Healthcare Provider Update: Healthcare Provider for Lincoln National: Lincoln National Corporation does not directly provide healthcare services. Instead, it operates as a financial services company that offers various insurance and investment solutions. For healthcare coverage, Lincoln National collaborates with health insurance providers like Aetna for its employee benefits and health-related products. Potential Healthcare Cost Increases in 2026: Healthcare costs are projected to rise significantly in 2026, driven by factors such as inflation in medical care and large anticipated increases from major insurers. Premiums for Affordable Care Act (ACA) marketplace plans could soar by over 20% on average, with some states facing hikes that exceed 60%. The potential expiration of enhanced premium subsidies will further exacerbate the situation, leading to a staggering increase of over 75% in out-of-pocket costs for many enrollees. As a result, consumers will need to navigate these challenges carefully, focusing on proactive strategies to manage their healthcare expenses effectively. Click here to learn more
When it comes to financial planning, especially for Lincoln National employees who are nearing or through retirement, tax management is essential to ensuring a comfortable and financially stable future. Due to the intricacy of tax regulations, Lincoln National retirees and their advisors may fail to recognize chances for tax savings or, on the other hand, may make mistakes that result in an increased tax liability. This post explores six common errors seen on retirees' tax returns and provides advice on how to potentially avoid them and make the most out of your tax plan.
Myths Regarding Deductions
It's common to misunderstand the choice between choosing the standard deduction versus itemizing deductions. Due to changes in tax legislation after 2018, Lincoln National retirees like the hypothetical John and Linda may not benefit from itemizing deductions even though they have a mortgage. This is a common circumstance. It is important to determine if the total of all possible itemized deductions—medical costs that are greater than 7.5% of AGI, mortgage interest, local and state taxes, and charitable contributions—exceeds the standard deduction limit, which for couples over 65 in 2023 was over $30,000.
Distributions from Qualified Charities: An Unused Possibility
Qualified Charitable Distributions (QCDs) are a useful tactic for Lincoln National retirees who want to give to charity in an effective manner. This is especially true for people who no longer itemize deductions. But eligibility starts at seventy-five, and one common mistake is to declare these distributions incorrectly on tax returns. Accurate Form 1040 documentation is necessary to guarantee that these contributions are acknowledged and optimized for taxation.
Unexpected Tax Obligations
Many Lincoln National retirees with inefficient investment portfolios or phantom gains have unanticipated tax problems. For example, even in years when the market is down, capital gains distributed by mutual funds might result in large tax bills. Investing in individual stocks or Exchange-Traded Funds (ETFs) in taxable accounts can provide investors with greater control over their tax obligations and the flexibility to choose when to realize gains.
Ignoring Cost Basis in Stock Transactions
Unnecessary tax burdens may result from selling equities without knowing the cost basis or failing to report it. Investments that were purchased before to the 2011 mandate requiring custodians to monitor this data often do not have a documented cost basis, which could result in the entire selling value being subject to gain taxation. Tax ramifications can be reduced by determining and correctly disclosing the cost basis or by taking these assets into account when making charitable contributions.
Medicare Premiums Tied to Income
The income-based premiums for Medicare Parts B and D are based on the income recorded two years prior to the current year. By submitting an SSA-44 form, Lincoln National retirees who are going through a major change in income—such as going into retirement—may be eligible for modified premiums. Unnecessary increases in Medicare premiums can be potentially avoided with awareness and proactive management of income levels.
Making Use of Tax Valleys
This 'tax valley,' where lower income levels offer potential for tax savings, is the period of time between retirement and required withdrawals from retirement plans. Tax advantages that are not accessible during higher income periods can be obtained by strategies like Roth conversions, taking distributions, or realizing capital gains during these years.
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In conclusion, even though handling tax planning and compliance may seem overwhelming, by being proactive and aware of typical pitfalls, one may greatly improve their financial future. Lincoln National retirees have many options to reduce their tax obligations and safeguard their financial resources for the future. These options include fine-tuning deduction strategies, maximizing charitable contributions, managing investment portfolios with an eye toward tax implications, accurately reporting all transactions, and strategically managing income to influence Medicare premiums and tax rates.
The effect of a retiree's place of residence on their tax obligations is one tactic that is frequently disregarded. Significant tax benefits are available to retirees in some jurisdictions, such as no state income tax, Social Security income exemptions, and advantageous treatment for pension and retirement account withdrawals. Relocating to a state with low taxes may save you a lot of money on taxes. Assessing state tax laws should be a crucial step in retirees' tax planning process as they make financial plans for the future. This is particularly important to take into account because it can impact estate planning techniques as well as retirement income in general. According to AARP's February 2023 report, 'States with the Best Tax Breaks for Retirees,'
Managing your retirement tax returns is like sailing a ship across the ocean. To safeguard their financial security, retirees must navigate the intricate waters of tax laws and regulations, much as an experienced sailor must be aware of shifting winds, currents, and potential hazards. Errors such as misjudging the impact of investment decisions on taxes, mishandling stock sales, maximizing charitable distributions, underestimating the influence of income on Medicare premiums, and not taking advantage of lower tax years are comparable to missing the good times, hitting undiscovered obstacles, or deciding on an ineffective path. To ensure a prosperous voyage during the retirement years, every action on this journey demands foresight, planning, and a grasp of the surrounding environment to maximize benefits and potentially avoid dangers.
Not Individualized tax advice. Discuss your situation with a qualified tax professional.
What is the primary purpose of Lincoln National's 401(k) Savings Plan?
The primary purpose of Lincoln National's 401(k) Savings Plan is to help employees save for retirement by providing tax-advantaged investment options.
How can employees at Lincoln National enroll in the 401(k) Savings Plan?
Employees at Lincoln National can enroll in the 401(k) Savings Plan through the company’s online benefits portal or by contacting the HR department for assistance.
Does Lincoln National match employee contributions to the 401(k) Savings Plan?
Yes, Lincoln National offers a matching contribution to the 401(k) Savings Plan, which helps employees maximize their retirement savings.
What types of investments are available in Lincoln National's 401(k) Savings Plan?
Lincoln National's 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and company stock.
What is the minimum contribution percentage for Lincoln National's 401(k) Savings Plan?
The minimum contribution percentage for Lincoln National's 401(k) Savings Plan is typically set at 1% of an employee's salary, but employees are encouraged to contribute more if possible.
Can employees at Lincoln National take loans against their 401(k) Savings Plan balance?
Yes, Lincoln National allows employees to take loans against their 401(k) Savings Plan balance under certain conditions.
What happens to my 401(k) Savings Plan if I leave Lincoln National?
If you leave Lincoln National, you can choose to roll over your 401(k) Savings Plan balance into an IRA or another qualified retirement plan, or you may withdraw the funds, subject to taxes and penalties.
How often can employees change their contribution amounts to Lincoln National's 401(k) Savings Plan?
Employees at Lincoln National can change their contribution amounts to the 401(k) Savings Plan at any time, subject to certain administrative deadlines.
Are there any fees associated with Lincoln National's 401(k) Savings Plan?
Yes, Lincoln National's 401(k) Savings Plan may have administrative fees and investment-related fees, which are disclosed in the plan documents.
What educational resources does Lincoln National provide to help employees understand the 401(k) Savings Plan?
Lincoln National offers educational resources such as workshops, online tools, and one-on-one consultations to help employees understand and manage their 401(k) Savings Plan.