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

Sears Holdings Employees: Should You Delay Charitable Giving Until 2026?

Healthcare Provider Update: Healthcare Provider for Sears Holdings Sears Holdings typically provides healthcare benefits to its employees through various insurance plans, often with national insurers such as Aetna, UnitedHealthcare, or Anthem Blue Cross Blue Shield being among the health carriers they have partnered with. The specific providers can vary by location and employee selection during open enrollment periods. Potential Healthcare Cost Increases in 2026 As we progress into 2026, the healthcare landscape is expected to face significant challenges, particularly for employees of Sears Holdings. Forecasts indicate steep premium hikes, with some states imposing increases of over 60%, largely influenced by rising medical costs and the potential expiration of enhanced ACA premium subsidies. The Kaiser Family Foundation highlights that without congressional intervention, millions of marketplace enrollees could see their out-of-pocket costs surge by more than 75%. This convergence of factors threatens to impose a substantial financial burden on both individuals and employers, necessitating proactive strategies to mitigate rising expenses. Click here to learn more

'For Sears Holdings employees, thoughtful timing of 2025–2026 charitable gifts can influence your long-term retirement strategy, making it important to consider your broader financial plan when making these choices.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Sears Holdings employees can benefit from working with tax and legal professionals to revisit their 2025–2026 charitable giving timelines, as aligning these decisions with your broader financial picture can help you stay organized and make informed choices.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How the 2025–2026 rule changes may affect the tax benefits of your charitable gifts.
The different charitable deduction rules for standard deduction filers versus itemizers.
Strategies for timing your giving as a long-time Sears Holdings employee or retiree.

2025–2026 Charitable Giving: How New Regulations May Affect Your Tax Plan

By Wealth Enhancement's Kevin Land, CFP® and Wesley Boudreaux

Giving to charities at the end of the year has long been a December custom for many households, including long-time employees and retirees from Sears Holdings. However, the One Big Beautiful Bill Act has changed how charitable deductions work, with substantial updates taking effect in 2025 and 2026. As a result, the familiar “give by December 31” rule may not be the most tax-efficient approach anymore.

The law essentially establishes two different profiles of charitable donors starting in 2026:

1. Filers who take the standard deduction.
2. Filers who itemize deductions.

Depending on which group you belong to, the timing of your charitable contributions can lead to very different tax outcomes, which is especially important if most of your income and benefits come from years of work with Sears Holdings.

Below, we describe:

1. Who stands to gain from postponing some gifts until 2026.
2. Who stands to gain from increasing donations before or during 2025.

Group 1: Standard Deduction Filers

Why some people might prefer to wait and donate in 2026

Instead of itemizing, around 90% of Americans take the standard deduction, ¹ and many Sears Holdings employees and retirees may fall into this category. Under the current 2025 rules, standard deduction filers generally do not receive any direct tax benefit from charitable gifts unless they itemize.

In 2026, that will change. Specifically, a new above-the-line charitable deduction will be available to standard deduction filers beginning in the 2026 tax year: ²

- Up to $1,000 for single filers
- Up to $2,000 for married couples filing jointly

Key characteristics—written into the law:

- You do not need to itemize to claim this deduction.
- Only monetary donations given to approved public charities are covered.
- This deduction does not apply to supporting organizations or donor-advised funds.
- Non-cash gifts such as household goods, appreciated stock, and cryptocurrency are not eligible.
- The dollar limits are not indexed for inflation.

Real-world impact

In 2025, a cash donation made by a standard deduction filer is unlikely to produce any tax benefit unless that filer itemizes. If the same donor waits and gives in 2026, they may be able to deduct up to $1,000 or $2,000, depending on filing status.

For instance:

Let’s say you:

- Are married and filing jointly
- Typically donate $2,000 per year
- Expect to take the standard deduction in both 2025 and 2026
- Are in the 22% federal tax bracket

If you donate $2,000 in December 2025, you still take the standard deduction and do not gain any additional federal income tax savings from that gift.

If you instead donate $2,000 in January 2026, you can use the new $2,000 above-the-line deduction, which reduces your federal income tax by:

$2,000 × 22% = $440

Rules for documentation

Donors who give $250 or more in a single donation must obtain written confirmation stating that no goods or services were received in return for the contribution.

Who might use the standard deduction

While the standard deduction is available to all taxpayers, it may be used more often by:

- Retirees with relatively limited deductible expenses
- Younger individuals without many itemizable costs
- Higher earners who have few deductions left to itemize (for example, capped SALT deductions)

For these donors, including many who spent their careers at Sears Holdings, delaying certain cash gifts until early 2026 may turn previously non-deductible contributions into tax-efficient charitable giving.

Group 2: Itemizers

Reasons for wanting to accelerate gifts into 2025

For those who currently itemize, 2025 may be the final year before new deduction restrictions apply, so timing could matter for long-time professionals whose pay and benefits have grown over many years at Sears Holdings.

What changes in 2026?

New charitable “floor” of 0.5% of AGI

Starting in 2026, charitable contributions are only deductible to the extent they exceed 0.5% of adjusted gross income (AGI). ³

For example:

AGI: $300,000
0.5% floor: $1,500
Only the portion of your charitable contributions above $1,500 is deductible.

The 60% AGI cap on cash contributions remains

Itemizers can generally deduct up to 60% of AGI in cash contributions to qualifying public charities. ³ Any contributions above this limit may be carried forward for up to five years. This cap applies in addition to the new 0.5% floor starting in 2026.

Example for a higher-income itemizer:

Let’s say you:

- Have AGI of $500,000
- Are in the 35% federal tax bracket
- Typically donate $25,000 per year

In 2025, before the new floor applies:

- Subject to the usual AGI limits, you may be able to deduct nearly the full $25,000.

In 2026:

- 0.5% of AGI = $2,500
- Only contributions above $2,500 are deductible
- Of your $25,000 in gifts, only $22,500 may be deductible
- Losing a $2,500 deduction at a 35% tax rate may increase your federal income tax by $875

This difference can be especially important for donor-advised fund strategies or large gifts that Sears Holdings professionals may plan as part of a broader legacy or estate plan.

Who might itemize

Usually, itemizers have:

- AGI above the national average
- High state and local taxes
- Deductible expenses such as meaningful mortgage interest
- Long-term charitable goals and multi-year giving plans

For these individuals, accelerating larger gifts in 2025 may result in a more favorable deduction position than waiting until 2026.

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Which Group Do You Belong To?

Delaying charitable giving until 2026 might be worth considering if:

- You typically use the standard deduction
- You give $1,000 to $2,000 or more to charities each year
- You do not expect to itemize in 2025
- You could shift a cash gift from December 2025 to January 2026 and potentially use the new above-the-line deduction

Giving before year-end 2025 might be more appealing if:

- You will itemize in 2025, or already know you will have substantial itemized deductions
- You intend to make sizable, flexible charitable gifts (for example, to a major institution or to a donor-advised fund)
- The new 0.5% AGI floor in 2026 would reduce the amount you can deduct
- Frontloading your giving in 2025 allows you to keep more of your charitable deduction under the current rules

How We Help Clients Make These Decisions

At Wealth Enhancement, when we review charitable planning for employees and retirees from large companies such as Sears Holdings, we consider:

- Income tax planning under the One Big Beautiful Bill Act
- Health care and long-term care needs
- Multigenerational strategies and estate planning
- Business, stock option, or liquidity events that influence annual income

We help families:

- Evaluate the likelihood that they will itemize in both 2025 and 2026
- Set charitable giving goals over a three- to ten-year period
- Compare donating in 2025 versus shifting gifts into 2026
- Coordinate planning with estate planning attorneys and certified public accountants

How The Retirement Group Can Help Sears Holdings Employees

The Retirement Group can walk through the numbers with you and design a charitable giving approach that fits within your broader retirement strategy if you are unsure whether your 2025–2026 charitable plan should involve delaying or accelerating gifts as a current or former employee of Sears Holdings.

Call (800) 900-5867 to discuss how your charitable plans fit alongside your pension, 401(k), and other retirement benefits.

Next Steps

Before you write your next year-end charitable check:

- Confirm whether you expect to itemize or take the standard deduction.
- Review how the upcoming 2026 rules may affect your deductions.
- Consider whether shifting gifts into 2025 or 2026 could improve your overall tax outcome.
Reach out to Wesley Boudreaux or Kevin Landis, CFP®, at Wealth Enhancement, and consider coordinating with The Retirement Group to determine which path best aligns with your goals as a long-term employee or retiree from Sears Holdings.

Sources:

1. Forbes Advisor. ' Standard Deductions For 2024-2025 Tax Returns And Extra Benefits For People 65+ ,' by Taylor Tepper. Oct. 8, 2025.

2. “One Big Beautiful Bill (OBBB): Impact on Charitable Giving.” Fidelity Charitable , 2025,
https://www.fidelitycharitable.org/articles/obbb-tax-reform.html .

3. “Navigating Charitable Giving in the Wake of New Tax Reform.” National Philanthropic Trust , 30 July 2025,
https://www.nptrust.org/philanthropic-resources/philanthropist/navigating-charitable-giving-in-the-wake-of-new-tax-reform/ .

Other Resources:

1. “New Limitations on Charitable Deductions Take Effect in 2026.” Greenberg Traurig , 28 Oct. 2025,
https://www.gtlaw.com/en/insights/2025/10/new-limitations-on-charitable-deductions-take-effect-in-2026

2. “The OBBBA Clock Is Ticking: Why 2025 Might be the Year to Act for Maximum Charitable Deductions.” Vanilla , 28 Oct. 2025,
https://www.justvanilla.com/blog/obbba-year-end-charitable-planning-2026 .

3. “Charitable Organizations: Substantiation and Disclosure Requirements.” IRS , 30 Sept. 2025,
https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-organizations-substantiation-and-disclosure-requirements .

How does the Sears Holdings Pension Plan differentiate between normal retirement, early retirement, and late retirement options for Kmart participants? In what ways do these options influence the retirement planning process for employees of Sears Holdings, and what specific considerations should Kmart employees be aware of when choosing one of these retirement paths, particularly in relation to their vested status?

Differentiation of Retirement Options: The Sears Holdings Pension Plan offers distinct options for normal, early, and late retirement. Normal retirement is available at age 65 or after five years of plan participation, whichever is later. Early retirement can be taken from age 55 but before 65, provided the employee is vested, with benefits subject to actuarial reduction unless certain conditions are met (like having at least 90 points, which is a sum of age and years of credited service). Late retirement pertains to any retirement after the normal retirement age, with pensions recalculated to reflect the delay in benefit commencement.

Considering the frozen status of the Sears Holdings Pension Plan, how does this impact the benefits eligibility for Kmart employees, and what implications does it have for their retirement savings strategies? In what ways should current employees factor in this frozen status when evaluating their overall retirement readiness and potential alternatives outside of the company plan?

Impact of Frozen Status: The freezing of the Sears Holdings Pension Plan on January 31, 1996, means that there have been no new accruals of benefits or participants since that date. For Kmart employees, this impacts their benefits eligibility by capping the pension benefits at levels earned up to the freeze date. Employees need to consider this stagnation in benefits when planning for retirement, potentially seeking additional retirement savings avenues to bridge any shortfall.

What are the essential calculations involved in determining the retirement benefits under the Sears Holdings Pension Plan for Kmart employees? Specifically, how do the Career Average Pay and Final Average Pay formulas come into play, and what factors should employees consider when estimating their future retirement payouts?

Essential Calculations for Retirement Benefits: Pension benefits for Kmart employees under the Sears Holdings Pension Plan are calculated using either the Career Average Pay or the Final Average Pay formulas. These calculations take into account an employee's years of credited service and compensation up to the freeze date. Factors like estimated Social Security benefits and specific formulas (such as a deduction based on Social Security benefits under the Final Average Pay formula) play crucial roles in determining the final pension payout.

How can Sears Holdings employees best navigate the process of applying for benefits under the Pension Plan? What specific steps should participants take to ensure their applications are processed correctly, and what important deadlines should they be aware of to avoid any negative consequences on their retirement benefits?

Navigating the Benefits Application Process: To apply for pension benefits, employees must submit a formal application, ideally 30 to 90 days before the intended commencement date. It is crucial to ensure all personal information, including marital status and spouse details, is up-to-date to avoid delays or inaccuracies in benefit processing. Missing application deadlines can lead to postponed benefit payments or unwanted default options.

In what situations can Kmart employees expect to receive a Deferred Vested Pension, and how is the calculation for this pension affected by their previous employment and vesting service? Employees should be aware of the important factors influencing their eligibility and the steps necessary to maintain their retirement benefits after leaving the company.

Eligibility and Calculation for Deferred Vested Pension: A Deferred Vested Pension is available to employees who leave the company after becoming vested but prior to qualifying for retirement. The calculation mirrors that of a normal retirement pension, with possible early commencement reductions. Understanding the timing of benefit commencement and the potential reductions for early start is vital for planning.

How does the Sears Holdings Pension Plan address tax considerations for employees receiving both monthly payments and lump sum payments upon retirement? What tax implications should Kmart participants be aware of, particularly in relation to IRS rules for distributions and potential penalties for early withdrawal?

Tax Implications of Pension Receipt: Pension payments, whether monthly or lump sum, are subject to federal taxes. Monthly benefits are taxed as ordinary income, while lump sums might be eligible for special tax treatments or rollover options to defer taxes. It’s important for Kmart employees to consider these implications and possibly consult with a tax advisor to optimize tax liability.

What are the rights and protections afforded to Kmart participants under the Employee Retirement Income Security Act (ERISA) as they navigate their retirement benefits with the Sears Holdings Pension Plan? How can employees leverage these rights to ensure they are receiving all the benefits to which they are entitled?

ERISA Rights and Protections: Under ERISA, Kmart employees are entitled to certain rights including the ability to appeal denied benefits, access to plan information, and assurances of fair and equitable treatment of their benefits. Leveraging these protections ensures that employees receive all due benefits.

What steps should Kmart employees take to update their personal information to ensure they continue receiving their benefits without interruption, especially in the context of missing participants or uncashed checks? What resources and contacts at Sears Holdings are available to assist with these updates?

Updating Personal Information: Maintaining accurate personal information with the pension plan is crucial for uninterrupted benefit payments. Employees should promptly update changes such as address, marital status, or beneficiaries to prevent issues with benefit distributions or lost checks.

How does the process of transferring between affiliated employers impact pension benefits for Kmart employees under the Sears Holdings Pension Plan? What considerations should be taken into account concerning Credited Service and Vesting Service during such transfers, and how can employees ensure they do not lose any entitled benefits?

Impact of Transfers Between Affiliated Employers: Transferring between Sears Holdings’ affiliated employers can affect pension benefits differently depending on whether the employer participates in the pension plan. It's essential to understand how such transfers impact credited and vesting service accruals.

For Kmart employees seeking more information about their benefits under the Sears Holdings Pension Plan, what is the best way to contact company representatives? How can they effectively communicate their questions or concerns to ensure they receive accurate and timely information regarding their retirement benefits?

Contacting Plan Representatives: Kmart employees seeking clarity on their pension benefits should contact the Sears Holdings Pension Service Center. Effective communication, including prepared questions and necessary documentation, will aid in obtaining accurate and comprehensive information.

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

Sears Holdings Corporation's pension plans were taken over by the Pension Benefit Guaranty Corporation (PBGC) following the company's bankruptcy. The two defined benefit pension plans have been frozen since 2005, meaning no new benefit accruals are added. The plans are underfunded by approximately $1.4 billion, with PBGC assuming responsibility to ensure pension payments continue. These plans cover about 90,000 participants who worked for Sears, Roebuck and Co., and Kmart Corporation. Despite the underfunding, PBGC is expected to cover the vast majority of pension benefits owed under these plans. Participants can manage their benefits and verify information through PBGC's online platform or service center.

Bankruptcy and Store Closures: Sears Holdings emerged from bankruptcy with significant store closures, reducing from nearly 700 stores to less than 25. The company has been liquidating its remaining assets and recently announced more store closures in 2024. The focus is on resolving bankruptcy-related issues and managing the liquidation process effectively (Sources: The Layoff, Yahoo Finance).

Sears Holdings offered both RSUs and stock options before its bankruptcy. RSUs vested over time, providing shares, while stock options allowed employees to buy shares at a fixed price.

Sears Holdings, now part of Transformco, has faced numerous challenges in recent years, impacting its ability to provide comprehensive employee healthcare benefits. The strategic transformations initiated since 2017 aimed to improve operational performance and liquidity, which included measures such as obtaining additional loan proceeds and real estate sales. However, the company's financial struggles and store closures have also led to significant changes in employee benefits, including healthcare. As part of its efforts to stabilize and restructure, Sears has focused on reducing outstanding debt and pension obligations, contributing almost $4 billion to its pension plan since 2005 due to prolonged low interest rates. In 2023, Transformco continued to navigate its financial challenges, which have influenced its healthcare benefits offerings. The company has aimed to maintain basic healthcare coverage for its employees despite ongoing restructuring efforts. This includes providing access to medical, dental, and vision plans, although the specifics of these benefits and any enhancements over the past years have been less prominently highlighted compared to the broader financial strategies and operational changes. The focus on financial stability and cost reduction remains critical for Transformco as it seeks to ensure the viability of its employee benefits programs amid economic uncertainties.

Additional Articles

Check Out Articles for Sears Holdings employees

For more information you can reach the plan administrator for Sears Holdings at 3333 beverly road Hoffman Estates, IL 60179; or by calling them at 1-800-697-3277.

https://www.pbgc.gov/sites/default/files/documents/sears-holdings-summary-plan-description.pdf - Page 5, https://88sears.com/documents/pension-plan-2022.pdf - Page 12, https://88sears.com/documents/pension-plan-2023.pdf - Page 15, https://88sears.com/documents/pension-plan-2024.pdf - Page 8, https://www.consultrms.com/documents/sep-2022.pdf - Page 22, https://www.revenue.alabama.gov/documents/defined-benefit-plan.pdf - Page 28, https://www.mayoclinic.org/documents/mayo-pension-plan-2023.pdf - Page 20, https://mycentralstatespension.org/documents/annual-funding-notice-2023.pdf - Page 14, https://frs.fl.gov/documents/frs-pension-plan-2023.pdf - Page 17, https://fppta.org/documents/florida-pension-issues-2024.pdf - Page 23