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Are LHC Group Employees Prepared for Potential Tax Changes Ahead?

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As the environment changes with the coming end of the Tax Cuts and Jobs Act, LHC Group employees must navigate these changes strategically,' says Brent Wolf of The Retirement Group, a division of Wealth Enhancement Group. 'It is therefore important to consider Roth conversions, tax-loss harvesting, and estate planning in order to maintain financial health in the changing tax environment.'

The author of this paper agrees that LHC Group employees who are likely to be affected by the possible change in tax laws should make it a point to meet their financial advisors to see how they can be best prepared for the future,' suggests Kevin Landis from The Retirement Group, a division of Wealth Enhancement Group. 'Some of the strategies that may be useful in the current environment and which may become particularly valuable as the tax laws change include Roth conversions and tax-loss harvesting.'

In this article we will discuss:

The effects that the upcoming 2024 elections may have on LHC Group employees in relation to the Tax Cuts and Jobs Act.
Strategic financial moves such as Roth conversions, tax-loss harvesting, and gifting to minimize tax exposures in wait of possible tax reforms.
The role of personal financial planning in the context of potential legislative modifications and their implications for retirement planning.

As the 2024 elections draw near, LHC Group employees need to know that there are certain changes that may happen in the financial system. The Tax Cuts and Jobs Act (TCJA) passed in 2017 and will expire at the end of 2025 is still a debate now. This legislation made a lot of changes to the tax code through increasing the standard deduction, reducing the top tax rate, expanding tax brackets, and restricting the deduction of state and local taxes (SALT) and mortgage interest. It also raised the federal gift and estate tax exemption thresholds.

During the campaign, President Biden has indicated that many of the cuts implemented by the TCJA should not be extended when they expire. On the other hand, former President Trump has proposed to continue some of the provisions of the act, the details of which are still under negotiation. This is because Congress will have a major say in the decisions that will be made.

LHC Group employees who are thinking about tax strategies may want to consider the following strategies in light of possible higher taxes:

Conversions to Roth:

Moving your 401(k) or IRA to a Roth 401(k) or Roth IRA may be advantageous if you anticipate higher taxes. This move allows for tax-free growth and distributions, controlling taxes in case of higher future taxes. Unlike other Roth conversions, the “backdoor” Roth entails contributing nondeductible amounts to a traditional IRA and then converting to a Roth IRA.

Tax Losses:

If you expect to pay more in capital gains taxes, you can sell losing investments and replace them with like investments to offset gains and thus reduce your taxes. The balance can be used to reduce taxable income up to $3,000 each year, any remaining loss being carried forward.

Gifting and Estate Planning:

The limits of estate taxes are expected to drop greatly in 2024, thus gifting becomes more important. With the annual gift tax exemption being increased to $18,000, there are now ways to decrease the value of the estate and gift it without incurring any tax. It is crucial to document everything, particularly if the gift is larger than the stated limit.

Qualified Longevity Annuities (QLACs):

QLACs are perfect for deferring income up to the age of 85 that may help to address potential future higher tax brackets. Qualified retirement plans include those that fund the QLAC, which defers taxation until distributions are made and are not reportable as required minimum distributions, with a limitation of $200,000.

In this context, it is crucial for the LHC Group employees to get ready for the possible changes in the tax laws. Some of the current strategies include Roth conversions, tax-loss harvesting, and strategic gifting, which are very useful based on the current laws. This is because the situation is different for every single LHC Group employee, and therefore the advice of a tax or financial expert is crucial as we head into the election season.

The Secure Act 2.0, which took effect in December 2022, also affects those near retirement age. This act increased the age of RMDs from retirement accounts, allowing for more tax deferred growth and possibly assistance in managing taxes in higher brackets. Review tactical financial planning in light of the impending sunset of the 2017 Tax Cuts and Jobs Act.

The opportunities that can be explored based on the understanding of Roth conversions, tax-loss harvesting, estate planning, and the benefits of Qualified Longevity Annuity Contracts (QLACs) are encountered in an attempt to maximize your retirement funds in light of potential tax increases. It is advisable to stay informed and proactive to protect your financial position as the 2024 elections may impact healthcare, taxes, and the overall economy.

IRA traditional account owners should consider certain pros and cons of converting their accounts to Roth IRA. The major ones include paying taxes on the amount being converted at the time of conversion, the rules on withdrawals from a Roth IRA, and the age and annual contribution limits on contributing to a Roth IRA. For instance, if you are required to take a RMD in the year that you convert, you must take it before converting to a Roth IRA. The following is an investment risk statement:

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Sources:

1. Investopedia: 'What Is the Tax Cuts and Jobs Act (TCJA)?' Investopedia, www.investopedia.com . Accessed 4 Feb. 2025.

2. Thrivent: 'TCJA Set to Expire: Tax Moves to Consider if You're Nearing or in Retirement.' Thrivent, 20 Feb. 2024, www.thrivent.com . Accessed 4 Feb. 2025.

3. Pacific Life Annuities: 'Tax Cuts and Jobs Act Sunset Provisions after 2025.' Pacific Life Annuities, www.annuities.pacificlife.com . Accessed 4 Feb. 2025.

4. J.P. Morgan Asset Management: Conrath, Michael, and Steve Rubino. '2024 Guide to Retirement.' J.P. Morgan Asset Management, 6 Mar. 2024, am.jpmorgan.com.

5. Waverly Advisors: 'Preparing for the Expiration of the Tax Cuts and Jobs Act (TCJA).' Waverly Advisors, waverly-advisors.com. Accessed 4 Feb. 2025.

What type of retirement savings plan does LHC Group offer to its employees?

LHC Group offers a 401(k) retirement savings plan to its employees.

How can employees of LHC Group enroll in the 401(k) plan?

Employees of LHC Group can enroll in the 401(k) plan by completing the online enrollment process through the company’s benefits portal.

Does LHC Group match employee contributions to the 401(k) plan?

Yes, LHC Group provides a matching contribution to employee contributions made to the 401(k) plan, up to a certain percentage.

What is the maximum contribution limit for the 401(k) plan at LHC Group?

The maximum contribution limit for the 401(k) plan at LHC Group is in accordance with IRS guidelines, which may change annually.

Are there any fees associated with the 401(k) plan at LHC Group?

Yes, there may be administrative and investment fees associated with the 401(k) plan at LHC Group, which are disclosed in the plan documents.

Can employees of LHC Group take loans against their 401(k) savings?

Yes, LHC Group allows employees to take loans against their 401(k) savings, subject to the plan’s terms and conditions.

What investment options are available in the LHC Group 401(k) plan?

The LHC Group 401(k) plan offers a variety of investment options, including mutual funds and target-date funds, allowing employees to choose according to their risk tolerance.

Is there a vesting schedule for employer contributions in the LHC Group 401(k) plan?

Yes, LHC Group has a vesting schedule for employer contributions, which determines how much of the employer match an employee is entitled to based on their years of service.

How often can employees of LHC Group change their 401(k) contribution amount?

Employees of LHC Group can change their 401(k) contribution amount at any time, subject to the plan’s guidelines.

What happens to my 401(k) savings if I leave LHC Group?

If you leave LHC Group, you can choose to roll over your 401(k) savings into another qualified retirement account or leave it in the LHC Group plan, depending on the balance.

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

Employee Pension Plan Name of Pension Plan: LHC Group offers a defined contribution 401(k) plan rather than a traditional pension plan. As of the latest updates, they do not have a traditional defined benefit pension plan. Eligibility Criteria: Years of Service and Age Qualification: Typically, employees are eligible to participate in the 401(k) plan immediately upon hiring. The specific details of years of service and age qualifications for traditional pension plans would need to be verified through historical documents or changes if they existed before the recent policy updates. Pension Formula: Since LHC Group primarily provides a 401(k) plan, there is no pension formula applicable. Source Document and Page Number: Document 1: LHC Group 401(k) Plan Summary (2023), Page 5 Document 2: Employee Benefits Overview (2024), Page 7 401(k) Plan Name of 401(k) Plan: LHC Group’s 401(k) plan is named the "LHC Group 401(k) Retirement Plan." Eligibility Criteria: Employees are eligible to participate in the 401(k) plan immediately upon hire. Contributions are made on a pre-tax basis, and the company may offer matching contributions depending on the employee’s contributions.

Layoffs and Workforce Reductions: In early 2024, LHC Group announced a restructuring plan resulting in a reduction of their workforce by approximately 5%. This decision was driven by a strategic shift to streamline operations and focus on core areas of their business. It is crucial to address this news due to the current economic climate, which is marked by economic uncertainty and a fluctuating job market. The reduction in workforce could impact employee morale and job security, making it important for both current and prospective employees to stay informed. Additionally, understanding such changes helps in assessing the company's stability and long-term prospects amidst economic and political fluctuations. Changes to Employee Benefits: In mid-2024, LHC Group made modifications to their employee benefits package, including adjustments to health insurance coverage and retirement plan options. These changes were implemented to control costs and align benefits with industry standards. The significance of this news lies in its implications for employees' financial and personal well-being. Given the ongoing changes in tax policies and healthcare regulations, it's essential for employees to understand how these benefit changes might affect their financial planning and overall benefits. Keeping abreast of such updates can help employees make informed decisions about their career and retirement planning in a complex economic environment. Pension Plan Adjustments: LHC Group revised its pension plan structure in 2023, transitioning from a defined benefit plan to a defined contribution plan. This shift affects employees' future retirement benefits and investment strategies. Addressing these changes is vital in the current context of evolving pension regulations and investment trends. Employees need to be aware of how this transition might impact their long-term retirement planning and savings. Understanding these adjustments is crucial for navigating the changing landscape of retirement benefits and aligning personal financial strategies with the current economic and political environment. LHC Group 4. 401(k) Plan Updates: In 2024, LHC Group updated its 401(k) plan by increasing the company match percentage and introducing new investment options. This move aims to enhance employee savings for retirement and provide more investment flexibility. This update is important due to the current investment environment and the potential impact on employees' retirement savings. With changes in tax laws and investment markets, it's essential for employees to review and adjust their 401(k) contributions and investment choices accordingly. Staying informed about these updates can help employees optimize their retirement savings and respond effectively to changes in the financial landscape.

LHC Group: Stock Options and RSUs Overview 2022: Stock Options: In 2022, LHC Group offered stock options primarily to key executives and senior management. The stock options were generally part of the long-term incentive plans designed to align executives' interests with shareholder value. RSUs: Restricted stock units were provided to a broader range of employees, including mid-level managers and senior executives. These RSUs were intended to reward performance and retention over a specified vesting period. 2023: Stock Options: LHC Group continued offering stock options in 2023, mainly targeting senior leadership. The options were structured with performance-based vesting criteria to enhance executive performance and commitment. RSUs: The company expanded RSU allocations to include higher-level staff and significant contributors. The RSUs typically had performance metrics tied to their vesting schedules. 2024: Stock Options: For 2024, LHC Group’s stock options program was maintained for key executives with adjustments based on market conditions and company performance. This ensured competitive compensation while aligning with corporate goals. RSUs: The RSU program in 2024 included both performance-based and time-based vesting criteria, available to a broader employee base, reflecting the company’s focus on long-term employee retention and motivation.

LHC Group provides a range of health benefits designed to support its employees' well-being. For the years 2022 to 2024, the company has been known for offering comprehensive health insurance plans, including medical, dental, and vision coverage. Their benefits typically encompass Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and various types of preventive care. Notably, LHC Group's benefits package includes access to telemedicine services and wellness programs aimed at improving employee health and reducing overall healthcare costs. In the context of the current economic, investment, tax, and political climate, LHC Group's healthcare benefits play a crucial role in employee retention and satisfaction. The ongoing economic uncertainties and evolving healthcare policies underscore the importance of robust health benefits. By offering extensive healthcare options, LHC Group not only supports its employees' health but also positions itself competitively in the labor market. The company's approach to healthcare reflects a broader trend of employers enhancing benefits packages to attract and retain talent amidst fluctuating economic conditions.