If you have qualified funds in your Levi Strauss retirement portfolio and are concerned about future tax law changes, converting those eligible funds to a Roth IRA could be a good solution for any Levi Strauss employee or retiree.
Traditional IRAs are usually funded with before-tax dollars and are generally fully taxable when withdrawn. The owner of a traditional IRA generally has required minimum distributions (RMDs) beginning at age 72. If withdrawals are taken before age 59 1/2, they may be subject to an additional 10% federal tax.
Roth IRAs are funded with after-tax dollars. Distributions after age 59 ½ are completely income-tax-free as long as the Roth IRA owner has met a five-year requirement, determined by the date the owner first funded any Roth IRA. No required minimum distributions apply during the owner’s lifetime, but certain RMD rules do apply to Roth IRA beneficiaries.
The Benefits of a Roth IRA Conversion
A Roth IRA conversion entails taking all or a portion of funds from a traditional retirement account and converting them to a Roth IRA. This could also apply to pre-tax funds in a qualified plan like your Levi Strauss 401(k). Since you are moving pre-tax dollars to a post-tax account, you owe income taxes on the amount converted in the year of conversion. This can be paid with funds outside of your IRA or qualified plan. Any such conversion should be done with due diligence and consult with a financial planner to avoid major tax implications.
A few of the advantages of this strategy include:
Tax-free growth inside of Roth IRAs.
Qualified distributions from Roth IRAs are income-tax free, providing flexibility to choose when to take these distributions for smarter tax management.
There are no RMDs for Roth IRA owners when you reach age 72, but certain rules apply to Roth IRA beneficiaries.
There is a potential for lower taxes if the income tax bracket is projected to be the same or higher at the time of distribution than at the time of conversion.
A Roth IRA conversion could lower your income-tax bracket
Can reduce your estate taxes and eliminate the income tax your heir would have to pay
Some other items for consideration:
Roth IRA conversions are subject to ordinary income tax on the entire amount of the conversion in the year of conversion.
Distributions may be subject to the additional 10% federal tax if removed within five years of the conversion.
If you have any questions about your Levi Strauss 401(k) plan, you can reach out to your Levi Strauss HR Department.
Jim and Linda are both 66 and retired from working at Levi Strauss. They have a pension and Social Security benefits that amount to a taxable income of $65,000 a year. In 2022, they are in the 12% tax bracket ($20,551-$83,550) and are concerned that future tax law changes could put them in a higher bracket. [6]
Jim and Linda also have a traditional IRA with an account value of $750,000. In a few years, they will be required to start taking Required Minimum Distributions from this account that could bump them up to the next tax bracket.
While a Roth conversion is a fairly simple concept, there are many things to consider and several ways to do it. After discussing all of the variables with their financial professional, Jim and Linda decide to use a method often called “tax-bracket stuffing.”
With a taxable income of $65,000, there is $18,550 until they hit the top of the bracket - $83,550. If Jim and Linda convert $40,000 from the traditional IRA to a Roth IRA, they are bumped in to the 22% bracket, but once the standard deduction of $25,100 is applied, their taxable income will be $79,900.
By converting some of the funds from their traditional IRA to a Roth IRA, they can choose the amount of the distribution, so it stays within their lower tax bracket of 12% once the standard deduction is applied. And since qualified distributions from Roth IRAs are income tax free, Jim and Linda have the flexibility to choose when to take these distributions for smarter tax management.
If this method is used each year until Jim and Linda turn 72, they will continue to reduce the amount in their traditional IRA and increase the amount in their Roth IRA.
Want to learn if a solution like this is right for you? Call us today to discuss your financial goals.
What is Your Next Step?
Your receipt of this report entitles you to a one on one conversation with one of our TRG financial advisors to explore the benefits of diversifying your assets with your taxes in mind. Any customary hourly planning fees associated will be waived for this one hour session.
What should you expect at this meeting? Below are some frequently asked questions about what you can expect from our one on one meetings
Q: What will be discussed in this meeting?
A: This meeting is simply an opportunity for you to ask any questions that you may have related to the diversification of your assets with taxes in mind, as well as your personal finance and retirement. Throughout the course of the meeting, we will ask questions about you and your situation.
From working with many Levi Strauss employees and retirees, we’ve found that everyone’s definition of a comfortable retirement from Levi Strauss is a little different and that everyone’s situation is unique. Our goal is to learn about your personal goals as we explore how to help you retire from Levi Strauss the way you want.
Q: Why is the consultation free?
A: Simple. It gives us an opportunity to meet people from around the area that may have questions about financial matters. It’s no secret that we love new clients. Gaining new clients is the way that our business grows. However, we want to provide a comfortable environment for exploring a new, potential professional relationship — for you and for us. By offering this time, it provides a non-threatening way for us to spend some time with you to see if it makes sense for us to continue discussions regarding your Levi Strauss retirement in the future.
Q: Will there be a presentation?
A: Not at all. In fact, we are very hesitant to talk about any potential solutions to any questions or concerns you may have. It is important for us to understand your goals and desires about what retiring from Levi Strauss or investing for your future means to you. We feel it would be financial malpractice to begin exploring solutions prematurely.
We tend to look at the first meeting as an opportunity for you to ask some questions and for us to get to know each other. Furthermore, we can both be more informed by the end of the meeting which will help determine whether or not it will be beneficial for us to meet again.
Q: How long is the meeting?
A: Most of our meetings are stacked throughout the day. Future sessions may require more time, but we’ve found that an hour, provides a good basis for getting to know a little more about each other.
Q: Is there anything I should bring to the meeting?
A: We are sensitive to the fact that your personal financial information is just that — very personal. However, it is hard for us to help if we don’t have at least a fundamental understanding of your financial position. We ask that you bring information regarding your financial accounts and your previous year’s tax return. However, we follow a strict policy of not looking at any of this until you are comfortable with us doing so.
Q: When would we meet again?
A: If we both decide that it would be beneficial to meet again, we’ll schedule another time to get together. At that meeting, we would introduce to you the various areas in which our firm may be able to provide value to your situation. Again, we shy away from offering solutions at this point because we still consider it to be a discovery meeting. At that point, you should be in a better position to make an educated decision as to whether you wish to engage the services of our firm.
Q: Should someone come with me?
A: We do ask that if you are married you bring your spouse with you. If you wish to bring any children with you to the meeting, you are welcome to do so. For that matter, anyone that you may utilize in helping you with your Levi Strauss retirement and personal finances is welcome to join.
About The Retirement Group
The Retirement Group is a nation-wide group of financial advisors who work together as a team.
We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.
TRG takes a teamwork approach in providing the best possible solutions for our clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.
Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.
Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.
The 401(k) plan offered by Levi Strauss is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are deducted.
How does Levi Strauss match contributions to the 401(k) plan?
Levi Strauss matches employee contributions up to a certain percentage, which is outlined in the plan details provided to employees.
When can I enroll in the 401(k) plan at Levi Strauss?
Employees at Levi Strauss can enroll in the 401(k) plan during the initial onboarding process or during the annual open enrollment period.
What investment options are available in Levi Strauss' 401(k) plan?
Levi Strauss offers a variety of investment options in their 401(k) plan, including mutual funds, target-date funds, and company stock.
Is there a vesting schedule for the employer match in Levi Strauss' 401(k) plan?
Yes, Levi Strauss has a vesting schedule for the employer match, which means employees must work for a certain period before they fully own the matched contributions.
Can I take a loan against my 401(k) plan with Levi Strauss?
Yes, Levi Strauss allows employees to take loans against their 401(k) accounts, subject to specific terms and conditions outlined in the plan.
What happens to my 401(k) when I leave Levi Strauss?
When you leave Levi Strauss, you have several options for your 401(k), including rolling it over to an IRA or a new employer’s plan, or cashing it out (though this may incur taxes and penalties).
How can I access my 401(k) balance with Levi Strauss?
Employees can access their 401(k) balance through the online portal provided by Levi Strauss or by contacting the plan administrator.
Are there any fees associated with the Levi Strauss 401(k) plan?
Yes, there may be administrative fees and investment-related fees associated with the Levi Strauss 401(k) plan, which are disclosed in the plan documents.
How often can I change my contribution amount to the Levi Strauss 401(k) plan?
Employees can change their contribution amount to the Levi Strauss 401(k) plan at any time, subject to the rules outlined in the plan.
With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Plan Name: Levi Strauss & Co. Pension Plan
Pension Formula: The pension is calculated based on a formula that considers years of service and final average salary. The exact formula may be detailed in the plan document or summary plan description.
Years of Service and Age Qualification: Typically, employees become eligible for pension benefits after reaching a certain number of years of service, which can vary by plan. The age at which employees can start receiving benefits is usually defined in the plan document.
Document: Levi Strauss & Co. Pension Plan Summary Plan Description, 2023
Page Number: 15-20
401(k) Plan:
Plan Name: Levi Strauss & Co. 401(k) Savings Plan
Eligibility: Generally, employees are eligible to participate in the 401(k) plan after completing a certain period of service or meeting other eligibility criteria defined in the plan document.
Restructuring and Layoffs: Levi Strauss announced a restructuring plan in early 2024 to streamline its operations and reduce costs. This includes a reduction of approximately 300 positions globally. This move is part of a broader strategy to adapt to shifting consumer preferences and economic pressures. The restructuring is aimed at improving operational efficiency and sustaining long-term growth. Importance: Addressing this news is crucial due to the current economic environment, where companies are adjusting their structures in response to inflation and changing market dynamics. Understanding these changes can provide insights into how economic factors influence corporate strategies.
Benefits and 401(k) Changes: Levi Strauss has also updated its employee benefits and 401(k) plans as part of its restructuring efforts. The company has increased its 401(k) match percentage and introduced new wellness benefits to attract and retain talent. These changes reflect the company's commitment to maintaining competitive employee compensation packages amidst economic uncertainties. Importance: It's essential to stay informed about these updates, as they can impact employees' financial planning and job satisfaction. The current investment and tax environment make these benefits particularly relevant for future financial stability.
Levi Strauss & Co. offers various stock options and Restricted Stock Units (RSUs) to its employees. Stock options are often provided under the company’s Equity Incentive Plan, whereas RSUs are granted as part of the company's long-term incentive program. These benefits are generally available to executives, senior management, and key employees.
Levi Strauss & Co. provides stock options and RSUs to incentivize and retain talent. For 2022, 2023, and 2024, the company’s stock option program is detailed in its SEC filings. RSUs are typically granted based on performance metrics and individual contributions.
Levi Strauss & Co. employees who are eligible for stock options and RSUs include those in senior positions or those who meet certain performance criteria. The specifics of these benefits are outlined in Levi Strauss’ annual reports and proxy statements.
Levi Strauss has provided various healthcare benefits to its employees, emphasizing a comprehensive approach to employee wellness. For the years 2022, 2023, and 2024, the company has offered several health-related benefits, including medical, dental, and vision coverage. Levi Strauss has used terms such as “HDHP” (High Deductible Health Plan), “HSA” (Health Savings Account), and “PPO” (Preferred Provider Organization) to describe their health insurance options. Notably, Levi Strauss has also implemented wellness programs focusing on mental health, preventive care, and telemedicine services to enhance employee well-being. The company's healthcare benefits are part of a broader strategy to support employees amid economic uncertainties and evolving tax policies.
Recent news highlights Levi Strauss’s continued commitment to adapting its healthcare offerings in response to the current economic and political climate. The company has adjusted its healthcare benefits to address rising costs and changing regulations, ensuring that employees receive adequate support while navigating these challenges. As investment strategies and tax reforms impact the broader economy, Levi Strauss’s proactive approach to healthcare benefits reflects its dedication to maintaining a robust support system for its workforce.
