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Key individual tax changes from Trump's 'big beautiful' bill
Current law vs. final legislation
| Current law | Final legislation |
|---|---|
| Standard deduction | |
| $15,000 single; $30,000 married filing jointly for 2025 | $15,750 single; $31,500 married filing jointly for 2025 |
| 'Bonus' deduction for older adults | |
| $1,600 for age 65 and older for 2025; $2,000 unmarried / not surviving spouse for 2025 | $7,600 for age 65 and older; $8,000 for unmarried / not surviving spouse; both from 2025 through 2028 |
| State and local tax deduction (SALT) | |
| $10,000 limit through 2025 | $40,000 limit for 2025; increases by 1% through 2029; reverts to $10,000 in 2030 |
| Child tax credit | |
| Max credit of $2,000 per child through 2025; refundable portion $1,700 for 2025 | Max credit of $2,200 per child; refundable portion $1,700 for 2025 |
| Estate and gift tax exemption | |
| $13.99 million single; $27.98 million married filing jointly for 2025 | $15 million single; $30 million married filing jointly for 2026 |
| Tax on tips | |
| N/A | Deduct up to $25,000 per year from 2025 though 2028 |
| Overtime pay | |
| N/A | Deduct up to $12,500 per taxpayer from 2025 through 2028 |
| Auto loan interest | |
| N/A | Deduct up to $12,500 per taxpayer from 2025 through 2028 |
| Auto loan interest | |
| N/A | Deduct up to $10,000 of annual interest on new loans from 2025 through 2028 |
| Trump Accounts for child savings | |
| N/A | One-time $1,000 credit to account per child born between 2025 through 2028 |
| Charitable deduction for non-itemizers | |
| N/A after 2021 | $1,000 single; $2,000 married filing jointly; permanent after 2025 |
Source: CNBC
Strategies for Sound Investing for FedEx Employees
As the stock market experienced significant volatility this week, I took a closer look at some numbers and noticed predictable trends. At FedEx, it's crucial to understand these market dynamics to safeguard our retirement savings.
Many FedEx employees who invest have shown optimism by pouring money into the stock market following this year’s significant gains.
Investors have also been taking loans to buy stocks, aiming for quick gains in a bullish market. Margin debt has increased by 15% this year through the end of June. Additionally, there has been aggressive use of call options—speculative bets that only pay off when the stock market rises.
To illustrate, margin debt at the end of June, when the S&P 500 was around 5,500, was 27% higher than in October of the previous year, when the S&P 500 stood at 4,200. Ideally, margin buying should occur more when prices are low and less when prices are high.
It’s not surprising that ordinary investors generally make much less money in the stock market over time than they should. Over the last 30 years, the S&P 500 has yielded total returns of about 1,700%, while the average investor has only achieved about 900%. This discrepancy arises because investors often sell when stocks are down and buy when they are up, resulting in suboptimal returns. Although these figures have improved over time, a significant gap remains.
The Importance of Emotion-Free Investment Strategies for FedEx Employees
Ideally, FedEx employees should adopt the opposite strategy when investing: buy more when stocks are down and more affordable, and buy less when they rise and are more expensive. However, this is extremely challenging to implement. The best long-term investment strategies are those that limit emotional decision-making and focus on effective asset allocation.
A 'balanced portfolio,' typically made up of 60% stocks and 40% bonds, isn't the only effective method. Options include 70% stocks and 30% bonds, 80% stocks and 20% bonds, or even 90% stocks and 10% bonds. This diversified approach has proven resilient in various economic conditions, including the challenging years of the 1970s when both stocks and bonds performed poorly.
The Supreme Power of Fixed Proportion Portfolios
While these strategies produce varied return profiles over time, their strength lies in maintaining fixed proportions. For example, if an investor keeps 70% in stocks and 30% in bonds, they end up buying more stocks when prices drop and selling some when prices rise. The key is regular portfolio rebalancing—perhaps once a quarter or twice a year. This involves selling parts of assets that have appreciated the most and buying more of those that have lagged, thus restoring the initial asset allocation.
Despite the effectiveness of these strategies, each new generation of investors often learns these lessons the hard way. Hence, they tend to borrow more to buy stocks only after prices have risen.
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Exploring the Complexities of Investment
The complexity of investments and the natural tendency to follow market trends can have a significant impact on investment outcomes. FedEx employees who understand and mitigate these behaviors can better align their strategies with their long-term financial goals.
Staying informed and adopting disciplined investment methods is crucial. Whether through diversified portfolios or periodic rebalancing, the focus must be on making rational decisions and minimizing emotional reactions to market fluctuations. Through these methods, investors can enhance their potential for positive returns over time.
According to a recent study by Dalbar, Inc. , published in 2023, it is revealed that the average investor outperforms major market indices by nearly 4% each year due to poor market timing decisions. This phenomenon, known as the 'behavior gap,' highlights the importance of adhering to a rigorous investment strategy and avoiding emotional reactions to market variations. This has a significant impact on long-term growth, emphasizing the importance of developing strategies that minimize impulsive transactions and promote consistent, rational investment behaviors.
What are the implications of the Funding Target Attainment Percentage for FedEx Corporation employees, and how does it impact the security of the pension benefits offered by FedEx Corporation? This question seeks to explore the nuances of the funding target attainment percentage as reported in the annual funding notice, examining how this metric not only reflects the financial health of FedEx Corporation's pension plan but also how it affects employee confidence in future benefit payments and retirement planning.
Funding Target Attainment Percentage: The Funding Target Attainment Percentage for FedEx Corporation indicates the degree to which the pension plan is funded. A percentage of 101.33% for 2022 suggests that the plan has sufficient assets to cover its liabilities, providing security for employees' pension benefits. This high percentage likely increases employee confidence in the stability and reliability of their future pension payouts, essential for long-term retirement planning.
How does the merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan influence the benefits currently available to FedEx Corporation employees? This question aims to delve into the practical changes that may arise due to this merger, assessing whether it aligns with employee expectations regarding their pension benefits and how the transition process is managed by FedEx Corporation.
Merger of Pension Plans: The merger of the FedEx Freight Pension Plan into the FedEx Corporate Employees’ Pension Plan appears to have been strategically managed to maintain benefit stability. Despite increasing liabilities by 5.3%, the merger was structured to ensure no negative impact on the benefit amounts payable to participants from either plan, preserving the expected pension benefits for all affected FedEx Corporation employees.
In terms of investment strategies, what measures does FedEx Corporation implement to ensure that its pension plan investments align with the long-term liabilities expected to be paid out to retirees? This question encourages an exploration of the investment policies in place, examining the asset allocations and risk management strategies that FedEx Corporation employs to ensure sustainable funding for its pension obligations, which could potentially include detailed analyses of stocks, debts, and alternative investments.
Investment Strategies: FedEx Corporation employs a diversified investment strategy across equities, fixed income, and alternative investments, aiming to meet long-term pension liabilities. This approach, which includes both active management strategies and the limited use of derivatives, is designed to generate returns that exceed market indices, thus ensuring adequate funding of pension obligations.
What options do employees of FedEx Corporation have for accessing their pension plan statements, and how frequently are these statements generated? The focus here is to understand the communication strategies employed by FedEx Corporation regarding pension benefit statements, including technological access points and the importance of these documents for employee financial planning.
Pension Plan Statements: FedEx Corporation provides annual pension plan statements through their Retirement Service Center, available electronically each fall. Employees can access their statements online or request them if notifications are not received, ensuring transparency and aiding in personal financial planning.
How are contributions to the FedEx Corporation Employees’ Pension Plan determined, and what role do excess contributions play in the plan's overall funding strategy? This question aims to educate employees about how the company balances mandatory contribution levels with potential excess contributions, exploring how these factors interact to influence the plan's solvency and employee benefits.
Contributions to the Pension Plan: Contributions to the FedEx Corporation Employees' Pension Plan are calculated to meet at least the minimum legal requirement and potentially include voluntary excess contributions. These excess contributions can help manage the plan's funding level and ensure its solvency, benefiting overall pension security for employees.
What types of benefits are guaranteed under the Pension Benefit Guaranty Corporation (PBGC) for FedEx Corporation employees, and what limitations exist that employees should be aware of? By focusing on the guaranteed benefits, this question prompts a discussion on the security of specific benefits provided by FedEx Corporation and highlights limitations, allowing employees to understand their rights fully.
PBGC Guarantee: The Pension Benefit Guaranty Corporation guarantees certain types of benefits for FedEx Corporation employees, such as pension benefits at normal retirement age and most early retirement benefits. However, there are limitations, such as exclusions for benefits without vested rights and recently increased benefits, which employees should be aware of to fully understand their pension security.
In what ways does the FedEx Corporation plan to adjust its pension funding strategy in light of changing federal laws that impact pension obligations? Employees are encouraged to consider how legislative changes influence corporate policies surrounding retirement benefits and the proactive strategies FedEx Corporation might take to remain compliant while ensuring the security of employee pensions.
Adjustments to Funding Strategy: FedEx Corporation is likely to adjust its pension funding strategy in response to legislative changes affecting pension obligations, such as those introduced by recent acts adjusting how pension liabilities are calculated. This proactive approach aims to ensure compliance with new laws while continuing to secure the financial health of the pension plan.
What are the steps that FedEx Corporation employees must take if they are considering retirement, particularly in how to navigate the pension plan and gain access to their benefits? This question aims to provide clarity on the retirement process, ensuring that employees are equipped with the necessary information regarding required documentation, timelines, and points of contact within FedEx Corporation.
Steps for Retirement Planning: Employees considering retirement should contact the FedEx Retirement Service Center to navigate their pension plan benefits. This process involves understanding necessary documentation, timelines, and available support, facilitating a smooth transition into retirement.
How does FedEx Corporation plan to manage potential funding shortfalls in the pension plan, and what mechanisms are in place for notifying plan participants should such an event occur? Employees would need to understand the proactive measures put in place by FedEx Corporation to address funding-related challenges while also knowing what this means for their benefits.
Managing Funding Shortfalls: In the event of potential funding shortfalls, FedEx Corporation has policies in place to manage such situations, including strategic contributions to mitigate shortfalls. The company maintains transparency with plan participants about funding levels and any significant changes affecting the pension plan.
For those seeking more information about their pensions and retirement options, how can FedEx Corporation employees contact relevant departments, and what resources are available for assistance? This question provides an opportunity for employees to familiarize themselves with contact points such as the FedEx Retirement Service Center, emphasizing the importance of open communication channels for addressing inquiries related to their pensions. Feel free to consult the provided document for more in-depth exploration of these topics.
Contacting for Pension Information: FedEx Corporation employees seeking more information about their pensions or retirement options can contact the FedEx Retirement Service Center. This center provides essential resources and support, ensuring employees have access to all necessary information regarding their retirement planning.
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