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Navigating Estate Planning for Surgery Partners Employees: Adapting to Federal and State Tax Changes

'Surgery Partners employees must remain proactive in updating their estate plans to reflect the evolving tax landscape, ensuring their financial legacy is preserved despite anticipated changes to exemption limits and estate tax regulations.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'Surgery Partners employees should consider adjusting their estate plans now to take advantage of current exemption limits before the anticipated reductions in 2026, ensuring that their assets are protected and efficiently passed on to future generations.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

Upcoming Changes to Estate Tax Exemptions — How the reduction of the federal gift and estate tax exemption in 2026 may impact Surgery Partners employees' estate plans.
Strategies for Managing Different Asset Types — The tax implications of retirement accounts, taxable accounts, and real estate when structuring an estate plan.
The Role of Life Insurance in Estate Planning — How irrevocable life insurance trusts can help mitigate estate tax burdens and facilitate a smooth transfer of wealth.

Estate planning remains a complicated area of financial management for Surgery Partners employees. With major changes to federal tax regulations expected by the end of 2025, employees should consider adjusting their estate plans to accommodate possible changes.

Modifications to Exemption Limits' Effects.

At USD 13.99 million per person, the federal gift and estate tax lifetime exemption is currently USD 13.99 million. This exemption is expected to drop to around USD 7 million post-2025. This change creates concern among users of the existing higher gifting limits. But Treasury Department regulations from November 2019 say gifts made between 2018 and 2025 under the higher exemption amounts will not be affected even if the exemption amounts decrease after 2025. Source: Treasury Department:

Considered Aspects for Different Account Types.

The federal estate tax affects all account types differently - and that includes employees of Surgery Partners companies - because assets at death are taxable at the full market value. Assets in retirement accounts like traditional IRAs or 401(k)s are subject to income taxes and possible penalties if passed before death. Alternatively, assets in taxable accounts like real estate or brokerage accounts might be better suited to lifetime gifting strategies. Roth conversions may also improve tax efficiency on large assets in retirement accounts.

Considerations Regarding Real Estate and Estate Taxes.

Estate planning for real estate involves considering the property's value at death because it directly affects estate tax, whether the heirs plan to sell or keep the property. States such as Nebraska and Pennsylvania tax the heirs on inheritances. Surgery Partners employees planning their estates should structure plans that provide enough liquidity to cover estate taxes and other costs without having to liquidate large assets like real estate or family businesses, especially since estate tax exemptions could decrease in 2026.

Life Insurance & Estate Planning.

Life insurance proceeds are included in the estate's gross value. But the proceeds of a policy owned by an irrevocable trust are not included in the estate and are exempt from estate taxes. This setup allows structured planning using annual exclusion gifts to fund life insurance premiums through trusts - a useful tool for tax-advantaged wealth transfer - especially with estates that may be over federal exemption limits.

Reviewing Your Estate Plan

Surgery Partners employees should review and update their estate plans every three to five years or at the time of a major life event like marriage, the birth of a child, or a significant change in net worth. State or federal tax laws also should cause an evaluation of estate plans. Some whose plans might not reflect new laws or personal circumstances should consult an estate planning attorney, especially with tax changes coming soon.

Final Thoughts

Surgery Partners employees should take proactive estate planning steps to protect their legacy amid possible federal tax law changes. This means understanding how different asset types affect estate taxes, using trusts for life insurance, and maintaining estate liquidity to service tax obligations. Such strategies match financial planning to laws of today and tomorrow, preserving wealth for future generations.

Like navigating changing waters, Surgery Partners employees should update their estate plans to reflect changing tax landscapes. Actively preserving financial legacies through lifetime gifting or asset restructuring may help them weather changes in federal tax exemptions. A bit like a captain in shifting seas, careful preparation may lead an estate to its destination.

Articles you may find interesting:

Source:

1. 'Understanding the 2026 Changes to the Estate, Gift, and Generation-Skipping Tax Exemptions.' Husch Blackwell , June 2024, www.huschblackwell.com .

2. 'Estate Planning Considerations for Highly Appreciated Assets.' McLane Middleton , September 2024, www.mclane.com .

3. 'Estate Planning Now and for the 2026 'Double Exemption' Sunset.' Eide Bailly , July 2023, www.eidebailly.com .

4. 'Make Estate Planning More Tax Efficient By NOT Splitting Assets Evenly.' Michael Kitces , August 2024, www.kitces.com .

5. 'Estate Tax Exemption Sunset 2026: Key Questions Answered.' Merrill Lynch Wealth Management , March 2024, pbig.ml.com.

What type of retirement savings plan does Surgery Partners offer to its employees?

Surgery Partners offers a 401(k) retirement savings plan to its employees.

Does Surgery Partners match employee contributions to the 401(k) plan?

Yes, Surgery Partners provides a matching contribution to employee contributions made to the 401(k) plan, subject to certain limits.

What is the eligibility requirement to participate in the Surgery Partners 401(k) plan?

Employees of Surgery Partners are generally eligible to participate in the 401(k) plan after completing a specified period of service, typically 30 days.

Can employees of Surgery Partners choose how their 401(k) contributions are invested?

Yes, employees at Surgery Partners can choose from a variety of investment options for their 401(k) contributions.

How much can employees contribute to the Surgery Partners 401(k) plan each year?

Employees can contribute up to the IRS annual limit for 401(k) contributions, which is adjusted periodically. For 2023, the limit is $22,500, with an additional catch-up contribution for those aged 50 and older.

When can employees of Surgery Partners start withdrawing from their 401(k) accounts?

Employees can typically begin withdrawing from their Surgery Partners 401(k) accounts at age 59½ without penalties, subject to plan rules.

Does Surgery Partners allow for loans against the 401(k) plan?

Yes, Surgery Partners allows employees to take loans against their 401(k) balance, subject to specific terms and conditions outlined in the plan.

What happens to my 401(k) balance if I leave Surgery Partners?

If you leave Surgery Partners, you can choose to roll over your 401(k) balance to another retirement account, leave it in the Surgery Partners plan, or cash it out, though cashing out may incur taxes and penalties.

Is there a vesting schedule for the Surgery Partners 401(k) matching contributions?

Yes, Surgery Partners has a vesting schedule for matching contributions, meaning employees must work for a certain period before they fully own the matched funds.

How can employees at Surgery Partners access their 401(k) account information?

Employees can access their Surgery Partners 401(k) account information through the plan’s online portal or by contacting the plan administrator.