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How Intuit Employees Can Navigate New 401(k) Rules Amid Pension Changes Before 2028

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Healthcare Provider Update: Healthcare Provider for Intuit Intuit, a leading financial software company, primarily utilizes UnitedHealthcare as its healthcare provider. This partnership enables Intuit to offer competitive health benefits and services to its employees, ensuring comprehensive coverage options. Brief on Healthcare Cost Increases in 2026 In 2026, healthcare costs are anticipated to surge dramatically, with many insured individuals feeling the brunt of escalating premiums. Factors contributing to this sharp increase include the loss of enhanced federal subsidies for Affordable Care Act (ACA) marketplace plans, which has the potential to spike out-of-pocket costs by over 75% for the majority of enrollees. Additionally, numerous states are experiencing proposed premium hikes, with some exceeding 60%, primarily fueled by rising medical costs and aggressive rate increases from top insurers. As a result, consumers and employers alike will face significant financial pressures, prompting many to re-evaluate their healthcare options and strategies in light of these challenges. Click here to learn more

The Act mandates that employees, including Intuit workers, aged 50 and above, earning over $145,000 in the previous year, must make any additional contributions to their 401(k) plans on a Roth basis. This means these contributions will be made with after-tax money. Consequently, while these employees cannot claim a tax deduction for these contributions, their withdrawals during retirement will be tax-free. For 2023, this translates to an additional contribution limit of $7,500, allowing for a total contribution of $30,000 for those over 50.

Implications for High-Earning Intuit Employees

The new rule significantly impacts how high earners plan for retirement. Under this system, they pay taxes upfront on their catch-up contributions but benefit from tax-free growth and withdrawals. This differs from traditional pre-tax 401(k) contributions, where taxes are deferred until withdrawal in retirement.

Vanguard's report highlights that in 2022, 16% of eligible employees utilized catch-up contributions. The shift to Roth contributions could alter the retirement planning landscape, especially for those in higher tax brackets who might prefer deferring taxes.

Challenges and Legislative Errors

Despite its intent, Secure Act 2.0 faces operational and legislative challenges. A notable error in the Act is the accidental omission of a provision increasing the pre-tax deferral limit by the amount of any catch-up contribution, effectively making these contributions technically illegal. Congress has acknowledged this mistake and is working towards a resolution.

Furthermore, there are concerns about the implementation timeline. The American Retirement Association (ARA), along with over 200 employers and financial institutions, has requested a two-year delay, citing a lack of clarity and the need for extensive administrative adjustments.

Public Perception and Government Role

There is some debate over the government's role in dictating the nature of retirement savings. The shift to mandatory Roth contributions for high earners has sparked discussions about the psychology of savings and government intervention. Some argue that this move might not be well-received by Intuit workers, particularly as it requires paying taxes during higher-earning years rather than potentially lower tax rates in retirement.

Potential Benefits of Roth Accounts

Despite the controversies, Roth accounts offer distinct advantages, especially for higher earners. The Act eliminates required minimum distributions from Roth 401(k)s before the account holder's death, a feature not available in traditional retirement accounts. This can be particularly beneficial for those seeking flexibility and tax-efficient growth.

Consequences of Non-Action by Congress

If Congress does not address these issues promptly, there could be significant repercussions for retirement savings in 2024. Many plans might be forced to eliminate catch-up contributions entirely for the year. This would not only limit the retirement saving opportunities but also the potential growth of these investments.

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Possible Solutions and IRS Involvement

In the event of continued legislative delays, the IRS and U.S. Treasury could intervene. The ARA suggests that temporary relief could be provided by deferring the enforcement of new rules, a strategy previously used in managing complex required minimum distribution rules for certain inherited retirement accounts.

Conclusion

The introduction of Secure Act 2.0 marks a pivotal change in retirement planning for high earners. While it offers the benefit of tax-free withdrawals, it also presents challenges in implementation and public reception. The resolution of these issues will be crucial for the smooth transition and effectiveness of the new regulations in shaping retirement savings strategies.

An important consideration for those nearing retirement is the potential impact of the Secure Act 2.0 on Social Security benefits. While the Act focuses on 401(k) plans, it's crucial to understand that high-earning individuals may also face implications on their Social Security benefits. According to a report by the Social Security Administration (SSA) published in 2023, individuals with higher incomes could see an increase in their provisional income, potentially leading to a higher percentage of their Social Security benefits being subject to tax. This could affect retirement planning, as the combination of mandatory Roth contributions and increased taxable Social Security benefits may require a reevaluation of retirement income strategies, particularly for those in higher tax brackets.

Navigating the changes brought by Secure Act 2.0 for high-earning retirement savers is akin to a seasoned sailor adjusting to new maritime regulations. Just as a sailor, well-versed in navigating the open seas, must adapt to new navigation rules to ensure a smooth and lawful journey, high-earning professionals must now steer their retirement savings plans in accordance with the new 401(k) contribution regulations. The shift to mandatory Roth contributions is like changing the type of sail mid-voyage – it requires a new strategy and understanding, but can potentially lead to more favorable winds in the future, offering tax-free withdrawals in retirement, much like a sailor reaching calm waters after a period of adjustment.

What type of retirement savings plan does Intuit offer to its employees?

Intuit offers a 401(k) retirement savings plan to its employees.

Does Intuit provide a company match for its 401(k) contributions?

Yes, Intuit offers a company match for employee contributions to the 401(k) plan, subject to certain limits.

How can Intuit employees enroll in the 401(k) plan?

Intuit employees can enroll in the 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

What is the eligibility requirement for Intuit employees to participate in the 401(k) plan?

Most Intuit employees are eligible to participate in the 401(k) plan after completing a specified period of employment, typically within the first year.

Can Intuit employees take loans against their 401(k) savings?

Yes, Intuit allows employees to take loans against their 401(k) savings, subject to the plan's terms and conditions.

What investment options are available in Intuit's 401(k) plan?

Intuit's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and company stock.

How often can Intuit employees change their 401(k) contribution amounts?

Intuit employees can change their 401(k) contribution amounts at any time, subject to the plan's guidelines.

Does Intuit provide financial education resources for employees regarding their 401(k) plans?

Yes, Intuit provides financial education resources and tools to help employees make informed decisions about their 401(k) savings.

What happens to my 401(k) savings if I leave Intuit?

If you leave Intuit, you can choose to roll over your 401(k) savings into another qualified retirement plan, cash out, or leave the funds in the Intuit plan, depending on the plan's rules.

Is there a vesting schedule for Intuit's 401(k) company match?

Yes, Intuit has a vesting schedule for the company match, which means employees must work for a certain period to fully own the matched funds.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
In July 2024, Intuit announced the layoff of 1,800 employees, roughly 10% of its workforce, as part of a larger restructuring effort aimed at focusing on artificial intelligence (AI) and automation. This restructuring is being driven by the company's strategy to shift toward AI-driven solutions, such as its AI-powered financial assistant, Intuit Assist. As part of this strategy, Intuit plans to rehire in new AI-focused and customer-facing roles, with a goal of boosting innovation and growth in areas like data, fintech, and mid-market solutions. In its Securities and Exchange Commission (SEC) filings, Intuit stated that this transition would come with an estimated $260 million in layoff-related costs, including severance and employee benefits, and further investments into AI and data-driven platforms.
Intuit offers its employees stock options and Restricted Stock Units (RSUs) as part of their compensation packages. Stock options give employees the right to purchase Intuit shares at a predetermined price, while RSUs are a promise to grant shares upon meeting vesting requirements. For example, RSUs vest over time or after performance milestones, with taxes withheld from the vested shares before employees can access the remaining stock. Both stock options and RSUs are considered ordinary income once vested and are reported on W-2 forms​ (Intuit Benefits)​ (TurboTax). In 2022, 2023, and 2024, Intuit provided RSUs with vesting schedules based on years of service and stock performance. Typically, a portion of the shares is withheld to cover taxes upon vesting, and the remaining shares are transferred to the employee's account. Employees can then decide whether to hold or sell the shares. RSUs are commonly awarded to attract and retain talent and are available to full-time employees, with executives often receiving higher allocations​
Medical Coverage: Intuit provides several medical plans depending on the employee's location, such as the Cigna Choice Fund with Health Savings Account (HSA), UnitedHealthcare (UHC) Network Plan, Cigna Managed Network Plan (EPO), and Kaiser Permanente (for employees in California and Georgia). These plans include broad coverage for services like preventive care, family planning, and physical therapy​ (Intuit Benefits)​ (Intuit Benefits). Health Savings Account (HSA): Employees enrolled in the Cigna Choice Fund with HSA plan can contribute tax-free money to cover medical expenses. In 2023, the IRS limit was $3,850 for individual coverage and $7,750 for family coverage, increasing to $4,150 for individuals and $8,300 for families in 2024​ (Intuit Benefits). Mental Health and Wellbeing: Intuit places a strong emphasis on mental health. Employees have access to no-cost confidential counseling, support for managing stress, depression, and workplace challenges, as well as resources for mindfulness and resilience building
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For more information you can reach the plan administrator for Intuit at , ; or by calling them at .

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