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Healthcare Provider Update: FedEx's healthcare provider is primarily Cigna, which partners with the company to offer health insurance solutions to its employees through a range of plans, including High Deductible Health Plans paired with Health Savings Accounts. In 2026, FedEx employees may face significant healthcare cost increases, mirroring a broader trend across the nation. With the expected elimination of enhanced ACA premium subsidies, some workers could see their out-of-pocket premium costs surge by over 75%. Coupled with the anticipated double-digit rate hikes from major insurers and rising medical expenses, the financial burden on employees is poised to escalate sharply, potentially impacting their overall healthcare affordability. Click here to learn more
In this article, we will discuss:
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Strategies to improve year-end tax planning, including retirement contributions, tax-loss harvesting, and Roth IRA conversions.
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Techniques to gain tax benefits through charitable donations, education credits, and effective income deferral.
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Essential considerations for managing required minimum distributions (RMDs) and using qualified charitable distributions (QCDs) to strengthen financial planning.
As the year draws to a close, proactive tax preparation is critical for FedEx employees, particularly in light of potential tax increases post-2025 due to the expiration of the Tax Cuts and Jobs Act. Managing tax liabilities now could significantly reduce your tax burden for 2024 and improve your financial outcomes in the coming years. Here are 12 tax strategies to enhance your financial plan before year-end.
1. Increase Retirement Account Contributions
FedEx employees can contribute to their IRA until April 15, 2025, for the 2024 fiscal year. Contributions to workplace retirement plans, such as 401(k)s, must be made by December 31, 2024. The annual limit for traditional and Roth contributions is $23,000, with an additional $7,500 for those aged 50 or older. Employees with high-deductible health plans can also consider contributions to Health Savings Accounts (HSAs) to lower taxable income. Unlike flexible spending accounts, HSAs allow funds to roll over annually, offering greater flexibility for future medical expenses.
2. Utilize Tax-Gain Harvesting
By selling underperforming investments, employees can offset gains and up to $3,000 of annual income through tax-loss harvesting. Be mindful of wash-sale rules, which prohibit repurchasing the same or substantially similar assets within 30 days. Cryptocurrencies currently remain exempt from these regulations, creating a unique planning opportunity.
3. Consider a Roth IRA Conversion
Converting a traditional IRA or employer plan to a Roth IRA incurs taxes upfront but offers tax-efficient growth and withdrawals, along with no RMDs. With potential tax increases after 2026, a conversion in 2024 may provide long-term advantages for FedEx employees.
4. Assess the Benefits of Itemizing Deductions
For those with substantial deductible expenses, itemizing may yield greater benefits than the standard deduction ($29,200 for married couples and $14,600 for single filers in 2024). Eligible deductions include medical expenses, mortgage interest, state and local taxes, charitable donations, and disaster losses.
5. Explore Education Tax Credits
FedEx employees can access the American Opportunity Tax Credit, which provides up to $2,500 annually for the first four years of higher education. Contributions to 529 plans may also qualify for state tax deductions, helping to improve education funding strategies.
6. Defer Income
Employees may benefit from deferring invoices or other income to the following year, particularly if higher taxes are anticipated in the near future.
7. Group Charitable Contributions
By combining multiple years of charitable donations into a single year, employees may exceed the standard deduction threshold, increasing tax benefits. Donor-advised funds allow for an upfront deduction while spreading contributions over several years.
8. Donate Appreciated Assets
Donating long-held appreciated assets enables employees to deduct the fair market value without incurring capital gains taxes, subject to a 30% AGI limitation.
9. Optimize Cash and Property Contributions
Cash and property donations are deductible up to 60% of AGI. Proper documentation is essential for large donations to meet IRS requirements.
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10. Leverage Annual Gift Tax Exclusions
Gifting up to $18,000 per recipient can reduce estate size and lower future inheritance taxes. This method facilitates wealth transfer without gift tax consequences.
11. Manage Required Minimum Distributions (RMDs)
Employees aged 73 or older must withdraw RMDs by December 31 to avoid penalties. Failure to do so can result in a penalty of up to 25% of the missed distribution amount.
12. Use Qualified Charitable Distributions (QCDs)
Individuals aged 70½ and older can direct up to $105,000 annually from an IRA to a charity. This amount satisfies RMD requirements and avoids taxable income.
Preparing for 2025 and Beyond
FedEx employees should incorporate inflation adjustments and potential legislative changes into their long-term plans. Regularly reviewing tax strategies with a financial advisor ensures alignment with current laws and personal circumstances.
Social Security benefits can also significantly impact tax obligations. Claiming benefits at age 62 increases taxable income, while delaying until full retirement age or beyond results in higher payments and lower tax exposure. Delaying benefits until age 70 can yield an annual increase of approximately 8% (Source: Social Security Administration ).
Conclusion
Planning for taxes is like preparing a gourmet meal. Each step, from contributing to retirement accounts to strategically timing charitable donations, adds a layer of financial stability. By implementing these strategies, FedEx employees can make informed decisions to improve financial outcomes and prepare for a rewarding retirement.
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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