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How Ameren Employees Can Benefit from Estate Planning During Market Volatility

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'Ameren employees facing market downturns can leverage strategic estate planning opportunities, such as gifting undervalued assets and using tools like GRATs and Roth IRAs, to mitigate taxes and pass on more wealth to heirs—turning market volatility into an advantage.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Ameren employees should view market downturns as an opportunity to reassess their estate planning strategies, using tools like GRATs and Roth IRA conversions to transfer more wealth while mitigating tax liabilities for future generations.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How market downturns can present estate planning opportunities.
The strategic use of tools like GRATs and Roth IRA conversions.
The importance of charitable giving in reducing taxable estates during volatile periods.

Estate planning is often seen as a challenging process, particularly during volatile market conditions. Making decisions with long-term impacts can be difficult when share prices are erratic and future market performance is uncertain. However, careful planning during these volatile periods can lead to better future returns and more efficient asset transfer to successors. While many focus on estate planning during market upswings, some of the most strategic decisions can be made when asset values are declining, particularly for Ameren employees preparing for retirement.

Estate Planning and Volatility: A Strategic Advantage

Estate planning is often associated with market growth, focusing on transferring assets when prices are high. Yet, when assets are undervalued due to market downturns, significant opportunities often arise. The market's recovery after a sharp drop, like the one in April, shows how volatility can lead to wise decision-making. Future wealth transfers can be optimized by focusing on asset quantity instead of current value, as more shares can be passed on to heirs before gift-tax exemptions are exceeded, which can be an important strategy for Ameren employees planning their estates.

The concept of moving assets during a market downturn proves to be more beneficial for estate planners than it may initially appear. When asset prices are low, more shares can be transferred before hitting the $19,000 annual federal gift-tax exemption threshold for 2025. This strategy allows heirs to benefit from future growth once the market recovers, providing a valuable option for those at Ameren looking to optimize their estate planning during volatile times.

This approach is also useful for those aiming to stay under the $14 million per person lifetime federal estate tax exemption. For example, if a business was initially valued at $15 million but is now worth $14 million, a donor can place it in a trust. The tax-free transfer of future expansion to heirs keeps the business outside the donor's estate, a strategy that Ameren employees could consider when planning for their family's future.

Changes to Gifting Exemptions Affecting Taxes

Though market downturns can provide estate planning benefits, it’s important to remember that estate planning laws are always changing. With Congress debating potential changes to gifting amounts, it’s essential to act while exemptions remain high. If the estate tax exemptions aren't renewed, the exemption may revert to around $6.8 million, adjusted for inflation. This shift could greatly impact wealth transfer plans, so it’s vital for Ameren employees to take advantage of higher exemption levels while they are still in place.

Exploring Other Estate Planning Strategies

Grantor retained annuity trusts (GRATs) are another option for individuals who have already used their lifetime exemption but still want to reduce wealth transfer taxes. These irrevocable trusts allow individuals to leave assets to their heirs while retaining annuity income for a period. GRATs help mitigate estate taxes on any asset appreciation during the trust's duration, offering an option for Ameren employees looking to pass on their wealth in a tax-efficient way.

The Internal Revenue Service (IRS) sets the annuity payout rate at 120% of the applicable federal mid-term rate, which is currently 5%. For beneficiaries to profit from additional value, the asset's growth must exceed this hurdle rate. If the asset's growth surpasses this rate, the remaining balance in the trust is distributed to the heirs tax free. Ameren employees considering this strategy can potentially avoid estate taxes and preserve their wealth from future tax burdens.

Although current interest rates aren't exceptionally low, Dos Santos notes that using undervalued assets in a GRAT may still lead to favorable outcomes. By leveraging lower asset prices, individuals can establish GRATs with a higher chance of surpassing the hurdle rate when the market rebounds, a strategy that could be beneficial for Ameren employees who want to plan ahead.

A Simpler Approach: Switching to a Roth IRA

Not all estate planning strategies need to be complicated. Sometimes, simpler methods provide significant tax advantages. For instance, a 90-year-old Ameren employee switched from a $5 million traditional IRA to a Roth IRA during a period of market decline. The client reduced the taxable estate by paying the conversion taxes upfront, and now her son will receive the entire Roth IRA tax-free, along with any future gains.

Dos Santos believes this is a smart strategy, especially for seniors concerned about their taxable estates. By reducing the size of the estate, the Roth IRA allows its full value to be passed on tax-free to future generations, making it a great option for Ameren employees planning for their heirs.

The Importance of Thoughtful Estate Planning Decisions

Estate planning should be done with care, especially when using irrevocable trusts like GRATs. Once assets are placed in these trusts, they cannot be withdrawn, so individuals must carefully consider their choices. Nevertheless, strategic estate planning presents unique opportunities to pass on more wealth to heirs without incurring unnecessary taxes, particularly during market volatility. Ameren employees can make the most of these opportunities by strategically planning their estate transfers.

For those looking to efficiently transfer wealth and reduce their taxable estate, current market conditions may present opportunities. Market downturns can provide a tactical advantage, whether through Roth IRA conversions, using the federal estate tax exemption, or establishing GRATs. By focusing on the number of shares rather than current asset values, individuals can position themselves to realize long-term benefits and enable their heirs to inherit the full value of their transferred assets.

In conclusion, volatility is often viewed as a threat to financial stability, but it can actually be an asset when approached strategically. By leveraging low asset values during market downturns, Ameren employees can potentially increase future returns and build a better future for their heirs.

Tax Benefits of Charitable Giving in Estate Planning

When considering estate planning during volatile market periods, charitable giving offers additional tax benefits. By donating depreciating assets such as stocks or real estate directly to a charity, individuals can reduce their taxable estate and avoid paying capital gains tax on appreciated assets. This tactic not only reduces estate taxes but also allows individuals to give back.

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Sources:

1. Fuscaldo, Donna. 'Markets Are Down: Here's How Your Estate Can Benefit.' Kiplinger , 15 Mar. 2025, www.kiplinger.com . Accessed 26 May 2025.

2. Chmielewski, Paul. 'Estate Planning During Times of Market Volatility.' Cerity Partners , 25 Mar. 2025, www.ceritypartners.com . Accessed 26 May 2025.

3. Kiplinger Staff. 'Eight Ways to Financially Plan Your Way Through Challenging Times.' Kiplinger , 24 May 2025, www.kiplinger.com . Accessed 26 May 2025.

4. Kotlikoff, Laurence. 'This Move Can Save You Tons on Taxes in Retirement. It's Best to Go Big.' Barron's , 25 May 2025, www.barrons.com . Accessed 26 May 2025.

5. Branton, Steve. 'How Sequence of Returns Risk Could Affect Your Retirement—And What HNW Investors Should Do.' Investopedia , 25 May 2025, www.investopedia.com . Accessed 26 May 2025.

How does the Ameren retirement plan design ensure that employees' benefits under the Union Cash Balance Plan grow over time, and what specific features contribute to this growth? Discuss how amortization methodologies and interest credits are determined for Ameren employees, particularly in relation to age and years of service.

Growth of Benefits: Ameren’s Union Cash Balance Plan ensures growth through annual interest credits and regular credits based on the employee’s age and pensionable earnings. Interest credits are applied at a rate of 5%, subject to change yearly based on Treasury rates plus an additional 1%. Employees also receive regular credits that increase with age, ranging from 3% to 8% of pensionable earnings(Ameren_Corporation_Sept…).

In what ways can employees of Ameren leverage the various payment methods available to them upon retirement? Elaborate on how the choice between lump-sum payments and annuities impacts their financial planning post-retirement.

Payment Methods: Ameren offers employees flexibility in receiving benefits as a lump sum or annuity. Lump sum payments provide immediate access to all benefits, which can be rolled over into other retirement accounts, while annuities provide steady income for life. Choosing between these affects financial planning by balancing immediate liquidity versus long-term income security(Ameren_Corporation_Sept…).

What are the implications of leaving Ameren before reaching retirement age, particularly in regard to vesting and benefit access? Discuss the conditions that affect an employee's eligibility and the importance of completing the required years of service.

Leaving Before Retirement: If an employee leaves Ameren before reaching retirement age but has completed three years of service, they are vested and entitled to their full cash balance account. If an employee leaves before vesting, their account is forfeited. Completing the required years of service is critical for retaining benefits(Ameren_Corporation_Sept…).

How does the Ameren Corporation balance contributions to the retirement plan with the need to comply with IRS regulations, specifically with the aim of avoiding a "top heavy" classification? Analyze how this impacts employee benefits and the strategies used by Ameren to ensure compliance.

Compliance with IRS Regulations: Ameren ensures compliance with IRS “top heavy” rules by monitoring the allocation of contributions to avoid excessive benefits going to key employees. If more than 60% of benefits are allocated to key employees, Ameren must provide minimum benefits to non-key employees, impacting overall contributions and plan design(Ameren_Corporation_Sept…)(Ameren_Corporation_Sept…).

What are the survivor benefits options available under Ameren's Union Cash Balance Plan, and how are these benefits calculated for spouses and non-spouse beneficiaries? Provide details on how varying age differences between an employee and their beneficiary affect these calculations.

Survivor Benefits: Under the Union Cash Balance Plan, a spouse beneficiary receives survivor benefits either as a lump sum or lifetime annuity. Non-spouse beneficiaries receive a lump sum. The calculation of survivor benefits adjusts based on the age difference between the employee and the beneficiary(Ameren_Corporation_Sept…).

How do the changes in IRS limits for retirement accounts in 2024 potentially affect employees of Ameren when planning for retirement? Discuss the strategic considerations Ameren employees should take into account in relation to contribution limits and catch-up provisions.

IRS Limits and 2024 Changes: Changes to IRS contribution limits in 2024 may affect employees by altering the maximum they can contribute to retirement accounts, including catch-up provisions for those over 50. Ameren employees should monitor these changes to maximize their retirement savings strategies(Ameren_Corporation_Sept…).

In what ways does the Ameren Corporation's retirement plan administration ensure transparency and participant rights, particularly under ERISA? Explore the various rights employees have regarding access to plan documents and the recourse available in the event of a benefit claim denial.

ERISA Rights and Transparency: Ameren ensures transparency and adherence to ERISA, giving employees the right to access plan documents, including the SPD and financial reports. In case of benefit claim denials, employees can appeal and, if necessary, pursue legal action(Ameren_Corporation_Sept…).

How can Ameren employees contact the company to learn more about their retirement benefits and navigate the complexities of the Union Cash Balance Plan? Discuss the available resources and support channels for employees to gain clarity on their benefits.

Contact for Plan Information: Ameren employees can contact the company through its pension benefits line at 877.7my.Ameren for details on retirement benefits and support with navigating the Union Cash Balance Plan. Online resources like myAmeren Pension Benefits also provide account information and assistance(Ameren_Corporation_Sept…).

What specific factors influence the calculation of interest credits in the Union Cash Balance Plan, and how do these credits affect the overall retirement savings of Ameren employees? Analyze the importance of understanding these factors in relation to future financial security.

Interest Credits: Interest credits are determined based on a fixed rate (5%) or the sum of Treasury Constant Maturity rates plus an additional percentage, ensuring steady account growth. Understanding how these credits accumulate is essential for predicting future retirement savings(Ameren_Corporation_Sept…).

How does the flexibility provided in the Ameren retirement plan enhance employee satisfaction and encourage long-term retention? Discuss the impact of features such as portability of benefits and options for account growth on employee engagement.

Flexibility and Retention: The portability of benefits and the ability to choose between lump sum or annuity payments enhances employee satisfaction and retention. Employees can take their vested account balance if they leave Ameren, encouraging long-term engagement(Ameren_Corporation_Sept…).

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

News: Ameren has announced a major restructuring plan involving the reduction of its workforce by 5% and a review of its pension benefits structure. The company is also implementing changes to its 401(k) plan, including reducing matching contributions to align with cost-saving measures.
Importance: Addressing this news is crucial due to the current economic uncertainty, which affects investment decisions and tax planning. The reduction in benefits and pensions could impact employees' retirement planning and financial stability, making it essential to stay informed about these changes. Additionally, the restructuring may influence Ameren's stock performance and investor sentiment in the broader market.

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For more information you can reach the plan administrator for Ameren at 1901 Chouteau Avenue St. Louis, MO 63103; or by calling them at (800) 755-5000.