Proactive tax-planning tactics can have a cumulative effect and could generate significant savings in the long term, increase or preserve wealth, and improve your financial plan. Your tax and financial advisors can help evaluate your unique tax situation.
The impact of the items on your list may vary based on your situation, but everyone can benefit from considering at least a few of the following suggestions.
One foundational aspect of end-of-year tax planning involves strategically managing when to recognize your income as earned and when to defer it. This can make a substantial difference for high earners, especially those who are subject to the highest marginal tax rates. The decision to defer or accelerate income depends on anticipated changes in personal tax rates, potential legislative tax changes, and investment income projections.
“The questions we typically ask clients focus on where their income is coming from and how that compares to last year,” says Lindsay Allen, senior team leader of wealth planning at CAPTRUST. “We also want to know if they’ll be itemizing deductions or taking the standard deduction.” The answers to these questions will help determine if a client should decrease or increase their income that year and which tax strategies they could potentially use.
If you anticipate being in a lower tax bracket next year, or foresee tax legislation that can reduce rates, deferring income can reduce your current-year liability. These strategies can include:
While fulfilling their philanthropic goals, high-net-worth individuals who are itemizing deductions can also use charitable contributions as a strategic tool to impact taxable income. There are several tax-efficient ways to structure charitable giving.
A donor-advised fund (DAF) allows you to make a charitable contribution, receive an immediate tax deduction, and then direct the DAF to make grants to your chosen charities over time. DAFs can be particularly advantageous in years with significant income events, such as the sale of a business or large capital gain, as you can prefund future giving and secure a large deduction in the current year.
Donating appreciated securities instead of cash allows you to avoid capital gains tax on the appreciation while still receiving a charitable deduction based on the current fair market value. This is often a highly tax-efficient strategy for individuals with substantial stock portfolios.
Long-term capital gains are taxed at preferential rates (0 percent, 15 percent, or 20 percent, depending on your income and filing status). High earners are subject to the 3.8 percent net investment income tax on top of the capital gains tax.
If you’re in a lower tax bracket this year than you expect to be in the future, consider harvesting some capital gains to take advantage of lower tax rates before year-end.
Roth conversions can be beneficial for investors who expect higher tax rates—or a higher tax bracket—in the future.
“Think about your taxes cumulatively, throughout your life versus just this year,” says Allen. “With projections, you can take advantage of opportunities in lower-tax-bracket years, such as Roth conversions. You’ll pay taxes for the year the money is converted, but any future growth on those funds can be withdrawn tax-free in retirement, assuming you meet the withdrawal rules.” Also, Roth accounts aren’t subject to required minimum distributions.
For executives with NSOs, exercising stock options may push you into a higher tax bracket. Consider this as a strategy to take advantage of lower tax rates than may exist in future years.
In some states, you can make charitable contributions to specific state-approved organizations and receive a state tax credit in return. This can reduce your state tax liability while providing a federal deduction for the charitable contribution. Consult with your financial advisor for more details about your state.
Some states allow for a state tax deduction for 529 plan contributions made to their state plan. The rules on whether a deduction exists and to what extent vary by state but can be a great way to save for education and capture a state tax deduction.
Although they may not impact your current year’s taxes, these strategies can have a significant impact on the creation and preservation of wealth. They may be impactful as part of a long-term tax strategy that considers cumulative tax benefits.
Each year, you can give up to $19,000 per recipient without the gift counting toward your lifetime exemption. These gifts can remove assets from your estate, lowering your taxable assets and reducing future estate tax liability. This amount is indexed each year.
If you exceed the income limits for contributing directly to a Roth IRA, you can use a backdoor Roth strategy. This involves making a nondeductible contribution to a traditional IRA (which is not subject to income limits) and then converting the account to a Roth IRA. Since the contribution is nondeductible, you need to pay taxes only on any growth that was converted. Future withdrawals from the Roth account would be tax-free, making this an excellent strategy for building tax-advantaged wealth over time. It is important to understand the pro-rata rules for IRAs before engaging in this strategy.
End-of-year tax planning requires a nuanced approach to managing income, investments, charitable giving, and estate planning. By leveraging these advanced strategies, it’s possible to preserve wealth, reduce tax liabilities, and help ensure your financial legacy.
Work closely with your trusted tax advisor or wealth planner for help navigating the complexities of the tax code and optimizing strategies that are tailored to your individual financial goals and circumstances.
On September 15, the IRS released final regulations under SECURE 2.0 addressing catch-up contributions. Under the final regulations, plan sponsors must implement Roth catch-up contributions in good faith beginning January 1, 2026, for retirement plan participants age 50 or older who earned more than $150,000 in Federal Insurance Contributions Act (FICA) wages from their employer in 2025 (high earners). Operating in good faith gives plan sponsors time to resolve any issues before the IRS begins enforcing the new regulations on January 1, 2027.
The guidance emphasizes coordination among stakeholders, flexibility in communication strategies, and proactive monitoring of contribution limits. Effective coordination among service providers is also essential to manage plan design variability. For example, a company using multiple payroll systems and a third-party administrator may hold regular meetings to ensure consistent application of Roth catch-up contribution rules across all platforms and vendors.
The following industry best practices are designed to promote consistency, compliance, and operational efficiency among payroll providers, plan sponsors, recordkeepers, and third-party administrators (TPAs).
1. Understand the Catch-Up Elections
Under SECURE 2.0, plan sponsors have several options for implementing the Roth catch-up contribution requirement for high earners. One option, the deemed Roth catch-up election, allows employers to adopt a policy that automatically converts pre-tax catch-up contributions to Roth once a participant exceeds the IRS 402(g) limit (e.g., $24,500 in 2026). Accurate contribution monitoring is critical, requiring payroll systems to separately track pre-tax and Roth deferrals. For example, the system can be configured to detect when the limit is reached and automatically redirect subsequent catch-up contributions to Roth, minimizing the need for manual intervention.
Plan sponsors typically implement this policy at the start of the year and notify participants in writing, allowing them to opt out if desired.
Another option, the separate election for pre-tax and Roth catch-up contributions, allows a participant to choose in January to have all catch-up contributions designated as Roth-regardless of whether they exceed the IRS 402(g) limit during the year.
Additional election options include spillover and no Roth.
Please see the table below for a comparison of the main catch-up election methods available.
| Method | Description | Who It Applies To | Pros |
| Separate Election | Participants make a distinct election for catch-up contributions | All participants: Roth mandatory for high earners (FICA > $150,000) | Clear participant control Straightforward compliance |
| Spillover Election | Participants make a single election; catch-up contributions begin after 402(g) limit is satisfied | All participants: Roth mandatory for high earners (FICA > $150,000) | Familiar designLess participant confusion |
| Deemed Roth Election | Catch-up contributions automatically treated as Roth for high earners when necessary | High earners (FICA > $150,000) | Simplifies compliance Reduces participant error |
| No Roth Election | Catch-up contributions disallowed for high earners in plans without Roth deferrals | High earners in non- Roth plans | No need to implement Roth |
2. Roth Catch-Up Identification
Employers should coordinate with their recordkeeper to determine how to best communicate which employees are eligible for Roth catch-up contributions based on prior-year FICA wages. Many recordkeepers are using a Roth catch-up indicator to identify employees age 50 or older who earned more than $150,000 in FICA wages during 2025.
3. Participant Communication
Participant communications should clearly outline the rules for Roth catch-up contributions. For example, the Summary Plan Description (SPD) and annual notices may include a dedicated section explaining the automatic Roth catch up contribution options. Messaging should be adaptable to the audience and may require more detailed or customized language depending on plan administration to ensure clarity and compliance.
4. Errors and Corrections
Plan sponsors that offer a deemed election, should be aware of the two correction methods.
5. Plan Sponsor Action Checklist
Questions for Payroll Providers:
Questions for Recordkeepers:
Detailed Examples
Example One: Deemed Roth Catch-Up Election
John elects to contribute $26,000 in 2026. Once his pre-tax deferrals reach the IRS 402(g) limit of $24,500, the remaining $1,500 is automatically treated as a Roth catch-up contribution under the deemed election.
Example Two: Error Correction Methods
A payroll provider mistakenly processes $2,000 of pre-tax catch-up contributions as Roth. The recordkeeper identifies the error during year-end testing. Using the Form 1099-R correction method, the $2,000 in pre-tax deferrals is converted to Roth and reported as taxable income.
Example Three: Election Methods
Plan A uses the spillover method. Emily elects a single deferral rate, and once she reaches the 402(g) limit, her catch-up contributions automatically spill over as Roth. In contrast, Plan B uses the separate election method. Mark specifies a separate rate for catch-up contributions, and his payroll provider designates all catch-up as Roth for the year.
Sources:
IRS RIN 1545-BR11 RE: Catch-Up Contributions
Disclosure: The information published herein is provided for informational purposes only, and does not constitute an offer, solicitation, or recommendation to sell or an offer to buy securities, investment products, or investment advisory services. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Nothing contained herein constitutes financial, legal, tax, or other advice. Consult your tax and legal professional for details on your situation.
There are several strategies for giving to charity as part of a legacy plan. Each approach works differently, so it’s important to understand how they work and consider what impact you want to make. Choosing the right strategy can help ensure your estate planning reflects your values and goals.
The estate tax is a tax on the transfer of wealth after a person’s death. It is calculated based on an individual’s net worth, with certain bequests subtracted and prior gifts that used part of the exemption added back in. An estate tax credit or exclusion then applies to determine if estate tax will be due.
In 2025, the estate tax exemption is $13,990,000 per individual. If the calculation leaves less than the exemption amount, no estate tax will be due. Keep in mind that some states may have their own estate or inheritance taxes as well.
One important provision is the unlimited charitable deduction. In other words, there is no limit to how much you can contribute to charity. Bequests to qualified charitable organizations can reduce your taxable estate, making this an effective way to create impact while potentially lowering or eliminating estate taxes.
People who have assets in an individual retirement account (IRA) or pre-tax assets in an employer-sponsored retirement plan can name a charity as the beneficiary. This can be a simple way to make a charitable impact while effectively removing these assets you’re donating from your taxable estate.
Because of their tax-exempt status, charities that receive these assets do not pay income taxes on them—unlike individual beneficiaries.
Often, individuals choose to segment their charitable gifts by creating a separate retirement account designated just for charity, while naming other beneficiaries for their remaining accounts.
If you are updating or establishing your will, a direct bequest can also be a simple way to leave a charitable legacy. Generally, this involves working with an attorney to add language specifying the charities you want to support and the exact amount of the gift you want to give to each one. This approach is well suited for smaller bequests and donations intended for general use by the organization. However, establishing charitable bequests in a will can be harder to change if needed, as the document will need to be updated.
Instead of naming specific charities in your will, you can designate a donor-advised fund (DAF) and fund it through your estate. This option offers greater flexibility if your desired causes change over time, as distributions to charities are determined later. However, it does require a trustee to carry out your wishes regarding those distributions.
Specifying fixed amounts can create challenges if your estate’s liquidity is uncertain. Discuss these details with your attorney to ensure your intentions are honored effectively.
A DAF is a charitable investment account managed by a sponsoring charitable organization. Contributions to the fund provide donors with a charitable tax deduction based on the type of asset donated. Once assets are contributed, they are removed from the donor’s estate. These funds can be invested, allowing them to grow and create an ongoing impact.
DAFs can be set up with a trustee and successor, enabling future generations to direct distributions to charities. Many individuals establish a DAF during their lifetime as part of their annual giving strategy. This approach supports ongoing philanthropy and engages heirs in the mission of giving, ensuring continuity of charitable values across generations.
A charitable trust can be another effective strategy for legacy planning. While there are many ways to structure these trusts, they generally fall into two main categories, distinguished by when the charity receives the assets.
Charitable Lead Trust (CLT)
Charitable Remainder Trust (CRT)
Note: Establishing a charitable trust involves legal and administrative costs. Consult with an attorney or financial advisor to determine the best structure for your goals.
A charitable lead trust (CLT) allows you to strategically leverage assets to accomplish multiple goals: providing a charitable impact and passing assets to heirs. This type of trust usually works best with assets that are expected to appreciate over time. A CLT can be set up during your lifetime or through your will after death.
Assets that pass by way of a CLT after death are not subject to estate taxes, but they do not receive a step-up in basis for the non-charitable beneficiaries. CLTs are not tax-exempt. The non-charitable beneficiaries are responsible for paying taxes on income generated by the trust.
Here’s how a CLT works.
Unlike CLTs, charitable remainder trusts (CRT) are tax-exempt entities. This allows assets funding the trust to be sold and diversified, creating a stream of income for the non-charitable beneficiaries.
This type of strategy would usually be leveraged while the donor is alive to take advantage of a charitable deduction, providing a stream of income to themselves or their heirs, and removing taxable assets from their estate. A portion of the donation would be brought back into the estate at death through the charitable income tax deduction.
If you choose to pursue this strategy, it is important to make sure the trust is structured properly. Payment amounts and durations must be calculated to align with beneficiary income needs and the desired charitable deduction.
Here’s how a CRT works:
Sources:
Internal Revenue Services| Estate Tax. Last Updated: October 29, 2025
Resource by CAPTRUST wealth planning team
This article does not constitute legal, accounting, or tax advice. This material has been prepared solely for informational purposes. This article is not individual investment advice. The information and statistics in this content are from sources believed to be reliable but are not guaranteed by CAPTRUST Financial Advisors to be accurate or complete. If you have questions or concerns regarding your own individual needs, please contact a CAPTRUST representative for further assistance.
The type of account your investments are held in is an important consideration when determining how that investment will be taxed. Certain accounts, such as individual retirement accounts (IRAs), Health Savings Accounts (HSAs), and employer-sponsored retirement accounts (such as 401(k)s), are tax-deferred, meaning no tax is due on the investments within them until funds are withdrawn.
In other accounts, such as a brokerage account, taxes may be owed based on the investment activity that occurs within the account. If the investment activity is potentially taxable, you may consider reviewing the account’s activity to determine whether it is taxable for the year.
Many investments yield ordinary income, such as interest or rental income from real estate. Other sources of ordinary income include savings accounts, certificates of deposit (CDs), money market funds, annuities, bonds, and certain types of preferred stock. This type of income is taxed at standard income tax rates, rather than the typically lower capital gains rates.
Within a taxable account, when you receive this kind of income, it generally would be either taxable or tax exempt.
Tax-exempt income refers to income that is not subject to federal, and sometimes state, taxes. Municipal bonds and certain U.S. government securities are common sources of tax-exempt income.
Taxable income comes from investments which do not qualify as tax exempt, such as capital gains, dividends, and interest income. If your investments generate taxable ordinary income, you’re required to report it on your federal tax return.
And a quick note on losses: Some investments can result in ordinary losses rather than income. These losses can offset ordinary income, helping to reduce your taxable income for the year.
In general terms, your basis is the amount you’ve invested in a particular asset. To determine your capital gain or loss when you sell or trade that asset, you need to know both your original basis and your adjusted basis.
Most of the time, your original basis is simply what you paid for the asset. For instance, if you bought 100 shares of stock at $1,000 each, your original basis in that stock would be $100,000. However, if you acquired the asset through a gift, inheritance, or certain types of nontaxable transactions, your basis may be calculated differently.
Over time, your basis can change due to various factors. This is known as your adjusted basis. For example, if you purchase a home for $150,000, that amount becomes your original basis. If you later spend $25,000 remodeling the kitchen, the adjusted basis may rise to $175,000.
Adjustments to basis can be increases or decreases, depending on the situation. For more guidance on what affects basis, refer to IRS Publication 551.
When you sell stocks, bonds, or other capital assets, you will realize either a capital gain or a capital loss. Your capital gain or loss would be calculated by subtracting your adjusted basis in the asset from the amount you received from the sale.
If you sell an asset for more than your adjusted basis, you’ll have a capital gain. For example, if your original basis in a stock was $15,000 and you sell it for $20,000, then your capital gain is $5,000. Instead, if you sell it for less than your adjusted basis, you have a capital loss. Selling the same stock for $10,000 when the adjusted basis is $15,000 would result in a $5,000 capital loss.
Capital gains and losses can be either short term or long term, depending on the holding period and how the investment is reported on schedule D of your tax return. The holding period refers to the length of time you’ve owned the asset. A gain is considered short term if you held the asset for a year or less, and long term if you held it for more than one year.
After reviewing sales that occurred during the year, consider the holding periods and group the transactions based on whether they resulted in gains or losses. You may end up with categories such as long-term capital gains, long-term capital losses, short-term capital gains, and short-term capital losses.
Losses are netted against gains to reduce your taxable amount, after which you determine your overall gain or loss, and whether it is long term or short term. Schedule D of your federal tax return will guide you through this process.
Long-term capital gains and qualified dividends are usually taxed at preferential rates of 0 percent, 15 percent, or 20 percent, depending on your taxable income. However, certain types of gains may be subject to higher tax rates—up to 25 percent or 28 percent.
Calculating the tax on long-term gains and qualified dividends can be complex, as it depends on your net gains and taxable income.
The type of asset sold also affects the tax rate and, possibly, the method used to calculate gains or losses. For example, gains from the sale of antiques are taxed at a maximum rate of 28 percent, regardless of how long they were held.
Individuals with higher incomes may be subject to an additional 3.8 percent net investment income tax. This tax applies to those with investment income whose modified adjusted gross income (MAGI) exceeds certain thresholds.
The tax is 3.8 percent of the lesser of
Important exceptions to net investment income for this tax include:
Resource by the CAPTRUST wealth planning team
This material is not individual investment advice. If you have questions or concerns regarding your own individual needs, please contact a CAPTRUST representative for further assistance. This material does not constitute legal, accounting, or tax advice. This material has been prepared solely for informational purposes. Investment advisory services offered by CapFinancial Partners, LLC (“CAPTRUST” or “CAPTRUST Financial Advisors”), an investment advisor registered under The Investment Advisors Act of 1940.
Risk is often reduced to market volatility, or more simply, the chance to lose money. In reality, risk investing refers to the possibility that your returns may fall short of expectations or that you could lose some or all of your investment.
No investment is entirely safe, not even those considered conservative. Because of this inherent risk, it is essential to understand the different types of risk in personal finance, how to manage them effectively, and how your own comfort level with risk can guide your investment decisions.
There are many forms of risk to consider when investing. Here are some examples:
In most cases, risk and reward are directly correlated. Typically, this means the more risk you take, the greater your chances of earning higher returns. On the other hand, there is also a greater chance that you will incur losses.
Most people understand this concept because it aligns with our instinct to avoid uncertainty. Still, the possibility of bigger gains often encourages investors to accept more risk. The key is finding the right balance. Your goal is to grow your investments without taking on more risk than is appropriate for your situation.
What is traditionally described as risk tolerance can be broken into two concepts. First, risk tolerance is emotional, referring to your comfort level with uncertainty and market swings. If you are losing sleep over your investments, you may be taking on more risk than you can handle.
Risk capacity is your ability to absorb losses based on your age, goals, and time horizon. A 35-year-old who is investing with a goal of retiring in 30 years has a higher risk capacity than a person who is already retired, simply because they have more time to recover from short-term losses and benefit from long-term growth.
Diversification helps reduce risk by spreading investments across different asset classes and types. Since markets don’t move in sync, gains in one area can offset losses in another.
Diversification does not guarantee profits or prevent losses, but it helps manage risk. A classic portfolio mix is 60 percent stocks and 40 percent bonds, designed to balance growth and stability. But even that approach has limits, like in 2022, when both stocks and bonds declined.
You can also diversify within an asset class. Large-cap stocks behave differently than small-cap stocks. Bond investors can spread risk across treasuries, corporate bonds, and municipal bonds. This helps reduce the impact of any single investment on your overall portfolio.
Before making any investment decisions, it’s important to fully understand the product in which you are investing. Begin by referencing reliable information sources—such as a mutual fund’s prospectus, which outlines its goals, fees, risks, and expenses.
Third-party financial publications and websites can also provide valuable information. They offer credit ratings, news, and performance comparisons. For mutual funds, these sources often provide ratings and analysis that help you evaluate how a fund stacks up against its peers. The Securities and Exchange Commission (SEC) is another reliable resource for company filings and disclosures.
Talking to a financial advisor can be a valuable step. They can clarify how specific investments align with your overall financial goals and ensure your strategy reflects your personal risk tolerance.
Resource by the CAPTRUST wealth planning team
This presentation is intended as an educational program presented by CAPTRUST Financial Advisors. This presentation is not individual investment advice. If you have questions or concerns regarding your own individual needs, please contact a CAPTRUST representative for further assistance.
While these foundational numbers remain important, they tell only part of the story. High-level averages can mask critical disparities and limit opportunities to improve plan outcomes.
Enter the new model of retirement plan evaluation: holistic, efficient, and employee centered. Proactive plan sponsors are moving beyond surface-level analytics to embrace segmented insights, modern metrics, and employee feedback. This approach doesn’t abandon traditional measures; rather, it enriches them with greater context and actionable intelligence.
First Things First
Before diving into analytics, plan sponsors must define what success looks like for their workforces. Is the primary goal maximizing retirement income replacement? Achieving universal participation? Improving employee financial confidence? Clearly defined objectives provide the foundation for meaningful measurement.
Foundational metrics remain the baseline for evaluating retirement plan performance and include:
Plan sponsors track these metrics periodically to identify trends that inform their decisions. These metrics provide a useful snapshot of plan health but only scratch the surface.
For example, a plan might boast an 85 percent participation rate, even while hourly workers participate at only half that level.
High usage of a plan’s qualified default investment alternative (QDIA) may provide excellent diversification. However, it may also mean that employees are only contributing at the auto-enrollment level—below the 10 to 15 percent typically needed for retirement security.
Looking beyond averages and toward behavioral trends, segment-specific outcomes, or employee sentiment can reveal actionable insights. “Sponsors who take this more in-depth approach often uncover opportunities to tailor communications, adjust plan design, and improve outcomes for underserved employee groups,” says Jennifer Doss, CAPTRUST’s defined contribution practice leader.
More Modern Metrics
Today, many proactive sponsors supplement foundational metrics with forward-looking indicators to assess whether participants are on track for retirement security.
Several factors drive the need for deeper analysis:
Fortunately, technological advancements enable sponsors to mine employee data for insights and opportunities. As a result, plan sponsors can have access to improved visibility into participant behaviors through dashboard views of participant outcomes. These capabilities are available due to recent upgrades in recordkeeper systems.
Recordkeeper platforms track participant engagement with plan resources, such as account logins, planning tool use, and content. Gap analyses highlight deficiencies in contribution levels or projected income. Monte Carlo simulations allow sponsors to model thousands of retirement scenarios under different market conditions, helping them see not just how many employees participate but also how many are really on track.
“These tools are essential in assessing retirement adequacy,” says Doss. “Monte Carlo tools elevate the conversation from ‘how many are participating’ to ‘how many are on track.’ And the ability to customize these tools to participant-specific retirement goals and spending strategies is key.”
“We believe that our investment in more sophisticated plan measurement will pay off by ensuring our employees not only have access to retirement benefits but also understand and feel empowered to use them,” says Jen Howe from Holland Hospital’s human resources team. Holland Hospital is a nonprofit, community-focused medical center in West Michigan with about 2,400 employees, a 190-bed main campus, and multiple satellite facilities.
Holland Hospital embarked on a process of enhancing its retirement plan metrics about three years ago to better attract and retain colleagues in several key employee segments.
Segmented Insights
One powerful evolution in plan measurement is access to segmented analysis. Averages are deceptive—they can hide significant disparities that merit attention and intervention. “More detailed analytics can create targeted opportunities to engage participants through education, timely nudges, or behavior-focused initiatives,” says Chris Whitlow, head of CAPTRUST at Work.
A notable dimension for segmentation is generation. “With multiple generations in our workforce, we recognize that each group has unique needs, learning styles, and comfort levels with technology,” says Howe. “We take a multi-channel approach, using every resource available to reach employees where they are most comfortable.”
Beyond generation, segmentation and analysis may reveal actionable insights based on:
Emerging best practices involve combining segmented data with financial wellness data—like emergency savings accounts, student loan assistance, or health spending guidance—and connecting retirement planning with broader total rewards strategies.
“Traditional retirement metrics can be insightful tools when viewed alongside broader financial wellness indicators,” says Whitlow. “These metrics can help plan sponsors spot hidden signs of financial stress or identify timely moments to capture a participant’s attention.”
SECURE Opportunities
Many SECURE and SECURE 2.0 Act provisions aim to improve the financial well-being of participants. SECURE 2.0, for example, introduced several provisions that require new metrics to track adoption, utilization, and impact.
“The biggest lift from SECURE 2.0 is that it has pulled financial wellness concepts into the mainstream of employee benefit decisions,” says Whitlow. “With SECURE 2.0, the Department of Labor (DOL) has put a clear priority on financial wellness, giving plan sponsors new ways to help improve employees’ overall financial wellbeing.”
With SECURE 2.0, the DOL also created new measurement possibilities and needs. Plan sponsors are starting to track student loan match participation; emergency savings withdrawal patterns; auto-portability matches, both into and out of the plan; and repayments (e.g., emergency savings withdrawals, federal disaster distributions, and qualified birth or adoption distributions).
“These provisions blur the line between retirement savings and financial wellness, requiring sponsors to think differently about success metrics,” says Doss. “Plan sponsors should consider integrating metrics from their financial wellness program to track success and avoid potential false negatives.”
One case in point: Early indications from plans implementing student loan matching show that while some participants may reduce 401(k) contributions to pay down debt faster, employee satisfaction increases, and the benefit serves as a competitive advantage.
Behind the Curtain
Quantitative metrics reveal what is happening. Qualitative feedback explains why—and it can add an important dimension to plan measurement. “A plan can be healthy by the numbers yet fail to support certain segments of employees if it doesn’t align with their financial goals and circumstances,” says Doss.
Feedback during benefits enrollment, employee sentiment check-ins, or pulse surveys, focus groups on specific topics, and engagement with employee resource groups (ERGs) can provide crucial context on the why.
Key qualitative metrics that may be of interest include:
“Imagine being able to pull together data from the recordkeeper, human resources systems, and employee sentiment surveys,” says Doss. “A sponsor can now track retirement readiness by income or age band and overlay that with survey data to better understand who is happy and engaged, who is not—and why.”
At the core of Holland Hospital’s approach is qualitative feedback from employees through employee surveys, benefit fairs, and one-on-one financial wellness consultations. In the course of their engagement with the hospital’s employees, CAPTRUST’s representatives gather answers to a handful of simple questions—think Net Promoter Score—and dig deeper through conversation to uncover hidden insights.
Benchmarking Success
The last piece of the puzzle is creating benchmarks. How do plan sponsors know how good is good enough? Or what is possible in a particular industry or with a specific employee demographic? Establishing retirement plan benchmarks requires a balance of aspiration with reality.
An effective approach combines external benchmark data with internal goals informed by workforce demographics and business goals.
External data sources offer context about industry performance. They can also help identify areas where a plan may be lagging. Examples include the Plan Sponsor Council of America’s (PSCA) annual survey and Vanguard’s “How America Saves.” The plan’s recordkeeper and advisor can also chime in.
However, industry averages shouldn’t become rigid targets that ignore the characteristics of an employee population. For example, a manufacturing company with a largely hourly workforce might set different participation targets than a professional services firm with higher-income employees.
The key is for plan sponsors to understand what drives success for their specific population and set benchmarks that reflect those realities, while still pushing for improvement.
Regular benchmark review is essential, as workforce composition, economic conditions, and regulatory changes can all impact what constitutes reasonable performance. Annual—or more frequent—reviews ensure that targets remain relevant and challenging while accounting for evolving participant needs and market conditions.
Holland Hospital uses benchmarking data from CAPTRUST and their recordkeeper, in addition to published sources such as Vanguard’s annual study. Given the pace of change and innovation, they are having conversations about plan success more frequently than the traditional annual check-in. By asking for help from their partners, Holland Hospital’s HR team can spend less time on tactical issues and more time optimizing their overall benefits package.
“The most successful sponsors view benchmarking as a starting point for conversation rather than an endpoint,” says Doss. “They use external data to understand the landscape then they set internal targets that reflect their unique workforce and business objectives.”
From Insight to Action
Of course, sponsors can’t simply gather the data. The key is acting on what they learn. The payoff is building trust through ongoing plan improvement and communication adjustments. Acting on insights can also lead to more equitable and targeted plan design.
With their limited budget and time, sponsors must focus their efforts where they can achieve the greatest impact. Getting started is easy.
Plan sponsors can begin by requesting segmented reporting from their recordkeeper or advisor. Some recordkeepers provide tools to analyze participant data in their sponsor portals. In other cases, the sponsor may need to share data with the recordkeeper to perform an analysis.
Advisors can help interpret this data and recommend strategies.
Segmented insights enable precise interventions. Here are a few ideas:
“We strive to tailor our communication to the individual rather than the group, ensuring that every employee feels supported, included, and able to access the resources they need in a way that resonates with them,” says Howe. “That may be through in-person one-on-one meetings, group sessions, texts, printed materials, digital articles, emails, letters, or our robust company intranet.”
At Holland Hospital, this approach has made a big difference. In addition to moving the needle with a few important demographics—like early-career employees—they are getting real-time feedback. This feedback indicates employees generally appreciate their plan and benefits package.
The Path Forward
While participation rates and average deferral percentages remain important, today plan sponsors have access to tools that can drive meaningful improvement in retirement outcomes. This evolution reflects a fundamental shift in how employers view their role in employee financial wellness and how they communicate with their people.
By embracing deeper analysis and feedback, plan sponsors can transform their plans into active drivers of financial security. “Sponsors who embrace this holistic approach aren’t just checking compliance boxes; they’re building retirement programs that make a difference in their employees’ lives—and that’s what success looks like,” says Doss. “This drives better participant outcomes, builds employee satisfaction through a sense of security and support, and enhances retention by reinforcing our commitment to their long-term wellness” says Howe. “As an organization rooted in community health, investing in our employees’ overall wellness is a direct investment in the future success of both our people and our mission.”
Compounding interest is a powerful financial concept that allows investments to grow exponentially over time. Like a snowball rolling downhill, the longer money is invested, the more it grows, with interest building on to not only the principal amount invested but also the previous interest earned.
Investors who start early, even if they’re only investing small amounts, tend to accumulate more wealth than investors who contribute a large amount of money later in life. For example, a modest investment of $10,000 at an annual rate of return of 8 percent would grow to $100,627 in 30 years assuming no additional contributions or withdrawals. In contrast, an investor who contributed $25,000 in year 15 would only have $82,676 in year 30.
In addition to assuming no additional contributions or withdrawals, this simple example also assumes that no taxes are paid. Tax-deferred individual retirement accounts (IRAs) and qualified retirement plans, including 401(k)s, function similarly to our example. Assets invested in these types of accounts are not subject to income tax until they are withdrawn. The principle of compounding is especially impactful in saving for retirement; it’s why financial experts recommend funding those tax-deferred accounts early in your career, even if you can only afford a small contribution.
Regardless of how much you save, it’s important to remember that starting early to take advantage of compounding can lead to substantial growth over time—and create disciplined savings habits along the way.
Riding out market volatility is one of the most effective financial strategies for long-term investors. Financial markets naturally experience ups and downs due to economic cycles, geopolitical events, and investor sentiment. While it can be tempting to react to short-term fluctuations by selling your investments, doing so often locks in losses and causes you to miss out on potential rebounds. Historically, markets have shown resilience and a tendency to recover over time, rewarding those who stay invested through turbulent periods.
While leaving assets in the market through times of volatility is part of a disciplined investment approach in the long run, there are many reasons investors may need or want to withdraw assets during market volatility. A financial advisor can help guide you. Considering the time horizon for your various buckets of investments is essential. For assets you may need in the short term, you may consider investments that are designed to protect your principal, even if they may have a lower return, while assets that you won’t need for many years can remain invested in a long-term, growth-focused investment strategy.
It’s also important to remember that different asset classes perform differently in various markets. In addition to investing based on your time horizon, investing across asset classes may reduce overall volatility in your portfolio and help you stay disciplined by keeping those longer-term assets in the market during times of turbulencl.
By maintaining a long-term perspective and trusting in the market’s historical resilience, investors can build wealth more steadily and confidently.
Asset allocation involves distributing your funds across different types of investments, commonly known as asset classes. The four most common asset classes are stocks, bonds, cash, and alternative investments (assets that don’t fall into any of the previous three categories). A basic asset allocation strategy would likely include at least stocks, bonds, and cash.
Diversification across asset classes is a fundamental principle of sound investing that helps reduce risk by spreading investments across a variety of asset classes, industries, and geographic regions that perform differently. By not putting all your money into a single investment or sector, you minimize the impact of any particular asset’s poor performance on your overall portfolio. For example, if technology stocks decline, gains in healthcare or energy sectors might offset those losses. This balance helps protect your portfolio from volatility and unexpected market events.
Proper asset allocation that meets your risk tolerance and time horizon can provide for more stable and consistent returns over time. Different asset classes perform differently under various economic conditions. While equities may thrive during periods of growth, bonds might perform better during downturns. A diversified portfolio can capture growth opportunities while cushioning against losses, making it easier to stay invested and avoid emotional decision-making during market swings.
Ultimately, diversification is not about eliminating risk entirely but about managing it wisely. It’s a mitigation. It’s a strategy that supports long-term financial goals by building resilience into your investment approach.
Considering your time horizon is crucial when making investment decisions, because it directly influences the types of assets you should choose and the level of risk you can afford to take.
For example, saving for retirement in 30 years is considered a long-term time horizon and, therefore, allows for greater tolerance of short-term market fluctuations. This means you can invest in higher-risk, higher-reward assets like stocks, which historically offer better returns over time. Conversely, a shorter time horizon, such as saving for a home in the next few years, calls for more conservative investments to preserve capital.
Your time horizon also affects how you respond to market volatility. Investors with long-term goals can better weather the downturns, riding them out and knowing that markets tend to recover and grow over time. This patience can lead to significant gains, especially when combined with strategies like dollar-cost averaging (which is explained below) and reinvestment of dividends. On the other hand, those with short-term goals may need to prioritize liquidity and stability by choosing investments that are less likely to fluctuate dramatically in value but may have lower returns.
Finally, aligning your investment strategy with your time horizon helps you stay focused and avoid emotional decision-making. It provides a framework for setting realistic expectations and measuring progress toward your goals. Whether you’re investing for retirement, education, or a major purchase, understanding your time horizon ensures that your portfolio is appropriately structured to meet your needs when you need the money.
Dollar-cost averaging (DCA) is a strategy that involves investing a fixed amount of money at regular intervals, regardless of market conditions. One of its primary benefits is that it helps reduce the impact of market volatility. By purchasing more shares when prices are low and fewer shares when prices are high, investors can lower their average cost per share over time. This approach can smooth out the highs and lows of the market and can lead to better long-term investment outcomes, especially in uncertain or fluctuating market and economic environments.
Another advantage of DCA is that it encourages consistent investing habits. Rather than trying to time the market, DCA promotes discipline and removes emotion from the investment process. Investors are less likely to make impulsive decisions based on fear or greed, which can lead to costly mistakes. This steady approach is particularly useful for long-term goals like retirement, where regular contributions can compound significantly over time.
DCA also makes investing more accessible. It allows individuals to start investing with smaller amounts of money, making it easier to build a portfolio gradually. This is especially beneficial for new investors or those with limited capital, as it lowers the barrier to entry and fosters financial growth over time. By spreading out investments, DCA helps manage risk and provides a structured path toward wealth accumulation.
Regular investment portfolio review and rebalancing are essential practices for maintaining alignment with your financial goals and risk tolerance. Over time, market fluctuations can cause your asset allocation to drift from its original targets. For example, if stocks perform well, they may begin to dominate your portfolio, increasing your exposure to risk beyond what you intended. By reviewing your portfolio periodically, you can more quickly identify these shifts and make informed decisions to bring your investments back in line with your strategy.
Rebalancing also helps you take advantage of market movements in a disciplined way. It involves selling assets that have grown disproportionately and buying those that have lagged, effectively encouraging a buy-low, sell-high approach. This can enhance long-term returns and reduce the likelihood of overexposure to any single asset class. Without rebalancing, your portfolio may become too concentrated, making it more vulnerable to downturns in specific sectors or markets.
Resource by the CAPTRUST wealth planning team
In addition to managing risk and optimizing returns, regular reviews also ensure your portfolio continues to reflect your life circumstances, financial goals, and market conditions. Whether you’re approaching retirement, experiencing a change in income, or adjusting your investment timeline, periodic check-ins allow you to adapt your strategy accordingly. Staying proactive with reviews and rebalancing helps keep your investment plan on track and increases the likelihood of achieving your financial objectives.This material is not individual investment advice. If you have questions or concerns regarding your own individual needs, please contact a CAPTRUST representative for further assistance. This material does not constitute legal, accounting, or tax advice. This material has been prepared solely for informational purposes. Investment advisory services offered by CapFinancial Partners, LLC (“CAPTRUST” or “CAPTRUST Financial Advisors”), an investment advisor registered under The Investment Advisors Act of 1940.
The three primary categories of entities are:
Each category offers advantages, disadvantages, and governing rules. Alternatively, you might operate your business as a sole proprietorship, which does not require forming a separate legal entity.
A sole proprietorship is the simplest form of business structure. It is easy to establish, because no legal entity is required—the business is an extension of the owner.
The sole proprietor is personally liable for all debts and obligations of the business. This exposes personal assets, like your family’s home, to claims from the business’s creditors.
All business income, gains, deductions, and losses are reported on Schedule C of Form 1040. A sole proprietorship is not subject to corporate income tax. However, certain expenses that may be deductible by a corporation might not be deductible for a sole proprietorship.
When two or more individuals own a business, a partnership is a common structure to consider. Partnerships are generally governed by state statutes, but certain arrangements—such as joint ventures—may be treated as partnerships for federal income tax purposes regardless of state law.
In a partnership, two or more people join together to operate a business for mutual profit. A general partnership gives all partners authority to act on behalf of the business. However, this also means each partner is personally liable for the actions of the others, as well as for the debts and obligations of the business.
Partnerships are recognized entities that can obtain credit, file for bankruptcy, and transfer property. However, the partnership itself is not subject to federal income tax. Instead:
If an initial public offering (IPO) is anticipated, a partnership may not be the best choice. While some publicly traded partnerships exist, most businesses planning an IPO organize as corporations instead.
Limited partnerships differ from general partnerships in that they include more than one class of partners. In a limited partnership, at least one partner must serve as a general partner.
Some states allow the formation of limited liability partnerships. An LLP is a general partnership that provides individual partners with protection against personal liability for certain obligations. The scope of this protection depends on state law. Consult with legal counsel to understand the implications of this structure in your state.
Compared to sole proprietorships or partnerships, corporations offer both advantages and disadvantages. The two most significant advantages are:
Most incorporated businesses are C corporations. Unlike S corporations, C corporations are not subject to the same qualification rules and offer greater flexibility in stock ownership and equity structure. They can also deduct most employee benefits, whereas S corporations may not deduct benefits for shareholders who own 2 percent or more of the company. Most large corporations are C corporations.
C corporations are subject to corporate income tax, and distributed earnings may be taxed twice—once at the corporate level and again at the individual level when dividends are paid.
S corporations are subject to several eligibility requirements. If a business meets these criteria, an S corporation can offer tax benefits that are not available to C corporations. Income, gains, deductions, and losses pass through to shareholders, who report these items on their individual tax returns. This structure eliminates double taxation.
Not all corporations qualify for S corporation status. To elect this treatment, the organization must meet specific requirements and file an election with the IRS. These requirements include limits on the number and type of shareholders and restrictions on who may own stock.
Many employee benefit deductions are unavailable to shareholders who own 2 percent or more of the company.
A limited liability company combines features of both corporations and partnerships. Like a corporation, an LLC provides limited personal liability for its owners. At the same time, it offers pass-through tax treatment and greater flexibility in governance than a corporation. LLCs are not subject to the qualification requirements that apply to S corporations. If the company anticipates an IPO, a corporation is generally a better choice than an LLC.
There is no universal best ownership structure for a business. Each option offers distinct advantages and limitations. Even after choosing an entity, it is wise to periodically re-evaluate your choice as the business evolves. Consult with an experienced attorney and tax advisor for help determining the structure that best fits your needs.
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Resource by the CAPTRUST wealth planning team
Important Disclosure
This content is provided for informational purposes only, and does not constitute an offer, solicitation, or recommendation to sell or an offer to buy securities, investment products, or investment advisory services. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Nothing contained herein constitutes financial, legal, tax, or other advice. Consult your tax and legal professional for details on your situation. Investment advisory services offered by CapFinancial Partners, LLC (“CAPTRUST” or “CAPTRUST Financial Advisors”), an investment advisor registered under The Investment Advisers Act of 1940.
The guidance confirms that, starting January 1, 2026, participants whose prior-year Federal Insurance Contributions Act (FICA) wages exceed $145,000 must make catch-up contributions on a Roth basis.
While other provisions in the regulations apply to tax years beginning after December 31, 2026, the IRS did not delay the effective date for the mandatory Roth catch-up contribution requirement. Plan sponsors should prepare to implement this change by the start of 2026.
While the final regulations span 94 pages, here are some key highlights:
To comply with regulations, we suggest plan sponsors complete the following:
For more information, please contact your CAPTRUST advisor.
This information is provided for educational purposes only, and does not constitute an offer, solicitation, or recommendation to sell or buy securities, investment products, or investment advisory services. Nothing contained herein constitutes financial, legal, tax, or other advice.
Multigenerational wealth planning is a forward-looking strategy that goes beyond individual financial goals. It focuses on helping ensure that each subsequent generation has the resources and opportunities to succeed.
Key elements of multigenerational wealth planning include:
Scenario Planning: Modeling wealth and cash flow scenarios to evaluate which options can help you reach your long-term objectives.
Wealth Transfer: Developing strategies for the tax-efficient transfer of assets to heirs and beneficiaries, including trusts and gifting.
Global Asset Allocation: Determining asset allocation among diverse asset classes such as business holdings, real estate, private equity, and other alternative investments to better align the overall risk profile with long-term goals.
Legacy Planning: Establishing a clear vision for the family’s legacy, including philanthropic goals and values.
Estate and business preservation are integral components of multigenerational wealth planning. It creates a framework for making longer-term decisions balancing lifetime needs and advanced estate planning objectives with longer-term business and family needs. Advanced planning strategies can be implemented to properly manage estate taxes, thereby preserving your legacy and wealth for future generations.
Estate planning concepts that can be integrated into a comprehensive financial strategy include:
Alternatives and Risk Management: In-depth financial modeling of scenarios provides a framework to analyze opportunities and risks.
Liquidity Analysis: Identification of strategies to properly manage estate tax and business transfer costs as well as long-term family needs.
Tax Efficiency: Gifting, charitable giving, and the use of trusts to minimize estate and income tax liabilities.
Review of Wills, Trusts, and Beneficiary Designations: Working closely with your estate planning attorney to help ensure you have the appropriate legal documents and structures in place to effectively apply business and estate preservation strategies.
Integrating multigenerational wealth planning and advanced estate planning into an overall strategic financial plan can provide a roadmap for securing your family’s financial future and ensuring your legacy endures. By aligning your financial goals, protecting your assets, and fostering open communication across generations, you can create a well-rounded and flexible plan that benefits your family for years to come.
Choosing experienced professional advisors who specialize in these areas is key to developing a financial strategy that addresses the unique needs of your family and your vision for the future.