Introduction

As a P&G employee or retiree, your finances are distinctly complicated, with different types of compensation like the Procter & Gamble Savings Plan, PST, STAR awards, and stock options. Tackling the tax aspects of these elements necessitates strategic planning to maximize savings, reduce tax burden, and steer clear of penalties.¹  We at Savvy Wealth use Holistiplan, an advanced tax planning software, to enable our clients to make sound tax decisions every year.

The Importance of Proactive Tax Planning

Without proper tax planning, high-income professionals like P&G employees can face unexpected tax bills, unnecessary penalties, and missed opportunities for tax-efficient investing.9² Holistiplan enables us to:

• Estimate Annual Tax Burdens: We examine how various sources of income, deductions, and tax brackets affect your tax liability..³
• Spot Roth Conversion Opportunities: We identify best windows to convert pre-tax savings to Roth accounts to capitalize on lower tax rates.⁴
• Plan for Stock Option & Capital Gains: We plan in regard to long-term capital gains so that sales of P&G stock and exercises of stock options are done tax-effectively ⁶
• Calculate Estimated Tax Payments: We help clients avoid expensive IRS penalties by satisfying safe harbor rules..⁷
• Review Tax Returns for Errors: We review tax returns in detail to detect omitted deductions, incorrect reporting, and other possible filing errors that may affect tax burden.⁸

Estimated Tax Payments & IRS Penalties

Probably the most neglected and important area of tax planning is making correct estimated tax payments. The IRS levies stiff penalties for underpayment of taxes, so it's particularly important to be in compliance.³ For P&G employees with income from STAR awards, exercises of stock options, or deferred compensation, withholding might not be enough to pay total tax liability.

With Holistiplan, we:

• Compute estimated taxes on actual income and projected earnings.
• Make sure clients satisfy safe harbor requirements, paying at least 90% of the current year's tax bill or 110% of the previous year's tax bill.
• Modify quarterly tax payments based on income changes, avoiding unnecessary IRS penalties.⁷

Roth Conversion Planning

Holistiplan enables us to create Roth conversions with accuracy, so we take advantage of low tax years without experiencing unnecessary tax bracket creep.² To illustrate, P&G retirees with lower taxables in early retirement years can roll over segments of their pre-tax 401(k) dollars to a Roth IRA, preserving lower rates before RMDs force them into higher tax brackets.

Stock Option & Equity Compensation Planning

P&G staff members tend to own company shares in the form of RSUs, PSUs, and stock options. Exercising options or selling shares without a strategy can unleash unintended tax burdens.⁹ Holistiplan assists us in:

• Evaluating the effect of various exercise and sale tactics on your tax rate.¹⁰
• Determining ways to split option exercises into several years in order to limit tax exposure⁶
• Assessing if it is more advantageous to retain shares for long-term capital gain treatment or to sell immediately after vesting.¹

How Savvy Wealth Incorporates Holistiplan into Your Financial Plan

We incorporate Holistiplan's analysis into our overall financial planning process, providing a tax-effective plan for our P&G clients. By engaging in proactive tax planning, we assist clients in:

• Minimizing unnecessary tax expenses.
• Maximizing investment approaches.
• Sustaining IRS compliance and penalty avoidance.
• Detecting and fixing errors on tax returns that may affect financial results.

By employing Holistiplan every year, we guarantee that every financial decision is maximized with tax efficiency in consideration, retaining more of your hard-earned wealth to work for you.¹¹

Conclusion

Tax planning is a critical element of a successful financial plan for P&G employees and retirees. At Savvy Wealth, we leverage the power of Holistiplan to review tax implications, maximize Roth conversions, coordinate estimated tax payments, and plan stock option exercises.¹² We also examine tax returns to detect mistakes and claim maximum possible savings. Through our forward-looking strategy, we keep our clients one step ahead of tax bills, steer them away from expensive errors, and maximize every financial advantage.

If you are interested in seeing how our tax planning strategies might be able to help you, contact Savvy Wealth today and arrange for an appointment.