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7 IRA Strategies and Tax Rules USG Corporation Employees May Be Overlooking

“USG Corporation employees who take the time to understand evolving IRA contribution limits, spousal opportunities, and conversion rules are often better positioned to coordinate personal savings with workplace retirement benefits. I encourage individuals to review these strategies within the context of their broader retirement and estate planning goals while consulting a qualified tax advisor for guidance tailored to their specific situation.” – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

“USG Corporation employees who carefully evaluate IRA contribution limits, spousal strategies, and conversion considerations can create stronger alignment between their personal savings and employer-sponsored benefits. I encourage individuals to view these IRA decisions as part of a coordinated retirement and estate planning framework while consulting a qualified tax professional for guidance specific to their circumstances.” – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

Key IRA contribution rules and annual limits for 2026.
Strategic considerations such as spousal IRAs, SEP IRAs, and Roth conversions.
Special IRA situations involving alimony, children with earned income, and income phase-outs.

Seven Frequently Ignored Facts About IRAs for USG Corporation Employees

Many USG Corporation employees begin thinking about IRA contributions while completing their tax forms and reviewing potential deductions. Whether you participate in company-sponsored retirement benefits or contribute independently, understanding how IRAs fit into your overall strategy can help you evaluate additional planning opportunities.

You might be unaware of a few things regarding IRAs. These are seven facts that are frequently forgotten.

1. An IRA Can Be Opened and Funded by a Nonworking Spouse

A spouse who does not receive a salary can still save for retirement. If you file a joint federal income tax return and one spouse earns taxable compensation, the nonworking spouse can open and contribute to their own traditional or Roth IRA. ¹

The deductible amount of a traditional IRA contribution may be limited based on income if the working spouse participates in an employer-sponsored retirement plan.

The total annual contribution cap for Roth and traditional IRAs in 2026 is $7,500. A catch-up contribution of $1,100 is permitted for individuals age 50 and older. ¹

Combined IRA contributions for both spouses cannot exceed the taxable income reported on the joint return.

2. You Can Still Contribute Even If You Are Not Eligible for a Deduction

Your traditional IRA contribution may not be deductible if your modified adjusted gross income exceeds certain thresholds and you participate in a company retirement plan such as a 401(k) or 403(b). ²

However, nondeductible contributions may still allow earnings to grow on a tax-deferred basis until withdrawal. ²

Assets from a traditional IRA may also be converted to a Roth IRA. ³ Conversions are permitted regardless of income level, although income taxes may apply depending on the amount converted.

3. Alimony May Not Count as Taxable Compensation for IRA Contributions

Under the Tax Cuts and Jobs Act of 2017, alimony payments from divorce or separation agreements signed on or after January 1, 2019 are not deductible to the payer and are not taxable income to the recipient. ⁴

Because IRA contributions must be based on taxable compensation, post-2018 alimony typically does not qualify.

Agreements signed before January 1, 2019 are generally grandfathered under prior rules unless formally modified.

4. Self-Employed? Consider a SEP IRA

If you have consulting income, freelance work, or a side business, you may be eligible to establish a Simplified Employee Pension (SEP) IRA.

SEP IRA contributions are generally made by the employer and may qualify as business deductions. Contribution limits are substantially higher than traditional or Roth IRAs.

Self-employed individuals may contribute up to 25% of qualified compensation, subject to IRS calculation guidelines. IRS Publication 560 includes worksheets for determining limits.

To make contributions for a given tax year, a SEP IRA typically must be established by the tax filing deadline, including extensions.

5. Catch-Up Contributions for Individuals Over Age 50

Individuals age 50 or older may make additional catch-up contributions to a traditional or Roth IRA.

The catch-up amount for 2026 is $1,100, with future adjustments indexed for inflation.

6. A Child Can Contribute to a Roth IRA if They Have Earned Income

A minor with taxable earned income may contribute to a Roth IRA up to the annual limit or the amount of earned income for the year, whichever is less.

Qualified retirement accounts such as IRAs are generally not counted as assets for purposes of determining the Student Aid Index (SAI) on the Free Application for Federal Student Aid (FAFSA), although withdrawals may affect income calculations. ⁵

7. You May Still Access Roth IRA Benefits Even if You Exceed Income Limits

A Roth IRA offers potential advantages such as tax-free qualified withdrawals and no required minimum distributions for the original account holder.

Although income limits restrict direct Roth IRA contributions, individuals may convert assets from a traditional IRA to a Roth IRA regardless of income.

IRS pro-rata rules require that all traditional, SEP, and SIMPLE IRA balances be considered when determining the taxable amount. Accurate tracking of after-tax contributions requires proper reporting, including Form 8606.

Because conversion strategies can involve complex tax considerations, reviewing your personal situation with a qualified tax professional may be helpful.

Support for Your Retirement Planning

For USG Corporation employees evaluating how IRAs coordinate with workplace retirement benefits, understanding contribution limits, conversion rules, and spousal planning opportunities can play an important role in a broader retirement strategy.

The Retirement Group can assist you in evaluating how these IRA rules align with your long-term goals. If you have questions about retirement planning, you can speak with a representative by calling (800) 900-5867 .

Disclosure: Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

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Articles you may find interesting:

Sources:

1. 'Retirement topics - IRA contribution limits.' IRS, 3 Mar. 2026. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

2. “IRA Contribution Limits for 2025 and 2026.” Fidelity Learn, Fidelity Investments, 26 Jan. 2026, www.fidelity.com/learning-center/smart-money/ira-contribution-limits .

3. Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily
include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a
Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required
minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA. Investing involves
risk, including possible loss of principal.

4. 'Divorce or separation may have an effect on taxes,' IRS Tax Reform Tax Tip, July 8, 2019. https://www.irs.gov/newsroom/divorce-or-separation-may-have-an-effect-on-taxes

5. 'How 6 Different Assets Can Affect Your FAFSA and Financial Aid Eligibility.' Saving for College, by Jeffrey Trull. Jan. 15, 2026. https://www.savingforcollege.com/article/how-7-different-assets-can-affect-your-financial-aid-eligibility

How does the retirement plan structure at USG Corporation impact both final average earnings participants and cash balance participants, especially regarding their eligibility and benefits accrued over time? In what ways does the differentiation between these two categories influence the retirement outcomes for employees of USG Corporation?

Retirement Plan Structure: USG Corporation's retirement plan differentiates between Final Average Earnings Participants and Cash Balance Participants. Final Average Earnings participants, who joined before January 1, 2011, accrue benefits based on their final average earnings and years of service, which can result in higher benefits for longer-serving employees. Cash Balance participants, who joined after January 1, 2011, have their benefits calculated based on a cash balance account, which grows with contributions and interest credits. These differences affect retirement outcomes, as Final Average Earnings participants may see higher pension payments if they have longer service or higher wages, while Cash Balance participants have more predictable but potentially lower benefits based on their account balance(USG Corporation_Retirem…).

USG Corporation's Retirement Plan allows for different age-specific rules regarding early retirement. How do the "Rule of 90" and "Rule of 82" affect the financial planning of employees considering an early retirement option, and what should they consider regarding their long-term financial security?

Rule of 90 and Rule of 82: The "Rule of 90" allows employees to retire early without a reduction in benefits if their age plus years of service total 90, provided they retire at or after age 62. The "Rule of 82" permits early retirement with reduced benefits for those whose age and years of service total 82. Employees planning early retirement must consider these rules as they directly affect the amount of benefits they receive, making it important to assess how long-term financial security will be impacted, especially if they retire before age 62(USG Corporation_Retirem…).

Could you elaborate on the process through which employees at USG Corporation can change their beneficiaries within the retirement plan? What steps need to be taken, and what are the implications of these changes on the benefits received upon the participant's death?

Changing Beneficiaries: To change beneficiaries, USG Corporation employees must contact Your Benefits Resources™, where they can designate a primary and contingent beneficiary. If married, the spouse must provide notarized consent to name a different primary beneficiary. The process involves completing a form, and any changes affect who receives benefits upon the participant's death. Failing to update the beneficiary could result in benefits being paid to unintended individuals(USG Corporation_Retirem…).

As part of the retirement process at USG Corporation, how are pensionable earnings calculated? What factors are included in this determination, and how might they vary among different employees based on their roles within the organization?

Pensionable Earnings Calculation: Pensionable earnings at USG Corporation include regular pay, shift differentials, and bonuses but exclude items like nonqualified deferred compensation, severance, and stock awards. These earnings are used to calculate benefits based on formulas that take into account an employee’s service years and earnings over the 36 highest consecutive months of the last 15 years of participation(USG Corporation_Retirem…).

How does the automatic enrollment in the USG Corporation Retirement Plan work, and what options do employees have if they initially chose not to participate? What implications might this have for their retirement savings strategy?

Automatic Enrollment and Opting In: Employees at USG Corporation are automatically enrolled in the retirement plan unless they choose to opt out. If employees decide not to participate initially, they can enroll later by contacting Your Benefits Resources™. Failure to participate from the start could result in lower retirement savings due to fewer years of contributions(USG Corporation_Retirem…).

In the context of USG Corporation, what are the potential tax consequences for employees withdrawing their retirement benefits, especially regarding the mandatory withholdings? How might employees effectively manage these tax liabilities when planning for retirement?

Tax Consequences of Withdrawals: Employees withdrawing their retirement benefits from USG Corporation will face mandatory federal income tax withholdings, typically 20% for lump sum distributions, unless the distribution is rolled over into an IRA. Employees must plan for these taxes when withdrawing to avoid unexpected liabilities and ensure they maximize their after-tax retirement income(USG Corporation_Retirem…).

How do employees at USG Corporation access the necessary documents related to their retirement benefits, and what is the process for obtaining copies of these documents if needed? What are the responsibilities of the Plan Administrator in this process?

Accessing Retirement Documents: Employees can access documents related to their retirement benefits through Your Benefits Resources™ online or via phone. If additional copies are needed, employees can request them from the Plan Administrator for a small fee. The Plan Administrator oversees ensuring these documents are provided to participants as required by ERISA(USG Corporation_Retirem…).

What unique provisions exist for USG Corporation employees who experience a break in service? How do these provisions impact their accumulated benefit service and overall benefits upon reemployment?

Break in Service Provisions: USG Corporation allows employees who experience a break in service to retain their accumulated benefits if they are reemployed within one year. If reemployed after one year, their previous service may not count toward future benefits unless they were vested prior to termination. This can affect the total benefits an employee accrues if they leave and later return(USG Corporation_Retirem…).

What options do employees of USG Corporation have for managing their benefits if they return to work after retirement? How does this affect their pension benefits and the overall strategy for maximizing retirement income?

Returning to Work After Retirement: Employees returning to work after retirement at USG Corporation will have their pension payments suspended and recalculated based on additional years of service. This recalculation takes into account prior payments, meaning employees should consider the impact of returning to work on their long-term pension strategy(USG Corporation_Retirem…)(USG Corporation_Retirem…).

How can employees of USG Corporation contact their Benefits Resourcesâ„¢ for more information on their retirement plan options? Are there specific channels preferred for different types of inquiries, and what resources are available to assist them?

Contacting Benefits Resources™: Employees can contact Your Benefits Resources™ via the web or a toll-free number to inquire about retirement plan options. Different inquiries, such as changes to beneficiaries or requesting benefit estimates, can be handled through these channels. Resources such as detailed benefit estimates are available to help employees plan for retirement(USG Corporation_Retirem…).