New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Deferred Compensation Plans vs. 401(k)s: Essential Insights for Harsco Employees Navigating Retirement Savings

Healthcare Provider Update: Healthcare Provider for Harsco Harsco Corporation, a global supplier of industrial services and engineered products, typically partners with prominent healthcare providers for employee health plans. Among the notable providers, Aetna often serves as a primary healthcare partner, offering comprehensive health insurance solutions, including medical, dental, and wellness programs tailored to the needs of Harsco employees. Potential Healthcare Cost Increases in 2026 As we look to 2026, healthcare costs are anticipated to surge significantly, driven by a confluence of factors. With many states facing imposed premium hikes of over 60%, particularly for Affordable Care Act (ACA) marketplace plans, employees of Harsco may experience drastic changes in their out-of-pocket healthcare expenses. The potential expiration of enhanced federal premium subsidies will amplify these increases, with more than 22 million enrollees projected to see monthly costs rise by an average of 75%. Coupled with escalating medical costs and aggressive rate adjustments from top insurers, navigating the healthcare landscape will require strategic planning to mitigate financial impacts. Click here to learn more

Exploring Retirement Planning Tools at Harsco

Deferred compensation plans play a pivotal role in retirement planning at Harsco, complementing the benefits accrued through 401(k) plans. Essentially, these plans allow employees to defer a portion of their income to a later date, enhancing their income management before retirement. For instance, an executive earning an annual income of $250,000 might opt to defer $50,000 each year until retirement, starting at age 55 and concluding at 65.

Executive Financial Strategy

Among Harsco executives, deferred compensation plans are widespread, particularly for those with substantial incomes who do not solely rely on their annual earnings for living expenses. This strategy not only reduces taxable income during active earning years but also minimizes exposure to the Alternative Minimum Tax (AMT) and enhances eligibility for tax deductions. When the deferred compensation is eventually paid—typically during retirement—the reduced regular income could place the beneficiary in a less burdensome tax bracket, optimizing tax savings.

Tax Implications and Payout Scheduling

Initially, employees must pay Social Security and Medicare taxes on the deferred amount, similar to the rest of their income. However, taxes on these funds are deferred until the actual payment date. The ability to defer a significant portion of income—often up to 50%—provides a substantial tax advantage, especially compared to the limits on 401(k) contributions.

2024 Contribution Limits and Considerations

In 2024, the maximum 401(k) contribution limit for individuals under 50 is set at $23,000, up from $22,500 in 2023 . Individuals aged 50 and older can contribute up to $30,500, an increase from $30,000. This highlights the relatively limited nature of 401(k) contributions, particularly for those with higher incomes seeking to maximize their tax-advantaged savings.

Investment Options and Accessibility

Harsco deferred compensation plans often offer a broader array of diversified investment choices compared to traditional 401(k) plans. However, these plans are generally less liquid, with funds usually inaccessible before the predetermined distribution date. This contrasts with 401(k) plans, where loans against the balance are possible, and there are provisions for early withdrawals under specific financial hardships, such as significant medical expenses or job loss.

Risks and Security

A significant risk associated with deferred compensation plans is the potential for forfeiture in the event of bankruptcy or dissolution of the employer. In such cases, unlike 401(k) plans that are protected and insured separately, deferred compensation amounts are considered unsecured credits of the employer. This positioning places them behind secured creditors, such as bondholders, in the debt settlement priority.

Strategic Management of Deferred Compensation

Featured Video

Articles you may find interesting:

It is generally advisable for Harsco employees to maximize contributions to their 401(k) before opting to divert funds into a deferred compensation plan. This strategy can help with, not only a portion of retirement savings, but also reduce the risk associated with potential corporate bankruptcy.

Combining Deferred Compensation with 401(k) Plans

Deferred compensation and 401(k) plans can coexist within an individual's retirement strategy, offering a multi-tiered approach to tax management and income distribution in later life.

Withdrawal Considerations

The terms for withdrawing from deferred retirement plans vary significantly and are determined by specific agreements between the employee and the employer. Generally, these plans restrict withdrawals until certain conditions, such as a decade of deferral or approaching retirement, are met.

Conclusion and Further Insights

Harsco employees should gain a solid understanding of the rules and potential limitations before opting for a deferred compensation plan is crucial. These plans are ideal for those who can afford to defer a portion of their income to benefit from deferred taxes and potentially lower tax rates upon retirement.

Sources and Further Reading

The Internal Revenue Service provides extensive guidelines on deferred compensation and 401(k) plans, including specific rules regarding contribution limits, taxation, and early withdrawal penalties . This resource is invaluable for individuals preparing their retirement strategies to keep compliance and optimize financial outcomes. Important references include IRS notices on eligible deferred retirement plans, topics on the Alternative Minimum Tax, updates on annual contribution limits, and guidelines on hardships and early withdrawals.

This subtle retirement planning method underscores the importance of strategic income deduction and tax management, ensuring that individuals maximize their financial resources in anticipation of retirement.

How does the Harsco Pension Scheme ensure that investment strategies align with the financial goals of its members, and what measures are in place to assess the adequacy of these strategies over time? Given the complexities involved in managing a pension scheme, understanding the decision-making processes and the criteria for evaluating fund performance is crucial for members to make informed retirement choices.

Investment Strategy Alignment: The Harsco Pension Scheme ensures that its investment strategies align with members' financial goals by regularly reviewing its Statement of Investment Principles (SIP) and adjusting strategies based on quarterly performance monitoring. The Trustees use tools such as LCP Visualise to track investment returns and funding levels, ensuring the Scheme is on track for full funding by 2025. This review process helps guarantee that the investment strategies are adequately meeting long-term goals and adapting to market conditions(Harsco Pension Scheme_3…).

In what ways does the Harsco Pension Scheme engage with its investment managers to ensure transparency and stewardship in voting on significant shareholder resolutions? Exploring how Harsco collaborates with these managers can shed light on the efficacy of decision-making and the importance of governance in the scheme's investment practices.

Engagement with Investment Managers: The Harsco Pension Scheme engages closely with its investment managers, delegating stewardship activities like voting on shareholder resolutions. These managers, such as BlackRock, follow rigorous voting and engagement policies, which are reviewed regularly. The Trustees ensure transparency by monitoring managers’ ESG integration and voting behaviors and by addressing significant issues, such as modern slavery or climate risks(Harsco Pension Scheme_3…).

What are the specific retirement benefits available to employees under the Harsco Pension Scheme, and how can members customize their retirement strategies to fit their individual needs? This question addresses the diversity of retirement options and the potential for tailoring plans to meet unique financial situations.

Retirement Benefits Customization: The Harsco Pension Scheme offers a range of retirement options, including default and self-select investment options that reflect member demographics and retirement preferences. Members can customize their retirement strategies through diversified funds, ensuring their investments are aligned with individual needs. The default strategy has been reviewed to ensure appropriateness for the majority, with options for drawdown, lump-sum withdrawals, or annuity purchases(Harsco Pension Scheme_3…).

How does the Harsco Pension Scheme handle the changing demographics of its membership, especially in terms of investment risk and available retirement options? Understanding how the scheme adapts to demographic trends can help employees anticipate changes that may affect their retirement savings and strategies.

Adapting to Demographic Changes: The Trustees monitor demographic trends and adapt the Scheme’s investment strategies accordingly. For example, as the Scheme matures, the investment allocation moves towards lower-risk assets to reflect the changing membership profile. Regular reviews ensure the Scheme adapts to the evolving needs of its members, helping to reduce risk while maintaining adequate returns(Harsco Pension Scheme_3…).

What is the process for Harsco employees to access their pension statements, and how frequently are these updates provided to ensure that members stay informed about their retirement savings progress? Regular communication about contributions and growth can significantly impact an employee's comfort level when planning for retirement.

Pension Statement Access: Harsco employees can access their pension statements through regular updates provided by the Trustees, typically on a quarterly basis. These statements, including detailed reports of contributions, investment growth, and progress toward retirement goals, help members stay informed and make adjustments as necessary(Harsco Pension Scheme_3…).

How does Harsco incorporate Environmental, Social, and Governance (ESG) considerations into its investment philosophy, and what impact do these principles have on the pension schemeâ€™s performance? A deeper examination into these aspects may enhance employee understanding of socially responsible investing trends within their pension fund.

ESG Considerations: The Harsco Pension Scheme integrates Environmental, Social, and Governance (ESG) principles into its investment strategy, regularly assessing its managers’ ESG practices. These assessments include human rights, climate change, and CEO pay ratios, ensuring that investments are socially responsible and aligned with long-term sustainability goals(Harsco Pension Scheme_3…).

What are the implications of the current IRS limits on contributions to retirement plans for employees participating in the Harsco Pension Scheme in 2024? Recognizing how these financial regulations impact personal contributions and matching funds can empower employees to maximize their retirement funding strategies.

IRS Limits Impact: The current IRS limits on contributions to retirement plans, such as those applicable in 2024, directly impact Harsco employees by capping how much they can contribute tax-free. Understanding these limits helps employees plan their contributions to maximize employer matching and ensure they take full advantage of their retirement benefits(Harsco Pension Scheme_3…).

With regards to the ongoing performance evaluations, what benchmarks does the Harsco Pension Scheme utilize to measure the success of its investments, and how are these benchmarks selected? This insight can help employees understand the performance metrics that drive the long-term viability of their pension scheme.

Benchmarking Investments: The Harsco Pension Scheme uses various benchmarks to assess the performance of its investments. These benchmarks are selected based on expected risk and return profiles and are reviewed quarterly. Monitoring against these benchmarks ensures that the Scheme’s strategies remain aligned with long-term funding goals and adapt to changing market conditions(Harsco Pension Scheme_3…).

How can Harsco employees obtain more information on the specific investment options available within the pension scheme, including the associated risks and potential returns? Access to comprehensive investment literature is essential for employees to make well-informed decisions regarding their pension scheme participation.

Investment Options and Information: Harsco employees can obtain detailed information about their pension’s investment options, including the associated risks and potential returns, through regular reports from the Trustees and investment consultants. This transparency allows employees to make informed decisions about their pension participation(Harsco Pension Scheme_3…).

What is the preferred method for employees to contact Harsco to gain further clarification on their questions about the pension scheme, and what resources are available for them during the retirement process? Clear communication channels and support mechanisms are vital as employees navigate their retirement preparations. These questions are designed to provoke thought and discussion around the operations, benefits, and governance of the Harsco Pension Scheme while providing employees with a foundation for understanding their retirement options.

Communication Channels: Employees can contact the Trustees of the Harsco Pension Scheme for clarification on pension-related questions through established communication channels. Resources, including personalized financial advice and regular meetings with investment managers, are available to assist employees during the retirement planning process(Harsco Pension Scheme_3…).

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

Name of Pension Plan: Identify the name of the pension plan. Years of Service and Age Qualification: Determine the requirements for employees to qualify for the pension plan. Pension Formula: Understand how the pension is calculated. Company 401(k) Plan: Name of 401(k) Plan: Identify the name of the 401(k) plan. Qualification for 401(k) Plan: Determine who qualifies for participation in the 401(k) plan.

Harsco announced a significant restructuring plan in early 2023 aimed at streamlining its operations and reducing costs. This included a series of layoffs across various divisions. The company projected that these measures would improve operational efficiency and align with its strategic goals.

Harsco offers stock options and RSUs to its employees as part of its compensation package. The company's stock options are designated as SOs, while RSUs are referred to as RSUs. For the years 2022, 2023, and 2024, Harsco has made stock options and RSUs available to key employees, including executives and high-performance staff.

Harsco’s official website, the benefits section details various health benefits, including medical, dental, and vision coverage. They offer a range of plans including PPO and HDHP (High Deductible Health Plans) with HSA (Health Savings Accounts) options. They also provide wellness programs, mental health resources, and employee assistance programs. Company Reviews and Job Boards: Sites like Glassdoor and Indeed reveal employee reviews about Harsco’s health benefits. Many reviews mention the company’s competitive benefits package, including health insurance, dental, and vision plans. However, some employees noted that the benefits could be improved, particularly in terms of coverage and cost. Industry Reports: Industry reports and compensation studies indicate that Harsco’s health benefits are generally in line with industry standards. The company provides a range of healthcare options with a focus on comprehensive coverage and preventive care.