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The $84 Trillion Wealth Shift: What Oneok Employees Need to Know About Inheriting from Parents

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The way that high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals distribute their wealth is changing dramatically. The way that wealth transfer is approached has changed significantly as a result of significant modifications to U.S. tax law, especially after President Donald Trump signed the Tax Cuts and Jobs Act in 2017. The federal estate tax exemption was significantly increased by this act, rising from about $2 million less than 20 years ago to $13.61 million now. As a result, an estate tax-free transfer of more than $27 million to heirs is now possible for married couples. The estate tax rises to 40% for assets that beyond this limit. For Oneok employees nearing retirement, it is important to keep on eye on your investment portfolio during these dramatic shifts.

The estate planning methods of high net worth and ultrahigh net worth corporate individuals have changed as a result of this significant rise in the estate tax exemption. With an increasing trend towards delaying the age at which heirs can access their inheritance, trusts have become a regular tool in this context. This hold-up in access is not only a result of mistrust; rather, it is a calculated strategy to guarantee longevity and shield the riches from possible threats like creditors and divorce.

These factors are a component of a larger plan to handle the wealth transfer in a way that guarantees the assets' security and strategic usage. Wealth transfers are increasingly likely to come with conditions or demands that beneficiaries must fulfill in order to receive their inheritance. These requirements, which might include everything from academic success to involvement in certain charitable endeavors, make sure that the riches benefits the recipient as well as more general society objectives.

Given the context of the 'great wealth transfer,' where an estimated $84 trillion is anticipated to exchange hands over the next several decades, this strategic approach to wealth transfer is especially pertinent. The accumulation of wealth is changing during this time, with inheritance becoming more common than entrepreneurship. The geographic distribution of wealth further emphasizes the worldwide ramifications of these wealth transfer tactics, with half of the world's billionaires living in nations with no inheritance tax. Being mindful of tax laws on inheritance could be beneficial for Oneok retirees.

These changing tactics are motivated by the desire of wealthy people to have control over how their fortune is used during their lifetime. This is typically expressed in letters of intent or other informal correspondence, laying out expectations for the successors' contributions and way of life without enforcing stringent guidelines.

Furthermore, wealth transfer methods go beyond simple inheritance. These include offering advantageous conditions for intrafamily loans and directly paying medical costs or tuition, thereby not deducting them from gift and estate taxes. This deliberate wealth distribution is further facilitated by the annual tax-free gift allowance, which will stand at $18,000 per recipient in 2024 (double for couples) and will not affect the donor's lifetime exemptions.

The 2017 tax law's sunset provisions make the present wealth tax exemption vulnerable to prospective revisions; if Congress does not extend it, the exemption could be cut in half by the end of 2025. Many high net worth individuals have accelerated their wealth transfer plans in anticipation of this impending shift in order to take advantage of the larger exemption while it is available.

The way wealth is transferred between high net worth and ultrahigh net worth individuals is changing and shows a sophisticated fusion of intergenerational wealth management, strategic philanthropy, and financial planning. In order to guarantee that wealth not only endures but also positively impacts the beneficiaries' and society's overall quality of life, it emphasizes the significance of strategic counsel and planning in navigating the intricacies of tax laws and wealth transfer schemes. Being aware of these tax laws and wealth transfer schemes may also benefit your plan of retiring from Oneok.

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Within the framework of the 'great wealth transfer,' it is important to emphasize that charitable giving techniques are starting to take center stage for Oneok individuals going through asset transfers. Donor-Advised Funds (DAFs) have become increasingly popular among wealthy people, according to a 2021 National Philanthropic Trust research, and contributions to DAFs have reached an all-time high. This trend highlights an increasing tendency for flexible, tax-efficient philanthropic entities that enable contributors to make assets contributions during their lifetime and maintain the flexibility to allocate distributions to charitable organizations over time. This strategy fits with the aspirations of many people who want to witness their riches have a real influence on the topics they care about in their lifetime.

The 'great wealth transfer' can be compared to sailing a magnificent ship across a large ocean. Rich people carefully plot the path of their wealth transfer, just like an experienced captain carefully prepares the route, taking into account the wind, the ship's capacity, and the intended destination. Like accelerating a journey with favorable winds, the 2017 Tax Cuts and Jobs Act expands the estate tax exemption, acting as a powerful tailwind to move the ship forward. The prudent application of trusts and provisions for inheritance functions as the ship's rudder, directing the riches securely to its designated harbors and guaranteeing that it upholds the heirs, encourages accountability, and supports charitable endeavors. Ensuring that the riches transported across these waterways leaves a lasting legacy and positively benefits the coastlines of future generations is just as important as reaching the objective on this journey.

What specific factors does ONEOK, Inc. consider when determining an employee's eligibility for retirement benefits, and how do these factors align with commonly understood retirement planning principles in the context of the ONEOK, Inc. Retirement Plan?

Eligibility Factors: ONEOK, Inc. considers several factors when determining eligibility for its retirement plan, such as date of hire, age, and participation in certain programs like the Profit Sharing Plan. Employees must have been hired before January 1, 2005, and must meet the minimum age of 21 to be eligible(ONEOK_Inc_Retirement_Pl…). These factors align with common retirement planning principles, such as ensuring long-term employment and participation in benefit programs.

How does the structure of the ONEOK, Inc. Retirement Plan impact the financial planning strategies of employees who are nearing retirement age, particularly in relation to their final average earnings and years of credited service?

Plan Structure and Financial Planning: The ONEOK Retirement Plan uses a formula based on Final Average Earnings and Years of Credited Service. This structure impacts employees' financial planning, as it encourages maximizing years of service and optimizing earnings in the final years before retirement(ONEOK_Inc_Retirement_Pl…). Employees nearing retirement should focus on maximizing both variables for a stronger financial outcome.

In what ways can changes to the IRS limits in 2024 affect the retirement planning of employees participating in the ONEOK, Inc. Retirement Plan, and how can they adapt their strategies to accommodate these changes?

IRS Limits and Impact on Planning: Changes to IRS limits, such as increases in contribution caps or income thresholds, could affect employees’ ability to defer taxes and maximize savings(ONEOK_Inc_Retirement_Pl…). Employees can adapt by adjusting their contributions to their 401(k) or other retirement accounts in line with new limits, ensuring they stay within allowable tax advantages.

For employees considering early retirement, what are the implications of selecting this option under the ONEOK, Inc. Retirement Plan compared to waiting for normal retirement benefits, and what should they consider regarding potential reductions in benefits?

Early Retirement vs. Normal Retirement: Opting for early retirement under the ONEOK Plan can lead to a reduction in benefits, as payments are reduced based on the Early Retirement Benefit Reduction Schedule(ONEOK_Inc_Retirement_Pl…). Employees should consider their financial needs and health before making this decision, as waiting until normal retirement age results in higher monthly benefits.

How does the process for applying for retirement benefits at ONEOK, Inc. work, and what specific documentation and timelines should employees be prepared to navigate in order to ensure a smooth transition into retirement?

Retirement Application Process: Employees must request a retirement estimate online or through HR, and submit retirement forms and documentation to initiate benefits(ONEOK_Inc_Retirement_Pl…). Timely submission is key to ensure a smooth transition, and benefits usually begin the first of the month after retirement.

What options are available to employees of ONEOK, Inc. if they wish to change their designated beneficiaries in the retirement plan, and how can they ensure that these changes are executed properly?

Changing Beneficiaries: Employees can change their designated beneficiaries by submitting a pre-retirement death beneficiary form(ONEOK_Inc_Retirement_Pl…). Spousal consent is required for changes that involve someone other than the spouse, and notarization is needed to ensure proper execution.

How does ONEOK, Inc. manage the investment of its retirement plan assets, and what guidelines are in place to ensure that participants' funds are invested prudently and in alignment with their retirement goals?

Investment Management: ONEOK manages its retirement plan assets in a trust, with investments overseen by plan fiduciaries following an investment policy(ONEOK_Inc_Retirement_Pl…). This policy ensures that funds are invested prudently, balancing risk and returns in alignment with participants' retirement goals.

In terms of employee rights under ERISA, what recourse do employees of ONEOK, Inc. have if they believe their benefits are being mismanaged or if they encounter issues when filing claims related to their retirement benefits?

ERISA Rights and Recourse: Employees have rights under ERISA, including the ability to file claims and appeals if they believe their benefits are being mismanaged(ONEOK_Inc_Retirement_Pl…). If claims are denied, they can appeal and ultimately take legal action under Section 502(a) of ERISA if necessary.

What procedures does ONEOK, Inc. have in place for communicating changes to the retirement plan, and how can employees stay informed about updates that may affect their benefits or retirement planning?

Plan Updates and Communication: ONEOK communicates changes to its retirement plan through electronic and physical notices(ONEOK_Inc_Retirement_Pl…). Employees are encouraged to stay updated by regularly reviewing these communications and contacting HR if they need clarification.

How can employees of ONEOK, Inc. reach out for additional information regarding the retirement plan, and what are the best practices for utilizing the resources available for retirement planning assistance?

Accessing Retirement Information: Employees can contact ONEOK HR Solutions or access the Employee Self-Service platform for detailed information about their retirement plan(ONEOK_Inc_Retirement_Pl…). Best practices include regular consultations with HR to stay informed and plan effectively for retirement.