term retirement planning.
How does the merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan influence the benefits currently available to FedEx Corporation employees? This question aims to delve into the practical changes that may arise due to this merger, assessing whether it aligns with employee expectations regarding their pension benefits and how the transition process is managed by FedEx Corporation.
Merger of Pension Plans: The merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan appears to have been strategically managed to maintain benefit stability. Despite increasing liabilities by 5.3%, the merger was structured to ensure no negative impact on the benefit amounts payable to participants from either plan, preserving the expected pension benefits for all affected FedEx Corporation employees.
In terms of investment strategies, what measures does FedEx Corporation implement to ensure that its pension plan investments align with the long-term liabilities expected to be paid out to retirees? This question encourages an exploration of the investment policies in place, examining the asset allocations and risk management strategies that FedEx Corporation employs to ensure sustainable funding for its pension obligations, which could potentially include detailed analyses of stocks, debts, and alternative investments.
Investment Strategies: FedEx Corporation employs a diversified investment strategy across equities, fixed income, and alternative investments, aiming to meet long-term pension liabilities. This approach, which includes both active management strategies and the limited use of derivatives, is designed to generate returns that exceed market indices, thus ensuring adequate funding of pension obligations.
What options do employees of FedEx Corporation have for accessing their pension plan statements, and how frequently are these statements generated? The focus here is to understand the communication strategies employed by FedEx Corporation regarding pension benefit statements, including technological access points and the importance of these documents for employee financial planning.
Pension Plan Statements: FedEx Corporation provides annual pension plan statements through their Retirement Service Center, available electronically each fall. Employees can access their statements online or request them if notifications are not received, ensuring transparency and aiding in personal financial planning.
How are contributions to the FedEx Corporation Employees’ Pension Plan determined, and what role do excess contributions play in the plan's overall funding strategy? This question aims to educate employees about how the company balances mandatory contribution levels with potential excess contributions, exploring how these factors interact to influence the plan's solvency and employee benefits.
Contributions to the Pension Plan: Contributions to the FedEx Corporation Employees' Pension Plan are calculated to meet at least the minimum legal requirement and potentially include voluntary excess contributions. These excess contributions can help manage the plan's funding level and ensure its solvency, benefiting overall pension security for employees.
What types of benefits are guaranteed under the Pension Benefit Guaranty Corporation (PBGC) for FedEx Corporation employees, and what limitations exist that employees should be aware of? By focusing on the guaranteed benefits, this question prompts a discussion on the security of specific benefits provided by FedEx Corporation and highlights limitations, allowing employees to understand their rights fully.
PBGC Guarantee: The Pension Benefit Guaranty Corporation guarantees certain types of benefits for FedEx Corporation employees, such as pension benefits at normal retirement age and most early retirement benefits. However, there are limitations, such as exclusions for benefits without vested rights and recently increased benefits, which employees should be aware of to fully understand their pension security.
In what ways does the FedEx Corporation plan to adjust its pension funding strategy in light of changing federal laws that impact pension obligations? Employees are encouraged to consider how legislative changes influence corporate policies surrounding retirement benefits and the proactive strategies FedEx Corporation might take to remain compliant while ensuring the security of employee pensions.
Adjustments to Funding Strategy: FedEx Corporation is likely to adjust its pension funding strategy in response to legislative changes affecting pension obligations, such as those introduced by recent acts adjusting how pension liabilities are calculated. This proactive approach aims to ensure compliance with new laws while continuing to secure the financial health of the pension plan.
What are the steps that FedEx Corporation employees must take if they are considering retirement, particularly in how to navigate the pension plan and gain access to their benefits? This question aims to provide clarity on the retirement process, ensuring that employees are equipped with the necessary information regarding required documentation, timelines, and points of contact within FedEx Corporation.
Steps for Retirement Planning: Employees considering retirement should contact the FedEx Retirement Service Center to navigate their pension plan benefits. This process involves understanding necessary documentation, timelines, and available support, facilitating a smooth transition into retirement.
How does FedEx Corporation plan to manage potential funding shortfalls in the pension plan, and what mechanisms are in place for notifying plan participants should such an event occur? Employees would need to understand the proactive measures put in place by FedEx Corporation to address funding-related challenges while also knowing what this means for their benefits.
Managing Funding Shortfalls: In the event of potential funding shortfalls, FedEx Corporation has policies in place to manage such situations, including strategic contributions to mitigate shortfalls. The company maintains transparency with plan participants about funding levels and any significant changes affecting the pension plan.
For those seeking more information about their pensions and retirement options, how can FedEx Corporation employees contact relevant departments, and what resources are available for assistance? This question provides an opportunity for employees to familiarize themselves with contact points such as the FedEx Retirement Service Center, emphasizing the importance of open communication channels for addressing inquiries related to their pensions. Feel free to consult the provided document for more in-depth exploration of these topics.
Contacting for Pension Information: FedEx Corporation employees seeking more information about their pensions or retirement options can contact the FedEx Retirement Service Center. This center provides essential resources and support, ensuring employees have access to all necessary information regarding their retirement planning.
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