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Healthcare Provider Update: Verizon collaborates with Aetna as its primary healthcare provider, offering a range of health plans and services to its employees and their families. Looking ahead to 2026, the healthcare landscape is poised for significant change, as record hikes in Affordable Care Act (ACA) premiums are anticipated. With some states facing increases exceeding 60%, many individuals could see their out-of-pocket premiums rise by more than 75%, particularly if enhanced federal premium subsidies are not extended. This scenario could create an additional burden for Verizon employees, emphasizing the importance of strategic planning for healthcare coverage amidst such dramatic shifts in costs. Click here to learn more
For Verizon employees nearing Retirement, understanding Massachusetts' new Millionaires tax could help avoid unwanted Tax consequences from financial transactions such as property sales that would push them over the USD 1 million income threshold, says [Advisor Name], of the Retirement Group, a division of Wealth Enhancement Group.
As Verizon employees navigate the changing tax landscape in Massachusetts, major transactions such as the sale of assets should not leave them with a higher tax bill,' says [Advisor Name], of the Retirement Group, a division of Wealth Enhancement Group.
In this article we will discuss:
1. Recent changes in Massachusetts tax structure reflect recent financial and legislative developments.
2. Massachusetts voters in November 2016 approved a constitutional amendment levying 4% on incomes over USD 1 million. This surtax on top of the 5% fixed rate means an effective 9% tax on incomes over seven figures.
3. That legislative amendment became effective at the beginning of this year.
In anticipation of that amendment's revenue stream, incumbent governor Maura Healey has set aside USD 1 billion from this tax already. That big sum is allocated to help with education and transportation projects, as provided in the budget she approved last week.
The financial advisory community nevertheless makes an important observation. Exceptions to the USD 1 million threshold could temporarily lift a subset of taxpayers following some significant financial dealings. Verizon employees who sell properties or enterprises, for example, may temporarily be in the surtax bracket. Leader of Darrow Wealth Management Kristin McKenna said the scope of this surtax was perhaps not entirely understood by voters. It includes high-value transactions like property sales that might mistake some for millionaires, she said.
In spite of these factors, the bigger picture suggests that the surtax may have modest effects. This tax will affect only about 0.6% of Massachusetts households in any given year - or about 21,000 taxpayers - according to a Tufts study.
Verizon employees need to understand how regional tax policies affect financial planning when they enter retirement. And many Verizon retirees live in Massachusetts, according to a 2022 report from the National Association of Retirement Plan Participants (NARPP). Understanding the state's surtax helps many of these people afford a comfortable retirement - they probably have assets, investments or stock options from their former employers. Particularly, they may be subject to the Massachusetts Millionaires Tax if their annual income exceeds USD 1 million through liquidation or other financial activities.
But financial experts differ on that. The majority remains unaffected,' said Chris Chen of Insight Financial Strategists. Still, projections are that by then 10% to 20% of the population would be affected,' he said.
Clear View Wealth Advisors' Steve Stanganelli has a different perspective. He described a scenario where he advised a client to alter a Roth conversion strategy in anticipation of a tax change. Stanganelli said perhaps the magnitude of the tax - especially for property sellers - was overstated. But he did not specify when a homeowner would be liable, for example if a low basis property appreciates significantly. Good news: Some capital gains from real estate sales in the state are exempt from tax.
Stanganelli stresses the importance of tax and financial planners in such circumstances and recommends consulting specialists before making major financial decisions such as property sales.
Financial planning sees this tax amendment as an opportunity. Advisors can use tax-efficient portfolio management or more complex techniques like trust utilization. So Edward Jastrem of Heritage Financial calls this a mix of estate and income-tax planning that will require bespoke solutions for each client.
An intriguing state-specific strategy emerged. The state of Massachusetts lets taxpayers filing joint federal returns file separately. Hence, couples with combined incomes approaching USD 1 million could snaffle the surtax.
But those alterations always have wider implications for Verizon retirees. Some financial experts say the surtax may push high-net-worth investors to leave for more tax-friendly states like New Hampshire or Florida.
No wonder then that opinions on this surcharge vary. Some, like Stanganelli, an Amesbury city council member, back it because it could fund local services, others have reservations. The trepidation stems from fears such fiscal policies would keep business magnates and aspiring entrepreneurs from settling in Massachusetts.
Yet others—including Chen—say even with this surtax, Massachusetts still has a competitive tax burden compared to states like California and New York.
Final Thoughts - while the Massachusetts Millionaires Tax is certainly a significant legislative initiative, the overall economic, business and individual wealth management implications are still to be fully assessed.
The new Massachusetts Millionaires Tax is like navigating the Cape Cod Canal. Verizon retirees and those nearing retirement need to understand this tax reform like sailors need to know tide schedules and channel widths. As a momentary misjudgment could run a ship aground in the canal, unexpected financial transactions such as the sale of property or the liquidation of assets could temporarily increase an individual's income to USD 1 million and pose tax risks. Still, with a little direction from an experienced captain on board, you can plot your course to profit from the financial tides and have a safe passage.
Added Fact:
A note to Verizon millionaires: The new surtax on incomes exceeding USD 1 million is now extended to certain capital gains from property sales in Massachusetts. This means highly-net-worth people who are involved in real estate transactions should monitor their income carefully lest they fall into the surtax bracket due to property sales. It highlights the need for careful financial planning and advice from tax and financial professionals when making major financial decisions such as purchasing a home or adjusting retirement and wealth management plans to the changing tax landscape in Massachusetts.
Added Analogy:
The new tax landscape in Massachusetts is like sailing in unpredictable waters—like the Cape Cod Canal. It's like being the captains of their financial ships for Verizon Millionaires, so knowing the Massachusetts Millionaires Tax is important for your voyage. As a skilled captain would study tide schedules and channel widths to avoid grounding their ship, high-net-worth individuals should also be wary of their income during major financial transactions like property sales to avoid unintended tax consequences. Like a canal navigator, they need help navigating this tax reform and making sound decisions about retirement and wealth management. As an experienced captain at the helm ensures a successful voyage, similarly sound financial planning and specialized advice can create safe financial seas and a harbor in Massachusetts.
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- How Are Workers Impacted by Inflation & Rising Interest Rates?
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Sources:
1. Massachusetts Department of Revenue. '4% Surtax on Taxable Income Over $1,000,000.' Massachusetts Department of Revenue, 6 Feb. 2025, www.mass.gov/info-details/4-surtax-on-taxable-income-over-1000000 .
2. MassBudget. 'Even Among Retirees with High Wealth, Few Will Pay the Fair Share Tax.' MassBudget, 17 Oct. 2022, 3. www.massbudget.org .
3. Center for State Policy Analysis, Tufts University. 'Evaluating the Massachusetts Millionaires Tax.' Tufts University, Jan. 2022, cspa.tufts.edu/sites/g/files/lrezom361/files/2022-01/cSPA_Evaluating_MA_Millionaires_Tax.pdf.
4. WBUR News. 'A 'Millionaires' Tax' in Mass. Would Net $1.3 Billion in Revenue, Report Says.' WBUR News, 13 Jan. 2022, www.wbur.org/news/2022/01/13/millionaires-tax-report-massachusetts .
5. Lankford, Kimberly. 'Retirement Taxes: How All 50 States Tax Retirees.' Kiplinger , Apr. 2020, www.kiplinger.com/retirement/602202/taxes-in-retirement-how-all-50-states-tax-retirees .
How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?
Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.
In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?
Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.
What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?
IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.
How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?
Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.
For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?
Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.
How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?
Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.
What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?
Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.
What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?
Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.
In terms of retirement preparedness, how does the pension plan at Verizon accommodate employees’ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?
Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.
How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?
Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.
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