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How Encore Wire Employees Can Benefit from Estate Planning During Market Volatility

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Healthcare Provider Update: Healthcare Provider for Encore Wire Encore Wire offers its employees health insurance benefits through a combination of providers, with major national insurers likely included given the industry standards. Specific details about the exact healthcare provider may vary, but typical healthcare networks for companies of this size include organizations like UnitedHealthcare, Anthem, or Aetna. Potential Healthcare Cost Increases in 2026 Encore Wire employees should brace for significant increases in healthcare costs in 2026, a trend largely driven by impending changes in the Affordable Care Act (ACA) marketplaces. Premium hikes could exceed 60% in some states, as the expected expiration of enhanced federal subsidies complicates affordability for many workers. As large employers like Encore Wire adapt to these escalating costs-potentially raising deductibles and out-of-pocket maximums-the financial burden may shift more heavily onto employees. Proactive planning and understanding of upcoming benefit changes will be crucial for minimizing the impact of these rising expenses. Click here to learn more

'Encore Wire 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.

'Encore Wire 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:

  1. How market downturns can present estate planning opportunities.

  2. The strategic use of tools like GRATs and Roth IRA conversions.

  3. 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 Encore Wire 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 Encore Wire 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 Encore Wire 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 Encore Wire 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 Encore Wire 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 Encore Wire 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. Encore Wire 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 Encore Wire 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 Encore Wire 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 Encore Wire 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. Encore Wire 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, Encore Wire 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.

What is the 401(k) plan offered by Encore Wire?

The 401(k) plan at Encore Wire is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are deducted.

How does Encore Wire match employee contributions to the 401(k) plan?

Encore Wire offers a matching contribution to the 401(k) plan, which means that the company contributes a certain percentage of what employees save, helping to boost their retirement savings.

When can employees at Encore Wire enroll in the 401(k) plan?

Employees at Encore Wire can enroll in the 401(k) plan during their initial onboarding process or during the annual open enrollment period.

What types of investment options are available in Encore Wire's 401(k) plan?

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

Is there a vesting schedule for Encore Wire's 401(k) matching contributions?

Yes, Encore Wire has a vesting schedule for its matching contributions, meaning employees must work for the company for a certain period before they fully own the matched funds.

Can employees take loans against their 401(k) at Encore Wire?

Yes, Encore Wire allows employees to take loans against their 401(k) savings, subject to certain terms and conditions outlined in the plan.

What happens to an employee's 401(k) plan if they leave Encore Wire?

If an employee leaves Encore Wire, they have several options for their 401(k), including rolling it over to a new employer's plan, transferring it to an IRA, or cashing it out (though this may incur taxes and penalties).

How often can employees change their contribution levels to the Encore Wire 401(k) plan?

Employees at Encore Wire can typically change their contribution levels at any time, subject to the plan's rules and guidelines.

Does Encore Wire provide financial education resources for employees regarding their 401(k)?

Yes, Encore Wire offers financial education resources and tools to help employees make informed decisions about their 401(k) savings and investments.

Are there any fees associated with Encore Wire's 401(k) plan?

Yes, there may be administrative and investment fees associated with Encore Wire's 401(k) plan, which are disclosed in the plan documents.

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For more information you can reach the plan administrator for Encore Wire at 1329 Millwood Rd McKinney, TX 75069; or by calling them at (972) 562-9473.

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