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Healthcare Provider Update: Verizon collaborates with Aetna as its primary healthcare provider, offering a range of health plans and services to its employees and their families. Looking ahead to 2026, the healthcare landscape is poised for significant change, as record hikes in Affordable Care Act (ACA) premiums are anticipated. With some states facing increases exceeding 60%, many individuals could see their out-of-pocket premiums rise by more than 75%, particularly if enhanced federal premium subsidies are not extended. This scenario could create an additional burden for Verizon employees, emphasizing the importance of strategic planning for healthcare coverage amidst such dramatic shifts in costs. Click here to learn more
'Verizon employees should view Required Minimum Distributions (RMDs) as an opportunity to optimize their portfolio and adjust allocations - turning what could be a tax headache into a window of thoughtful financial management,' says Kevin Landis, representing The Retirement Group, a division of Wealth Enhancement Group.
Planning RMD withdrawals allows Verizon employees to increase long-term financial stability, reduce tax exposure and adjust assets to changing market conditions while meeting their obligations, 'says Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group.
In this article we will discuss:
1. The challenges and opportunities of Required Minimum Distributions for Verizon investors.
2. How to adjust your portfolio using RMD withdrawals.
3. The tax efficiency benefits of Qualified Charitable Distributions (QCDs) and optimizing RMD timing.
Many Verizon investors have significant tax obligations associated with Required Minimum Distributions (RMDs). Although taxes are inevitable, RMDs also force investors to pull money from their accounts - even if they're not needed for daily expenses - which can result in unexpected tax bills. And RMD withdrawal rates may be higher than desired. However, RMDs can - with some planning - also be an opportunity to enhance investment portfolios.
RMDs are a tax-deferred account obligation for many - traditional IRAs, SEP and SIMPLE IRAs and inherited IRAs - 25% plus taxes. It was previously 50%, but the Secure 2.0 legislation slashed that penalty to 10% with the possibility of further reduction to 10% or waiver in cases of reasonable error. Meeting RMD deadlines helps avoid penalties and maintain a sound financial plan.
Not seeing RMDs as a financial burden, Verizon investors can use them to rebalance portfolios, adjust asset allocations and sell assets that no longer support their goals. Integrated into a wider investment strategy, RMDs may be an important component of portfolio management.
Step 1: Set Your Required Minimum Distribution.
Planning for RMDs starts with knowing how much money to withdraw. All tax-deferred IRAs except Roth IRAs are subject to RMDs - This includes traditional IRAs, SEP IRAs and SIMPLE IRAs - and employer-sponsored retirement plans like the 401(k), including Roth 401(k)s (subject to change in 2024 when Roth 401(k)s will no longer require RMDs).
Find your RMD by examining account balances as of December 31 of the prior year. For example, 2024 RMDs would be based on balances as of 2023. Refer to the appropriate RMD table for your situation then. People use the Uniform Lifetime Table but there is a Table for those with a spouse over ten years younger than the primary beneficiary.
One benefit of RMDs for IRAs is withdrawals need not come from each account individually. Or investors can pull out RMD amounts from all IRAs in their name (including SEP and SIMPLE IRAs) in one withdrawal. This flexibility is reflected also in 403(b) accounts. But RMDs from traditional retirement plans like 401(k)s and qualified corporate retirement plans must be withdrawn individually.
Step 2: Assess Your Asset Allocation.
Identify areas of adjustment in your portfolio's asset allocation once you know your RMD amount. Portfolio management tools like Morningstar's portfolio X-Ray show your portfolio composition compared to your target allocation. Where allocations veer off of your intended outcomes, you could use RMDs to trim holdings in overrepresented asset categories.
Recently U.S. stocks have beaten international stocks and bonds, which often tilt portfolios toward domestic equities. When completing RMDs, withdraw from overrepresented stocks or assets you want to reduce to keep the balance without interfering with your investment plan.
Step 3: Select Holdings to Reduce.
After clarifying asset allocation, identify holdings to reduce. Assess your portfolio across sectors and investment styles first. A Morningstar style Box classifying investments by size and style may reveal overvalued stocks.
With recent growth stocks outperforming value stocks, some portfolios may now be excessively invested in growth assets. Also a good time to sell stocks or funds that have appreciated but are more risky or volatile. If any holdings have experienced management changes, fee hikes or other adjustments, they might be good candidates for reduction.
Step 4: Choose how to Use Withdrawn Assets.
How you will divide up RMD proceeds depends on your financial plan. Put these funds towards current expenses or put them in a 'cash bucket' for future needs. For taxable accounts, reinvesting RMDs in long-term investments may maintain target asset allocation. Whenever RMDs are greater than immediate needs, they can be reinvested in a taxable account or if deemed eligible, made as contributions to a traditional or Roth IRA.
For example, Verizon RMD-eligible investors with earned income could contribute to a Roth IRA. Roth assets are exempt from RMDs and can grow without mandatory withdrawals.
Step 5: Look at Qualified Charitable Distributions (QCDs).
For charitable investors over age 70 1/2, a Qualified Charitable Distribution (QCD) is a good strategy. With QCDs, up to USD 105,000 from an IRA can be given away to charity meeting RMD requirements without increasing taxable income. The increase in standard deductions means that some investors wish to review their deductions, so QCDs may be an asset to achieving charitable goals while remaining tax efficient.
Specific steps must be followed to execute a QCD - Investors should consult IRA custodians who may need to work directly with charities to complete the transfer. Some custodians also let you write IRA checks for charity, but the distribution must go to the charity.
Creating Portfolios with Strategic RMD Strategy.
RMDs applied strategically can help Verizon investors align withdrawals with asset allocation goals and personal spending needs - all while meeting regulatory requirements.
This approach is especially relevant given current economic conditions in which market volatility has prompted some to rethink their exposure to growth-focused stocks. Growth-oriented assets have posted big gains too - and this may also indicate an opportunity to rebalance toward diversified assets or other sectors.
RMDs also support long-term growth objectives when reinvested properly. For example, putting RMD funds into dividend-paying stocks or conservative bonds could create a future income stream in addition to broader financial goals.
Optimizing RMD Timing
Schedule withdrawals based on market conditions is one way to improve RMD benefits. A 2024 Vanguard study suggests that withdrawing RMDs after market upswings could let investors capture gains while stabilizing investments during downturns. Known as market-sensitive RMD timing, this approach can support tax planning and risk management by leveraging appreciated assets during appropriate market conditions. This strategy requires a tax advisor to help with timing and market assessment.
A Gardening Analogy for RMDs.
Imagine RMDs as seasonally pruned in a well-kept garden. As selective pruning cuts out overgrown branches for balance and growth, RMDs let you adjust parts of your portfolio that are too concentrated or misaligned with your goals. This 'pruning' can limit exposure to higher-risk assets and rebalance you toward steadier investments. RMDs help build a resilient portfolio ready for growth - through thoughtful trimming.
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- Corporate Employees: 8 Factors When Choosing a Mutual Fund
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- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
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Sources:
1. Adams, Hayden, and Kathy Cashatt. 'RMD Strategies to Help Ease Your Tax Burden.' Charles Schwab , 15 Jan. 2025, www.schwab.com/learn/story/rmd-strategies-to-help-ease-your-tax-burden .
2. Internal Revenue Service. 'Retirement Topics – Required Minimum Distributions (RMDs).' IRS , www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds .
3. Hnt, Dan. '4 Financially Smart Ways to Take Money Out of Retirement Accounts.' Morgan Stanley , 7 Jan. 2025, www.morganstanley.com/articles/financially-smart-ways-to-use-required-minimum-distributions .
4. Adams, Hayden, and Kathy Cashatt. 'Required Minimum Distributions: What's New in 2025.' Charles Schwab , 15 Jan. 2025, www.schwab.com/learn/story/required-minimum-distributions-what-you-should-know .
5. 'How Required Minimum Distributions Impact Your Traditional IRA Balance.' Investopedia , 22 Nov. 2024, www.investopedia.com/required-minimum-distributions-for-iras-8742766 .
How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?
Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.
In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?
Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.
What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?
IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.
How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?
Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.
For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?
Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.
How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?
Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.
What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?
Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.
What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?
Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.
In terms of retirement preparedness, how does the pension plan at Verizon accommodate employees’ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?
Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.
How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?
Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.
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