NUA Qualified For PG&E Employees?

Healthcare Provider Update: Healthcare Provider for Pacific Gas & Electric The primary healthcare provider for employees of Pacific Gas and Electric (PG&E) is often covered under large insurance carriers that offer comprehensive plans, including offerings from Blue Cross Blue Shield and UnitedHealthcare; the exact provider may vary depending on the employee's specific plan and regional options available. Projected Healthcare Cost Increases in 2026 As we look ahead to 2026, healthcare costs are anticipated to rise significantly due to a combination of factors. Insurers are reporting average premium increases that could exceed 20%, driven largely by ongoing inflation in healthcare services and the potential expiration of enhanced subsidies provided under the Affordable Care Act. This perfect storm of rising medical costs and diminished financial support could shock many consumers, with estimates suggesting that out-of-pocket premiums might surge by as much as 75% for individuals reliant on marketplace plans. As such, both employees and employers within PG&E should prepare for heightened expenses, taking proactive steps now to mitigate potential financial impacts. Click here to learn more

In order to help our clients from PG&E understand just how NUA can be used, we'd first like to make sure our PG&E clients understand qualified accounts that this tax trick can be used in and how they differ in tax treatment compared to non-qualified accounts. Qualified accounts (i.e. Traditional 401(k)) are designed to offer individuals added tax benefits. In a qualified account, you can make contributions with pre-tax dollars from your income, which lowers your tax bill for that year. 

 

'Qualified accounts (i.e. Traditional 401(k)) are designed to offer individuals added tax benefits.'

 

In addition, no tax is paid on appreciation until withdrawals are made. At the point withdrawals are made (tax penalty for withdrawals before 59½ and required minimum distributions [RMDs] after 70) both appreciation and invested amounts are taxed as ordinary income.

 

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On the other hand, we'd like to point out to our PG&E clients that non-qualified plans are those (i.e. a standard brokerage
account) that are not eligible for tax-deferral benefits. Investments are paid
for with after-tax dollars. When appreciated shares are liquidated (a gain is
“realized”), the difference between cost basis (original cost at purchase) and sales price is taxed at either short-term or long-term capital gains rate depending on how long they were held, in addition to taxes paid on dividends the year they are received. Funds from non-qualified accounts are neither subject to early withdrawal penalties nor RMDs.