Case Study: P&G Retirement Tax Strategy Using NUA and a Donor Advised Fund

If you're a Procter & Gamble employee preparing to retire, your PST and Savings Plan will likely make up the core of your financial transition. And when it's time to distribute these accounts there's a window to reduce taxes and set up long-term flexibility.

At Vaultis Private Wealth, we regularly help P&G professionals coordinate distribution strategies, retirement planning, and tax-efficient decision making. One tool in this process is the Donor Advised Fund (DAF). This is not a one-size-fits-all solution, but rather one option within our broader planning toolkit. We explain the full mechanics of DAFs in this article, but in this case, the DAF is used alongside another powerful planning technique: Net Unrealized Appreciation (NUA).

This strategy works best for someone who is already charitably inclined, looking to complete an NUA election as part of their PST distribution, and either doesn’t plan to use the Frank Duke Rollback—or may use both strategies in tandem. It allows for the reduction of taxable income in a high-earning year, avoids capital gains on appreciated stock used for charitable giving, and creates long-term flexibility for future donations. In some cases, it can also help lower future required minimum distributions by shifting assets out of retirement accounts and into taxable accounts.

Let’s walk through a fictional case study that closely mirrors what we see in real-world P&G retirements.

The Situation: Retiring with $4M Across PST and Savings Plan

John, a 60-year-old P&G employee, is retiring this year and completing a full distribution of both his Procter & Gamble Profit Sharing Trust (PST) and Savings Plan. Through our planning conversations, we evaluated the full menu of distribution strategies available to him, including standard IRA rollovers, Net Unrealized Appreciation (NUA), and the Frank Duke Rollback (which we are not utilizing in this case — see our article here for more background).

For a high-level overview of available options, see our PST distribution guide.

John’s financial picture looks like this:

• $3 million in his PST, including $1 million in P&G preferred shares

• $1 million in his Savings Plan

• $400,000 in income this year from salary, vacation payout, and stock option exercises

As part of his lump sum distribution, the Savings Plan and the non-NUA portion of the PST are being rolled over to a traditional IRA to preserve tax deferral. For the P&G preferred shares, we decided to pair an NUA strategy with a Donor Advised Fund contribution, helping John reduce his long-term tax burden while also fulfilling his charitable goals in a tax-efficient way.

Most P&G employees are familiar with the preferred shares in the PST, which are often used in NUA planning due to their low historical cost basis. In John’s case, they created an ideal opportunity to shift value out of the PST while optimizing future tax treatment.

Step 1: Executing NUA to Shift Assets into Taxable Brokerage

After careful analysis, we determined that completing Net Unrealized Appreciation (NUA) on the $1 million of P&G preferred shares was a strong fit for John’s situation. This strategy reduced his future tax liability by converting what would have been ordinary income from IRA distributions into long-term capital gains. At his income level, ordinary income can be taxed at up to 35 percent, while long-term capital gains are capped at 15 percent, creating meaningful tax savings when assets are sold over time.

Here’s how it breaks down:

• John owns 6,250 preferred shares at a current market value of $160 per share

• His cost basis is just $6.82 per share, or $42,625 total

• By electing NUA, only the $42,625 is taxed as ordinary income this year

• The remaining appreciation becomes long-term capital gains when sold later

This not only improves tax efficiency over time, it also shifts a portion of John’s retirement assets into a taxable brokerage account, where he can now use dividends from the P&G shares to help fund his lifestyle without being subject to required minimum distributions (RMDs) or triggering additional IRA income.

That said, there are tradeoffs. P&G shares held in an IRA can be sold with no immediate tax consequence, making it easier to quickly diversify a concentrated position. Shares distributed via NUA, however, will generate long-term capital gains when sold. This can be advantageous when funding ongoing expenses, but less so when the goal is to reduce exposure to a single stock. Balancing tax efficiency with portfolio construction is a key consideration in any distribution strategy.

This kind of strategy works best when coordinated alongside your broader income plan, Roth conversion strategy, and long-term investment goals.

Step 2: Charitable Giving with Low-Basis Stock

John and his spouse regularly donate $10,000 per year to charitable organizations. However, like many taxpayers, they typically take the standard deduction ($29,200 for married couples in 2024), meaning their donations don’t generate any direct tax benefit.

This retirement year was an ideal opportunity to shift that approach.

With $400,000 of income already expected, plus the additional $42,625 of ordinary income from the NUA election, their tax bracket reached the 32 to 35 percent range. Rather than making another $10,000 gift directly to his favorite charities, we helped John contribute $50,000 worth of low-basis P&G stock to a Donor Advised Fund.

This did three important things:

• Generated a $50,000 charitable deduction that pushed them well above the standard deduction threshold, allowing them to itemize

• Avoided capital gains tax on the donated shares

• Pre-funded multiple years of future giving while retaining flexibility over how and when to make grants

Step 3: Maintaining Flexibility with a Donor Advised Fund

Even though the tax deduction was realized in the current year, John and his spouse do not need to distribute all $50,000 at once. Their Donor Advised Fund allows them to recommend grants to charities over time, at their own pace.

In effect, they were able to bundle five years of giving into a single high-income year for tax purposes, while keeping their actual giving cadence unchanged.

The Value for P&G Retirees

When coordinated properly, strategies like NUA and Donor Advised Funds can work together to create meaningful tax efficiency, income flexibility, and charitable impact. Here’s what this approach helped John accomplish:

• Tax deferral on IRA rollovers for the Savings Plan and non-NUA assets

• Lower ordinary income tax burden on appreciated company stock via NUA

• Capital gains avoidance by donating low-basis shares to a DAF

• Increased tax deduction by bunching charitable gifts in a high-income year

• Long-term flexibility to control charitable giving without rushing decisions

• Ongoing dividend income from a taxable account to help support lifestyle needs

• Potential reduction in future RMDs by shifting assets out of qualified accounts

In total, we accomplished John’s goals of offsetting the ordinary income created by the NUA election and establishing a structure to continue meeting his charitable giving goals in a thoughtful, tax-aware way.

Smart Retirement Planning Takes Coordination

P&G retirees have access to a number of specialized distribution strategies, but they are not one-size-fits-all. Timing, tax bracket, investment goals, charitable intent, and account structure all interact in unique ways. The best outcomes come from working with someone who can coordinate all the moving pieces to fit your specific situation.

At Vaultis Private Wealth, we specialize in helping P&G professionals navigate retirement with clarity and confidence, whether you're based in Cincinnati or elsewhere. If you are considering retirement from P&G, we’re here to help.

Frequently Asked Questions

What is the P&G PST, and why is it important for retirement?

The Procter & Gamble Profit Sharing Trust (PST) is a significant retirement benefit for P&G employees. Understanding how to distribute it—through NUA, rollovers, or lump sum elections—can impact your taxes, investment flexibility, and long-term planning.

How does Net Unrealized Appreciation (NUA) benefit P&G retirees?

NUA allows you to convert highly appreciated P&G stock in your PST into taxable brokerage holdings, where future gains are taxed at long-term capital gains rates instead of ordinary income. This can create long-term tax savings when executed properly.

When should a Donor Advised Fund be used in P&G retirement planning?

A Donor Advised Fund (DAF) can make sense if you're charitably inclined and facing a high-income year—such as the year you retire and take a PST distribution. Donating appreciated stock can lower taxes while pre-funding years of future giving.

Can I use NUA and the Frank Duke Rollback together?

Yes, in some cases it may make sense to combine elements of both strategies. However, this depends on your tax situation, how much P&G stock you hold, and whether you're comfortable maintaining certain plan rules. Learn more in our Frank Duke Rollback article.

What should I do next if I want help with P&G retirement planning?

Start with a no-pressure conversation. Vaultis Private Wealth specializes in retirement and distribution planning for P&G employees and retirees. You can schedule a 30-minute introductory call here to discuss your situation and explore how we may be able to help.

Disclaimer: This article is provided for informational and educational purposes only and should not be construed as investment, tax, or legal advice. The scenario presented is hypothetical and does not represent an actual Vaultis Private Wealth client, but reflects common planning considerations for Procter & Gamble employees. Individual circumstances vary, and strategies described may not be appropriate for every investor. Vaultis Private Wealth is a registered investment adviser offering advisory services in jurisdictions where it is appropriately registered or exempt from registration. Advisory services are provided only to clients or prospective clients under a written advisory agreement. Tax and estate planning decisions should be reviewed in consultation with a qualified tax advisor or attorney. While care has been taken to ensure the accuracy of the information provided, Vaultis Private Wealth does not guarantee its accuracy or completeness and is not responsible for any errors or omissions.

What to Do If You’re Offered a Retirement Package at Procter & Gamble

If you’re a Procter & Gamble employee based in Cincinnati — or working in one of P&G’s locations across the country — receiving a retirement package may be one of the most important financial decisions you’ll ever face. Whether it’s part of a voluntary separation program or an early retirement offer, understanding the full picture — from benefits and taxes to healthcare and next steps — is essential.

At Vaultis Private Wealth, we bring deep experience helping P&G employees evaluate retirement packages and make confident, informed transitions into the next chapter of life. This guide walks you through the key steps to take if you’ve been offered a P&G retirement package.

1. Understand What’s in the P&G Retirement Package

The first step in evaluating a P&G retirement package is to understand the full scope of what’s being offered.

• Is there a severance or bonus included?

• Are unused vacation days paid out?

• Will you retain stock options or RSUs?

• Is retiree healthcare coverage included?

For Procter & Gamble employees, a key part of the package involves your Profit Sharing Trust (PST) and Savings Plan. It’s important to know how these accounts will be handled at retirement — including whether you qualify for penalty-free withdrawals and how to use preferred shares or Net Unrealized Appreciation (NUA) strategies to potentially reduce your tax burden.

2. Decide What Comes Next for Your Career and Life

Before making any financial moves, ask yourself: What do I want my next chapter to look like?

• Are you ready to fully retire?

• Would you like to consult or work part-time?

• Are you planning to seek another full-time position?

The answer will influence your cash flow needs, timing of Social Security, and how aggressively you manage taxes and investments. For many Procter & Gamble professionals, continuing to work in a reduced or strategic role after leaving the company is part of their long-term retirement vision.

3. Understand Your Cash Flow and Lifestyle Funding Strategy

Once you’ve clarified what your next chapter might look like, the next step is to assess how you’ll fund your lifestyle in the months and years ahead — whether you plan to fully retire, take a break, consult, or look for another role.

Start by reviewing your expected income and available resources:

• Will you receive severance or a payout of unused vacation days?

• How much cash do you have on hand or in emergency savings?

• What are your monthly spending needs — fixed and flexible?

• Do you have investment income, rental properties, or a working spouse?

• Are you eligible to begin drawing from retirement accounts without penalties?

For many P&G employees, using severance, vacation pay, or taxable savings can help bridge the gap between employment and the next phase — without immediately tapping long-term retirement assets.

Even if you’re not fully retiring, this is the time to build a transition cash flow plan that helps you stay financially steady while exploring your next move. You may not need a full retirement income strategy yet, but you do need a plan to meet your needs confidently and tax-efficiently.

4. Review Your Healthcare Coverage Options

Healthcare is one of the most important — and potentially costly — parts of any transition away from full-time work. Before you make any final decisions, it’s critical to confirm whether Retiree Healthcare is included in your offer from Procter & Gamble.

While P&G has historically offered Retiree Medical to eligible employees, this benefit can vary depending on the package, your age, and your years of service. Do not assume it's included — make sure it’s clearly outlined in your offer documents.

If Retiree Healthcare is not included and you're under age 65 (not yet eligible for Medicare), you’ll want to evaluate alternative options such as:

• Joining your spouse’s health insurance plan, if available

• Obtaining coverage through a new employer, if you plan to continue working

• Purchasing a plan through the federal or state healthcare exchange

If you’re 65 or older, you’ll need to enroll in Medicare Parts A and B to access the P&G Group Medicare Advantage Plan, if it’s included as part of your benefits.

Timing matters: you typically have a 60-day enrollment window — 30 days before and 30 days after your official retirement date — to make healthcare elections if you're eligible for P&G retiree coverage.

Even if you're not fully retiring, understanding how you’ll maintain healthcare coverage — and what it will cost — is essential to planning your next steps with confidence.

5. Decide What to Do with Your P&G Retirement Plans

Your Profit Sharing Trust (PST) and Savings Plan are likely among your largest financial assets — and what you choose to do with them will impact your taxes, cash flow, and investment flexibility for years to come.

There’s no universal answer. Your decision depends on several key factors:

• Your age, especially in relation to penalty-free withdrawal rules

• Your asset mix, including P&G stock or preferred shares

• Your lifestyle needs — whether you need income now or later

• Your tax situation and charitable goals

• Whether you’ll be retiring, taking time off, or moving to a new job with another retirement plan

Common options include:

• Leaving the assets in the plan

• Taking a partial distribution

• Rolling funds into an IRA or a new employer’s 401(k)

• Taking a lump-sum distribution with Net Unrealized Appreciation (NUA)
  (including advanced strategies like the Frank Duke approach)

Each strategy comes with benefits and trade-offs. For a closer look at how these distribution paths work — and which might fit your situation — visit our guide on P&G Retirement Plan and Distribution Strategies.

6. Don’t Overlook Taxes

A common mistake when evaluating a retirement offer is underestimating the tax impact. Your tax picture may look very different in the year you leave P&G — and it’s important to understand how that aligns with your next steps.

If your package includes a severance payment equivalent to a year’s salary, a payout of unused vacation days, or you begin taking retirement plan distributions, your income could spike unexpectedly. Add in potential income from part-time work or a new job, and the result could be a higher tax bill than anticipated.

Whether you're transitioning to another role or fully retiring, knowing where you stand from a tax perspective is critical. A proactive tax strategy can help you avoid surprises — and make the most of planning opportunities like Roth conversions, capital gains timing, or charitable giving.

7. Work with an Advisor Who Knows the P&G Landscape

As you’ve seen throughout this article, evaluating a retirement package from Procter & Gamble isn’t a single decision — it’s a series of interconnected choices involving taxes, healthcare, investment planning, lifestyle goals, and timing.

There’s nuance at every turn:

• Understanding how age impacts your access to retirement accounts

• Coordinating severance and part-time income with a tax strategy

• Making the right distribution choice from the PST or Savings Plan

• Determining whether retiree healthcare is included — and what to do if it’s not

While some employees may feel comfortable navigating these areas alone, the reality is that even small missteps can lead to avoidable taxes or missed opportunities. Working with a financial advisor who deeply understands P&G’s retirement benefits can help you avoid blind spots, clarify your next steps, and move forward with confidence.

Conclusion: Clarity Creates Confidence

Receiving a retirement package from P&G can be both exciting and overwhelming. With so many moving parts — from healthcare to taxes to distribution choices — the decisions you make now will shape your financial future.

Taking the time to understand your options, weigh your next steps, and build a plan that fits your life is essential. And when the details get complex, working with someone who knows the P&G landscape can make all the difference.

Frequently Asked Questions

What should I consider before accepting a retirement package from P&G?

It's important to evaluate both the short- and long-term financial impact. This includes reviewing your retirement plan options — namely the Pension Plan and the Profit Sharing Trust (PST) Plan — as well as your healthcare coverage and income needs. Many employees benefit from modeling multiple income and tax scenarios before making a decision.

How does the P&G PST Plan factor into my retirement package?

The Profit Sharing Trust (PST) Plan is a significant component of most employees' retirement savings. Understanding your diversification options, tax treatment, and rollover choices is critical. Timing your elections and coordinating with your other retirement accounts can improve long-term outcomes.

Can I roll over my P&G savings into an IRA?

In most cases, yes. Rolling over your P&G Profit Sharing or Savings Plan to an IRA can provide more investment flexibility and tax planning opportunities. However, it’s important to evaluate the timing and structure of the rollover to avoid unintended tax consequences.

What are the pension options available to P&G employees?

Depending on your role and tenure, you may have access to monthly pension payments or a lump-sum distribution. Each option has pros and cons related to income security, taxes, and estate planning. We frequently help clients run comparisons based on their specific goals.

Does being located in Cincinnati give Vaultis Private Wealth added insight into P&G retirement planning?

Yes. Being based in Cincinnati, where Procter & Gamble is headquartered, gives Vaultis Private Wealth unique visibility into the company’s culture, retirement benefits, and employee communication. While we work with clients across the country, that local familiarity allows us to provide informed, personalized guidance — whether you're retiring in Cincinnati or moving elsewhere.

Disclaimer: This article is provided by Vaultis Private Wealth for informational and educational purposes only and should not be construed as personalized financial, tax, or legal advice. Vaultis Private Wealth is a registered investment advisor (RIA) and is not affiliated with Procter & Gamble. The views expressed here are based on our understanding of P&G's retirement plans and benefits, but individual circumstances vary. We encourage readers to consult with a qualified financial advisor, tax professional, or attorney before making any decisions related to retirement, investments, or benefits.

Procter & Gamble’s 2025 Dividend Increase: What It Means for P&G Employees and Shareholders

Introduction

Procter & Gamble has announced its 69th consecutive annual dividend increase — a testament to its financial strength and shareholder focus. For current and former P&G employees, this increase isn't just a headline — it can have a direct impact on long-term financial planning, particularly for those holding company stock in retirement accounts or taxable portfolios.

P&G’s official press release on the dividend increase can be found here.

A Closer Look at P&G’s 2025 Dividend

The quarterly dividend has increased to $1.0568 per share, up 5% from the prior rate. This follows dividend increases of:

• 7% in 2024

• 3% in 2023

• 5% in 2022

It also marks the 135th consecutive year of dividend payments — a record that few companies can match.

For P&G shareholders — especially employees participating in the PST Plan or Savings Plan — this translates to growing income year after year.

Why It Matters for P&G Employees and Retirees

If you’re holding P&G stock in retirement accounts or personal portfolios, this dividend increase:

• Boosts your cash flow

• May impact your income tax exposure, especially in taxable accounts

• Can influence your withdrawal strategy if you’re retired or planning to retire soon

Whether you're still working at P&G or are already retired, dividend income can play a crucial role in supporting your lifestyle and long-term goals.

Financial Planning Around P&G Stock and Dividends

While growing dividend income is a positive, it’s also important to consider:

• Concentration risk: Holding too much of one stock — even a strong performer like P&G — introduces volatility. Learn how to manage concentrated stock positions.

• Tax strategy: Dividends from taxable accounts are generally taxed at capital gains rates

• Withdrawal planning: Retirees often overlook the role of dividends in meeting spending needs, particularly when distributions from the PST Plan or RSUs are in play

At Vaultis Private Wealth, we help P&G professionals manage their stock holdings in a way that supports income needs, manages risk, and keeps taxes in check.

A Trusted Wealth Partner for P&G Professionals

Vaultis Private Wealth works with Procter & Gamble employees and retirees to design financial plans tailored to the unique complexities of P&G compensation, stock, and retirement benefits. While we’re based in Cincinnati, we proudly serve P&G professionals across the country — helping each client build a plan that supports their goals through every stage of life.

Next Step: Make Your Dividend Strategy Work for You

If you're a P&G employee or retiree wondering how this dividend increase fits into your long-term plan, we're here to help. We’ll review your income needs, tax exposure, and equity allocation — and help you decide how best to use this boost in dividend income.

Frequently Asked Questions

What is the 2025 dividend amount for P&G shareholders?

The quarterly dividend is now $1.0568 per share, reflecting a 5% increase from 2024.

How does the dividend increase impact P&G employees?

Employees and retirees with P&G stock in retirement plans or brokerage accounts will see increased income, which may also affect tax planning and retirement withdrawals.

Is holding P&G stock for the dividend a good idea?

It depends on your overall financial plan. While the dividend is attractive, concentrated positions should be reviewed for risk, tax exposure, and long-term goals.

Should I adjust my retirement plan based on the dividend increase?

Potentially. A financial advisor can help you evaluate how dividend income fits into your broader income strategy and whether your current allocation still makes sense.

Disclosure: Vaultis Private Wealth is a registered investment adviser. This blog post is for informational purposes only and does not constitute investment, tax, or legal advice. Information presented is based on publicly available data as of April 9, 2025, and is subject to change. Past dividend increases, such as those of Procter & Gamble (P&G) at 5% in 2025, 7% in 2024, 3% in 2023, and 5% in 2022, do not guarantee future results. Dividend payments and increases depend on P&G’s financial performance and board decisions, and there is no assurance they will continue at historical levels. Individual financial situations vary, and the income or tax implications mentioned may not apply to all readers. Consult a financial advisor or tax professional before making investment decisions. Advisory services are offered through Vaultis Private Wealth, which is not affiliated with P&G. For more details on our services, fees, and risks, please contact us.

P&G Retirement Plans: Your Investment Choices

Understanding Your P&G Retirement Plans

Procter & Gamble (P&G) employees rely on two primary retirement vehicles: the Savings Plan (401(k)) and the Profit Sharing Trust (PST Plan). Understanding your investment options within these plans—and their diversification rules—enables you to craft a strategy aligned with your risk tolerance, time horizon, and P&G-specific risks.

Savings Plan Flexibility

The Savings Plan permits investment across its full menu at any time, providing flexibility to diversify beyond P&G stock.

PST Plan Diversification Rules

The PST Plan defaults to P&G common stock until age 50, when you can begin diversifying while maintaining a 40% minimum allocation.

Investment Options Available to P&G Employees

Money Market

• Money Market Fund: Designed for capital preservation, this fund invests in high-quality, short-term securities such as U.S. government obligations, commercial paper, and certificates of deposit. It offers stability and same-day liquidity, making it a low-risk choice for conservative investors.

Fixed Income

• U.S. Short-Term Bond Index Fund: Tracks the Barclays U.S. 1-3 Year Government/Credit Bond Index, focusing on short-term government and credit bonds for cost-effective stability.

• U.S. Intermediate-Term Bond Index Fund: Mirrors the Barclays U.S. Aggregate Bond Index, investing in a broad mix of investment-grade bonds—including government, corporate, and mortgage-backed securities—for steady income and moderate growth.

Real Return

• Real Return Fund: This multi-asset fund seeks to protect purchasing power by blending Treasury Inflation-Protected Securities (TIPS), global real estate investment trusts (REITs), and commodities. Its diversified approach aims to deliver returns that outpace inflation, with lower correlation to equities.

Equities

• Large Cap Equity Index Fund: Replicates the S&P 500, providing exposure to leading U.S. companies.

• Global Equity Index Fund: Follows the MSCI ACWI IMI, offering broad diversification across U.S. and international markets, including emerging economies.

• International Equity Index Fund: Tracks the MSCI ACWI ex-U.S., investing in thousands of foreign stocks for global growth potential.

• Small Cap Equity Fund: Mirrors the Russell 2000, targeting U.S. small-cap stocks with higher growth prospects and volatility.

• Procter & Gamble Stock: Direct investment in P&G common stock, allowing you to participate in the company’s long-term growth and dividend income.

Pre-Mixed Options

Pre-mixed portfolios offer professionally designed allocations, automatically rebalanced to maintain your chosen risk profile:

• Income (Pre-Mixed A): 45% intermediate bonds, 20% real return, 20% global equity, 15% short-term bonds—emphasizing stability and income.

• Growth & Income (Pre-Mixed B): 40% global equity, 35% intermediate bonds, 15% real return, 10% short-term bonds—balancing growth and income.

• Growth (Pre-Mixed C): 75% global equity, 15% real return, 10% intermediate bonds—focused on long-term capital appreciation.

Tailored Guidance for P&G Employees

Selecting the right investment mix depends on factors like your risk tolerance, time horizon, market conditions, and diversification needs. Vaultis Private Wealth excels in working with employees of Procter & Gamble as they prepare for and transition into retirement. Our deep understanding of P&G’s retirement plans allows us to provide guidance that is both personalized and aligned with your unique circumstances.

Frequently Asked Questions

What are the main differences between the P&G Savings Plan and the PST Plan?

The Savings Plan is a 401(k) that allows P&G employees to contribute pre-tax or Roth dollars, offering a range of investment options and immediate vesting. The PST Plan is company-funded, primarily invested in P&G stock, with diversification options available starting at age 50, maintaining a 40% minimum allocation to P&G stock.

How can I diversify my PST Plan holdings after age 50?

Upon reaching age 50, P&G employees can diversify their PST holdings by reallocating up to 60% of their account into other investment options, while maintaining at least 40% in P&G stock. This strategy helps manage concentration risk and aligns with individual retirement goals.

Are there tax advantages to holding P&G stock in my retirement accounts?

Yes. Strategies like Net Unrealized Appreciation (NUA) can offer tax benefits by allowing the appreciation on P&G stock to be taxed at long-term capital gains rates instead of ordinary income rates. It's essential to consult with a financial advisor to determine if NUA is suitable for your situation.

What are the benefits of using pre-mixed investment options?

Pre-mixed portfolios provide a diversified investment strategy tailored to specific risk profiles. They are automatically rebalanced, reducing the need for active management and helping maintain alignment with your retirement objectives.

How can Vaultis Private Wealth assist me with my P&G retirement planning?

Vaultis Private Wealth specializes in guiding P&G employees through the complexities of retirement planning. Our advisors offer personalized strategies that consider your unique financial situation, helping you make informed decisions about your Savings Plan, PST Plan, and overall investment approach.

Disclosure: This blog provides educational insights, not personalized financial, tax, or legal advice. Investments involve risks, including potential loss of principal—values may fluctuate, and past performance does not guarantee future results. Diversification and asset allocation do not ensure profit or protect against loss in declining markets. Options like P&G stock or pre-mixed portfolios carry specific risks, such as concentration or market volatility. Tax outcomes, including strategies tied to PST diversification, vary by individual circumstances; consult a tax professional. Vaultis Private Wealth is not affiliated with P&G, and views expressed are ours alone. Contact a financial advisor before making investment decisions.

Understanding P&G’s LTIP: Stock Options vs. RSUs

As a Procter & Gamble (P&G) employee, you have a unique opportunity to shape your financial future through the Long‑Term Incentive Program (LTIP). When eligible, this program allows you to customize your compensation to fit your personal goals. In this article, we’ll break down your LTIP options, weigh their pros and cons, and guide you toward making informed decisions that align with your needs and aspirations.

What Are LTIP Awards?

P&G’s LTIP is designed to reward your contributions to the company’s success while aligning your interests with those of shareholders. Eligible employees can receive awards as Stock Options, Restricted Stock Units (RSUs), or a mix of both, based on a cash‑equivalent value set by P&G (i.e., your award is denominated in dollars, then converted into shares).

Comparing Stock Options and RSUs

In practical terms, Stock Options and RSUs offer two distinct ways to participate in P&G’s long‑term growth. Stock Options give you the right—but not the obligation—to purchase company shares at a set price in the future. If P&G’s stock price rises above your grant price, you can exercise your options and benefit from the difference. However, if the stock price does not increase, options may have little or no value. In contrast, RSUs represent a commitment by P&G to deliver actual shares to you after a vesting period, regardless of how much the stock price has changed. RSUs retain value as long as P&G stock has value, and they require no action on your part to receive them.

LTIP Award Mix Options

You can choose how your LTIP award splits between Stock Options and RSUs:

1. 100% Stock Options

2. 75% Stock Options, 25% RSUs

3. 50% Stock Options, 50% RSUs

4. 25% Stock Options, 75% RSUs

5. 100% RSUs

This flexibility allows you to tailor your award to your personal financial goals and risk tolerance.

Pros and Cons of Each Award Type

Stock Options
Pros:

• Potential for significant upside if P&G stock appreciates substantially

• Flexibility to choose when to exercise (between years 3 and 10), assisting with income and tax planning

Cons:

• Worthless if the stock price does not exceed the grant price

• Requires active management and decision-making

• Higher volatility/risk compared to RSUs

Restricted Stock Units (RSUs)
Pros:

• Guaranteed value as long as P&G stock retains value

• Delivered at vesting with no action required

• Receive dividend equivalents during vesting

• Lower risk than stock options

Cons:

• Less upside potential if the stock price rises significantly

• Fixed delivery and you cannot delay tax—you’ll be taxed when they vest (typically at year 3)

Understanding Tax Implications

When evaluating your LTIP choices, it’s essential to understand the tax implications, as they can significantly affect your net proceeds and overall financial plan.

• RSUs: Taxed as ordinary income at vesting (usually year 3). P&G will sell a portion of shares to cover tax withholding; you receive the net shares or cash.

• Stock Options: Taxed as ordinary income when exercised (between years 3 and 10), based on the spread. P&G typically sells shares to cover withholding; you receive the remainder in cash or shares.

Factors to Consider When Choosing

Consider these factors when selecting a mix:

• Risk vs. Value: Options offer higher upside potential but more risk; RSUs are more stable.

• Time Horizon: Options are better suited for long‑term planning; RSUs offer earlier value delivery.

• Stock Outlook: Your view of P&G’s future performance may influence your choice.

• Cash Flow Needs: RSUs deliver predictable value at vesting; options can be timed for funding needs.

• Overlapping Grant Cycles: Since RSUs vest in 3 years and options expire in 10, pay attention to when different awards vest/expire to better coordinate your income and tax events

LTIP Election Timing

You’ll make your LTIP election during P&G’s annual window, typically in early August, with the award granted in October . Election does not carry forward from prior years—you must actively choose each year via the Executive Compensation portal before the deadline.

Next Steps

At Vaultis Private Wealth, we work closely with Procter & Gamble employees and retirees to help them navigate the many financial decisions that come with a long career at P&G. Whether you’re evaluating your LTIP award, planning for retirement, or managing your Savings Plan and PST, our goal is to provide clear, objective advice tailored to your situation.

If you’re looking for a partner to help you make sense of your options and build a strategy aligned with your goals, we’re here to help.

Schedule a meeting below to learn how we can support your financial journey—both during your time at P&G and beyond.

Frequently Asked Questions

When do I need to make my LTIP election?

P&G typically opens the annual LTIP election window in early August, with the grant issued in October. Your prior choice does not carry over—be sure to elect each year via the Executive Compensation portal before the deadline.

What is the difference between Stock Options and RSUs in P&G's LTIP?

Stock Options let you buy shares at a predetermined price in the future and may offer greater upside if the stock rises, but they risk being worthless. RSUs deliver shares at vesting regardless of stock price and include dividend equivalents, offering more stability.

How are LTIP awards taxed?

RSUs are taxed as ordinary income at vesting, with P&G withholding taxes. Stock Options are taxed when exercised, based on the price difference—a separate tax withholding event.

Can Vaultis help with P&G retirement investment options like PST rollovers?

Absolutely. We specialize in guiding P&G employees through retirement investment options including Savings Plan, PST rollovers, IRAs, and the Procter and Gamble Savings Plan, helping tailor strategies to individual needs.

Disclosures: The information in this blog is for educational purposes only and is not intended as personalized financial, investment, tax, or legal advice. The LTIP options discussed may not be suitable for everyone, as individual financial goals, risk tolerance, and circumstances differ. Consult a qualified financial advisor, tax professional, or legal advisor before acting to evaluate your specific situation and determine if these options fit your needs. Past performance of P&G stock does not guarantee future results, and investments in Stock Options and RSUs involve risks, including the potential loss of principal. Tax laws may change, potentially affecting the strategies described; this content reflects laws as of December 13, 2024. Vaultis Private Wealth does not guarantee the accuracy, completeness, or outcome of this information and is not affiliated with Procter & Gamble, which does not endorse this content or compensate Vaultis for any services mentioned.

The Frank Duke PST Distribution Strategy

For many longtime P&G employees, the Profit Sharing Trust (PST) holds decades of accumulated savings. Understanding how to access these assets in a tax-efficient way can make a significant difference in your retirement outcome. The Frank Duke Strategy is one such approach—simple in structure, but powerful when executed correctly.

What Is the Frank Duke Method?

The Frank Duke method is a two-step process that leverages the IRS’s Net Unrealized Appreciation (NUA) rules and a 60-day IRA rollback to help you maximize the after-tax value of your PST holdings. Here’s how it works:

• Step 1: Take a lump-sum distribution from your PST after a qualifying event (such as retirement or reaching age 59½). Split the distribution by rolling most assets into an IRA, while transferring P&G shares—typically preferred shares with a low $6.82 per share cost basis—into a taxable brokerage account using the NUA provision.

• Step 2: Within 60 days, roll back a portion of the taxable account shares (often exceeding the cost basis) into an IRA. This maneuver can offset the ordinary income tax due on the cost basis, while the remaining shares in the taxable account benefit from long-term capital gains treatment when sold.

For NUA basics, see our post: Understanding NUA: A P&G Retirement Tax Strategy

Who Can Use This Strategy?

This approach can apply to nearly all P&G employees, regardless of account size. The key factors are whether your PST contains P&G preferred shares and, if applicable, the cost basis on your P&G common shares. While preferred shares are typically the most advantageous due to their fixed $6.82 cost basis, common shares are also eligible for NUA. However, the cost basis on common shares can vary depending on your individual contribution history and investment activity, making them more situational. In some cases, a targeted use of common shares may also make sense.

Key Benefits for P&G Employees

• Significant Tax Savings
  By shifting the appreciation in your P&G shares from ordinary income tax rates (which can reach up to 37%) to long-term capital gains rates (typically 15–20%), you can potentially save thousands of dollars in taxes.

• Diversified Account Types
  The strategy creates both taxable and tax-deferred accounts, offering flexibility for retirement income and investment management.

• Enhanced Flexibility
  Access to a taxable account allows for more flexible withdrawals and broader investment options compared to the PST.

• Improved Estate Planning
  The ability to manage distributions and account types can support more effective estate and legacy planning.

How the Strategy Works: A Step-by-Step Example

Let’s look at a scenario with the following key details: 5,882 P&G preferred shares, each with a $6.82 cost basis, and a current market value of $170 per share (total value: $1 million).

• Step 1: Take a lump-sum distribution from your PST. Roll most assets into an IRA and move the 5,882 preferred shares—shares that many long-tenured P&G employees hold at the historical $6.82 basis—into a taxable account via NUA. The cost basis ($40,115 = 5,882 shares × $6.82) is taxed as ordinary income in the year of distribution.

• Step 2: Within 60 days, roll back at least $40,115 worth of shares from the taxable account to your IRA. This offsets the ordinary income tax hit, while the remaining shares—now worth nearly $960k—are eligible for long-term capital gains treatment when sold.

This approach can result in substantial tax savings and greater control over your retirement assets.

Advanced Planning: Charitable Giving with a Donor-Advised Fund (DAF)

For P&G retirees with philanthropic goals, the Frank Duke method can be paired with a Donor-Advised Fund (DAF):

• After executing the NUA strategy, donate appreciated P&G shares to a DAF.

• Receive a charitable deduction for the full market value of the shares, offsetting the ordinary income from the cost basis.

• Avoid capital gains tax on the appreciation, allowing your charitable contributions to grow tax-free within the DAF.

This combination aligns tax efficiency with your charitable legacy.

To learn more, see our article on Donor-Advised Funds and PST Planning

Important Considerations

• Timing Is Critical
  The lump-sum distribution must follow a qualifying event (retirement, age 59½, or death) to qualify for NUA treatment.

• 60-Day Rollback Window
  The IRS enforces this deadline strictly. Missing it can forfeit the tax benefits.

• Precision Required
  Errors in execution can result in lost tax advantages. Professional guidance is highly recommended.

Is the Frank Duke Strategy Right for You?

The Frank Duke PST Distribution Strategy is a proven method for helping P&G retirees unlock more value from their retirement assets. But it requires thoughtful execution. At Vaultis Private Wealth, we’ve helped many P&G employees evaluate this opportunity, weigh alternatives, and carry it out with precision. If you're looking for help with P&G retirement planning, we’re here to guide the way.

Frequently Asked Questions

What is Net Unrealized Appreciation (NUA)?

NUA allows you to move employer stock from a qualified retirement plan into a taxable brokerage account and pay ordinary income tax only on the cost basis. The appreciation is taxed at long-term capital gains rates when sold.

Who qualifies to use the Frank Duke Strategy?

P&G retirees who have experienced a triggering event (such as retirement or reaching age 59½) and hold P&G stock in their PST may qualify. Timing and execution are essential.

What if I miss the 60-day rollback window?

Missing the window eliminates the ability to recharacterize the shares into an IRA, locking in the ordinary income treatment on the cost basis. Precision and timely action are critical.

Can I use this strategy if I’ve already rolled over my PST?

No. Once you’ve rolled over your PST into an IRA, you generally lose the ability to use the NUA strategy. It must be done as part of a qualifying lump-sum distribution.

How does this strategy compare to leaving everything in the IRA?

While an IRA keeps your assets tax-deferred, it also subjects future withdrawals to ordinary income tax. The Duke strategy offers the potential for lower long-term tax treatment and more liquidity.

Can I combine this with other strategies like Roth conversions?

Yes. Many P&G retirees pair this with partial Roth conversions to further manage their tax bracket in retirement. This requires careful coordination but can enhance long-term tax efficiency.

Disclosures: The information in this blog is for educational purposes only and is not intended as personalized financial, tax, or legal advice. The Frank Duke PST Distribution Strategy may not be suitable for everyone, as individual financial goals, risk tolerance, and circumstances differ. Consult a qualified financial advisor, tax professional, or legal advisor before acting to evaluate your specific situation and determine if this strategy fits your needs. Past performance does not guarantee future results, and all investments involve risks, including the potential loss of principal. Tax laws and regulations may change, potentially affecting the strategies described. Vaultis Private Wealth does not guarantee the accuracy, completeness, or outcome of this information and is not affiliated with Procter & Gamble, which does not endorse this content.

Managing Concentrated Stock Positions for P&G Employees

As a dedicated Procter & Gamble (P&G) employee, you likely have accumulated a substantial position in P&G stock through years of service and participation in the Profit Sharing Trust & Employee Stock Ownership Plan (PST Plan). While this concentrated holding can be a testament to your commitment and the company’s success, it also introduces unique risks that require careful management, especially as you approach retirement.

Understanding Your P&G Stock Position

Many P&G employees accumulate a high concentration of company stock without actively planning for it. Understanding how this happens is the first step toward addressing it.

It’s common for P&G employees to have a high allocation to P&G stock. This is largely because company-funded PST contributions are made exclusively in the form of P&G stock each year. Additionally, diversification within the PST is restricted: you cannot begin to diversify your holdings until reaching age 50, and even then, you are required to maintain at least a 40% allocation to P&G stock in your PST account. These restrictions do not apply to the Procter and Gamble Savings Plan, where you have more flexibility to diversify your investments at any time.

The Risks of Concentration

Concentrated positions in any stock can pose long-term financial challenges, even for stable companies like Procter & Gamble.

While P&G’s track record is strong, holding a large portion of your wealth in a single stock exposes you to several risks:

• Volatility: Your portfolio experiences significant swings tied to P&G’s performance.

• Company-Specific Risk: Events unique to P&G could disproportionately affect your financial well-being.

• Sector Risk: The consumer goods sector’s performance can heavily influence your portfolio.

• Opportunity Cost: Concentration may limit your exposure to growth in other sectors or asset classes.

• Emotional Bias: Deep company loyalty can sometimes cloud objective financial decisions.

The Retirement Perspective

As retirement approaches, portfolio structure matters more than ever. Concentration risks can compound during this transition period.

• Shortened Recovery Time: There’s less time to recover from potential market downturns.

• Sequence of Returns Risk: If P&G stock underperforms early in retirement, it could accelerate portfolio depletion.

• Net Unrealized Appreciation (NUA) Opportunities: Properly timing the distribution of P&G stock from your retirement plan can unlock significant tax savings through the NUA strategy, which allows for preferential tax treatment on the appreciation of employer stock.
  (Learn more about NUA strategies for P&G retirees)

If you're exploring options for help with P&G retirement planning, this phase is often where thoughtful strategies make the biggest impact.

Strategies for Risk Management

Balancing loyalty to P&G with long-term security requires a plan that reflects your full financial picture.

• Gradual Diversification: Systematically diversify your holdings as plan rules permit, reducing your exposure over time.

• Holistic Portfolio View: Assess your PST and Savings Plan holdings in the context of your entire investment portfolio, including outside assets.

• Tax-Efficient Strategies: Explore options such as donating appreciated shares to charity for potential tax benefits, or leveraging NUA and other distribution strategies.

• Consider Allocation Across the Full Portfolio: Reducing concentrated exposure to consumer staples in other parts of your portfolio—such as taxable accounts or IRAs—can help offset the weight of P&G holdings without immediate liquidation. A customized, coordinated approach allows for flexibility while still respecting plan limits.

• Option Strategies: In select cases, advanced strategies like protective puts or collars may help hedge concentrated risk. These tools require specialized expertise and careful implementation.

• Exchange Funds and Other Alternatives: Less commonly used but potentially valuable in certain scenarios, exchange funds allow you to contribute concentrated shares in exchange for a diversified basket of holdings. These strategies come with complexity and limitations but are worth exploring for qualified investors.

Every client’s situation is unique, and the right mix of strategies will depend on your goals, risk tolerance, and emotional comfort with diversification.

A Real-Life Example: Balancing Strategy and Sentiment

Consider a recent P&G retiree from the Cincinnati area who began working with us at Vaultis Private Wealth in late 2024. After a long and successful career, he found that nearly 70% of his retirement assets—across both his PST and Savings Plan—were allocated to P&G stock. This level of concentration is not uncommon among long-tenured employees, and it often comes with a strong emotional attachment to the company’s shares.

We developed a plan to gradually diversify his holdings while honoring his connection to P&G. After completing his full distribution, which included leveraging Net Unrealized Appreciation (NUA) and a Duke Rollback, we took a two-pronged approach. First, we targeted his NUA shares in his taxable account, planning to use them strategically over time as part of his Lifestyle Funding Strategy. Second, to begin the diversification process, we sold an initial 15% of his P&G shares in his IRA at an attractive price. From there, we set up a disciplined schedule to sell a set number of shares each month, with the goal of reducing his P&G exposure to approximately 15% by the end of 2025. This evolving process allows us to introduce flexibility and adjust the plan should P&G’s price appreciate or depreciate more than expected.

He appreciated having a plan that didn’t require abandoning the stock all at once. The emotional side of retirement planning is real—and when addressed thoughtfully, it doesn’t have to conflict with financial goals.

It’s important to recognize that every individual’s emotional connection to P&G stock is different. Some employees feel a deep sense of loyalty and pride, while others are more comfortable viewing their holdings objectively. Either perspective is valid, and both should be respected in the planning process. Even for those with a strong attachment to the stock, it remains essential to reduce concentration risk to an appropriate level to protect long-term financial security. Our flexible approach ensures that your financial plan honors your unique relationship with P&G while prioritizing your future stability.

Partnering for Your Financial Future

P&G’s retirement ecosystem is complex, including the PST, Savings Plan, LTIP elections, NUA strategies, and concentrated stock positions. At Vaultis Private Wealth, we work closely with Procter & Gamble employees and retirees to help them make sense of it all. Managing a concentrated stock position is just one area where we bring clarity and experience. We’ve guided many through similar transitions and understand how each decision connects to the bigger picture.

Frequently Asked Questions

What is the PST Plan and how does it work?

The Profit Sharing Trust (PST) is a retirement plan funded annually by P&G in the form of company stock. Employees cannot diversify their holdings until age 50 and must maintain a minimum 40% allocation to P&G stock within the PST after that age.

How do I know if my P&G stock concentration is too high?

There’s no one-size-fits-all number, but if more than 20–30% of your total net worth is in P&G stock, it may be time to consider diversification. We help assess this in the context of your full portfolio and goals.

What is Net Unrealized Appreciation (NUA) and why does it matter?

NUA is the gain on P&G stock held in your retirement plan. When handled correctly during a distribution, you may pay ordinary income tax only on the cost basis, while the appreciation is taxed at long-term capital gains rates.

Can I still benefit from NUA if I’m retiring before age 59½?

Yes, in many cases. If your distribution qualifies as a lump-sum and meets certain IRS rules, the NUA strategy may still apply, though early withdrawal penalties could affect some parts of the distribution. It’s worth reviewing with an advisor.

What if I feel emotionally attached to my P&G shares?

That’s very common among longtime employees. At Vaultis, we respect that connection and work with clients to develop a gradual, personalized approach that aligns with both their financial and emotional comfort.

Are there other advanced strategies for managing a concentrated position?

Yes. Options strategies, tax-aware charitable giving, portfolio offsetting, and even exchange funds may all be viable depending on your situation. Not all are appropriate for every client, but they’re worth discussing with an advisor.

Disclosures: Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any investment strategy will achieve its objectives. The information provided is not intended to be tax advice. Please consult a tax professional for specific tax advice. This article is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities or investment products. Always seek the advice of a qualified financial advisor with any questions you may have regarding your financial situation.

P&G's PST Plan Update: Farewell to Preferred Shares

Procter & Gamble (P&G) has announced a significant update to its Profit Sharing Trust (PST) Plan, marking the end of an era for employee retirement benefits. After decades of allocating preferred shares to employee retirement accounts, P&G has now fully depleted its reserves of these shares. This change will impact how future PST contributions are made and carries important implications for employees at different stages of their careers.

What’s Changing?

Going forward, all PST contributions will be made exclusively in P&G common shares, replacing the previous mix of common and preferred shares. This transition is a direct result of the exhaustion of P&G’s preferred stock pool, finalized in 2024.

What Does This Mean for Tenured Employees?

For long-serving P&G employees, this update brings several key considerations: 

• Net Unrealized Appreciation (NUA) Strategy: The NUA opportunity—which allows for potential tax savings by applying long-term capital gains rates to company stock appreciation—remains available. However, with no new preferred shares (which had a fixed $6.82 cost basis) being added, the tax advantage may be somewhat reduced as common shares (with a market-based cost basis) become the sole component.

• Retirement Planning: The gradual shift to common shares will change the composition of PST accounts over time. This may prompt a review of retirement income strategies and diversification options to ensure your plan remains aligned with your goals.
  

What about newer employees?

For those earlier in their P&G careers, the effects are more pronounced:

• Reduced NUA Appeal: With little or no preferred shares in their PST accounts, newer employees will see a diminished NUA benefit, making it less central to their tax planning strategies.

• Long-Term Focus: Alternative tax-efficient strategies—beyond NUA—will become increasingly important, emphasizing traditional retirement planning tailored to common stock allocations.

Navigating the New Landscape

P&G’s move away from preferred shares reflects the evolving nature of retirement benefits. Staying informed and proactive is essential to ensure your financial plan adapts to these changes.

At Vaultis Private Wealth, we specialize in helping P&G employees navigate these unique benefits. Whether you’re a tenured employee seeking to maximize NUA or a newer hire exploring new strategies, our advisors provide tailored guidance.

Disclosures:

The information provided in this blog is for informational purposes only and does not constitute financial, tax, or legal advice. Please consult with a financial advisor or tax professional for advice specific to your situation. Past performance is not indicative of future results. The value of investments can go down as well as up, and you may not get back the amount you originally invested. Investing involves risk, including the potential loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. The tax implications of the NUA strategy and other retirement planning strategies can vary based on individual circumstances. It is important to consult with a tax professional to understand the specific tax implications for your situation. Vaultis Private Wealth is not affiliated with Procter & Gamble (P&G). The views expressed in this blog are those of the author and do not necessarily reflect the views of P&G.

Optimizing Retirement Distribution Strategies for Procter & Gamble Employees

As you approach retirement after a rewarding career at Procter & Gamble (P&G), making informed decisions about your retirement savings is crucial. The right distribution strategy can help you sustain your lifestyle, manage taxes, and make the most of the benefits you’ve worked hard to earn. This article outlines three key approaches to optimizing your P&G retirement benefits, tailored to your unique financial situation, retirement timeline, and personal goals.

Maintain Assets in Existing Retirement Plans

Keep your funds in your P&G Savings Plan (401(k)) and Profit Sharing Trust (PST) after retirement, withdrawing money as needed.

Benefits:

1. Flexibility to adjust withdrawals based on your changing needs

2. Typically lower fees compared to many retail investment accounts

Things to consider:

1. Withdrawals are taxed as ordinary income

2. Investment choices may be more limited than those available in an IRA

Who should consider this strategy?

Individuals who are comfortable managing their investments, withdrawal strategies, and tax planning on their own. This approach is ideal for those who prefer to retain direct control and are confident in navigating the available plan options.

Partial Distribution Strategy (for retirements between ages 55 and 59½)

For those retiring typically between ages 55 and 59½, consider keeping preferred shares and enough cash or investments in your PST, while rolling over the remainder to an IRA.

Benefits:

1. Penalty-free distributions from your PST after age 55

2. Opportunity to preserve low-cost-basis preferred shares for future tax advantages (such as Net Unrealized Appreciation, or NUA)

3. Ability to diversify your investments through an IRA

Things to consider:

1. Managing multiple accounts can add complexity

2. Early IRA withdrawals (before age 59½) may incur penalties, so careful planning is essential

Who should consider this strategy?

Typically, individuals who retire after age 55 but before 59½ and do not have significant assets outside their Retirement Plan—such as taxable savings or stock options—to bridge the gap until 59½. This strategy is well-suited for those who want to begin diversifying their P&G holdings while avoiding the 10% early withdrawal penalty.

Total Distribution with (or without) NUA Strategy

Take a lump-sum distribution from your retirement plans, with the option to apply Net Unrealized Appreciation (NUA) tax treatment to your P&G stock if it aligns with your goals. This strategy can also be paired with approaches like a Duke Rollback to offset taxes or a Donor-Advised Fund (DAF) contribution. Non-NUA assets can be rolled into an IRA.

Benefits:

1. Potential for significant tax savings on appreciated P&G stock, as gains may be taxed at long-term capital gains rates if NUA is utilized

2. Flexibility to diversify your investments after distribution

3. Combines the advantages of NUA (if chosen) with IRA access for more effective tax management

Things to consider:

1. You’ll pay ordinary income tax on the stock’s cost basis (often $6.82 per share) if you elect NUA

2. Distributed assets lose the benefit of tax-deferred growth

3. This approach requires precise tax planning—mistimed moves can lead to higher taxes or additional fees

Who should consider this strategy?

Most commonly, this strategy is appropriate for individuals who are past age 59½ at retirement, or for those who have significant assets—such as stock options, taxable savings, or proceeds from P&G long-term capital gains sales—planned to cover their lifestyle needs until reaching 59½. This allows them to avoid the 10% penalty on IRA distributions while maximizing the benefits of NUA and diversification, if applicable.

Note: NUA is an option, not a requirement. You can choose to take a total distribution without applying NUA if it does not fit your situation or objectives.

Next Steps for P&G Employees

To make the most of your P&G retirement benefits:

1. Assess each strategy in light of your retirement goals and timeline

2. Review your current Savings Plan, PST balances, and P&G stock holdings

3. Consult with a financial advisor who understands P&G’s retirement plans and can help tailor a strategy to your needs

Your years at P&G have built a strong foundation for retirement. Choosing the right distribution strategy will help ensure your assets support the lifestyle you envision, allowing you to transition confidently into the next chapter.

At Vaultis Private Wealth, we specialize in the unique retirement planning needs of Procter & Gamble employees. Our experienced advisors help P&G professionals navigate these complex strategies to optimize their benefits. Contact us for a complimentary consultation.

Disclosures:

The information in this article is for educational purposes only and is not intended as personalized financial, investment, tax, or legal advice. The strategies discussed, including NUA and the Frank Duke approach, may not be suitable for everyone, as individual financial goals, risk tolerance, and circumstances differ. Consult a qualified financial advisor, tax professional, or legal advisor before acting to evaluate your specific situation and determine if these strategies fit your needs. Past performance does not guarantee future results, and all investments involve risks, including the potential loss of principal. Tax laws and regulations may change, potentially affecting the strategies described; this content reflects laws as of March 17, 2025. Vaultis Private Wealth does not guarantee the accuracy, completeness, or outcome of this information and is not affiliated with Procter & Gamble, which does not endorse this content or compensate Vaultis for any services mentioned.

The Net Unrealized Appreciation Opportunity for P&G Employees

As a Procter & Gamble (P&G) employee, you’ve built your career at a company known for its stability, innovation, and commitment to its people. One of the most powerful opportunities within your benefits package is Net Unrealized Appreciation (NUA). This tax strategy can help you reduce your tax burden and maximize the value of your retirement savings, especially when applied to your Profit Sharing Trust (PST) and its preferred shares.

What Is Net Unrealized Appreciation? 

Net Unrealized Appreciation (NUA) is a strategy established by the IRS tax code that allows you to take advantage of the growth in value of employer stock—such as P&G shares—held within a tax-deferred retirement account like the PST. When you retire or leave P&G, the NUA strategy enables you to shift the appreciation on these shares from being taxed as ordinary income to the more favorable long-term capital gains rates. This can result in substantial tax savings for employees with significant P&G stock holdings.

The P&G Profit Sharing Trust Advantage:

P&G’s PST is a standout retirement vehicle, offering a blend of company contributions in both common and preferred shares. The preferred shares, with their low cost basis of $6.82 per share, are particularly valuable for NUA planning. While P&G stopped contributing preferred shares in 2024, any shares you accumulated prior to that year remain a key asset, amplifying the tax-saving potential of this strategy.

How NUA Works Under the Tax Code

The NUA strategy is governed by IRS rules that provide favorable tax treatment for employer securities distributed from qualified plans like the PST. Here’s how it works:

• Lump-Sum Distribution: To qualify, you must take a full distribution of your PST within one tax year, triggered by separation from service, reaching age 59½, or death (IRC Section 402(e)(4)).

• Cost Basis Taxation: The cost basis of your P&G shares is taxed as ordinary income in the year of distribution and reported on Form 1099-R. For preferred shares, this is $6.82 per share. For common shares, the cost basis is the combined purchase price from contributions made over the years. While preferred shares typically present the greatest NUA opportunity due to their low cost basis, common shares can also be included in certain situations, depending on your individual holdings and strategy.

• NUA Taxation: The appreciation (market value minus cost basis) is deferred and taxed at long-term capital gains rates when you sell the shares, regardless of how long you hold them after distribution.

• Penalty Note: If you are under age 59½, the cost basis portion is subject to a 10% early withdrawal penalty. However, the NUA portion is exempt. Strategies such as the Duke Rollback or charitable giving can help mitigate this penalty.

Applying NUA at P&G 

Here’s how P&G employees can use NUA:  

1. Take a Lump-Sum Distribution: Withdraw your entire PST balance in one tax year.

2. Transfer Preferred Shares: Move these shares into a taxable brokerage account.

3. Pay Tax on Cost Basis: Ordinary income tax applies to the cost basis ($6.82 for preferred shares and, in certain cases, the cost basis for common shares).

4. Consider Tax Mitigation Strategies: In the year of the distribution, consider strategies to reduce your tax liability on the cost basis. Options include the Duke Rollback strategy or charitable gifting using a Donor Advised Fund (DAF).

5. Defer NUA Taxes: The appreciation remains untaxed until you sell the shares.

6. Sell and Save: When you sell, the NUA is taxed at long-term capital gains rates—often much lower than ordinary income rates.
   

A Brief Example: NUA in Action for a P&G Employee

Consider a P&G employee with 5,000 preferred shares in their PST, each with a cost basis of $6.82. By taking a lump-sum distribution, they would report $34,100 as ordinary income (5,000 shares x $6.82). It’s important to note that $34,100 is the amount subject to ordinary income tax—not the actual tax owed, which will depend on your individual tax bracket. If P&G’s current share price is $162, this employee could move $810,000 worth of stock out of the retirement plan, with the appreciation—over $775,000—taxed later at long-term capital gains rates when the shares are sold, rather than at higher ordinary income rates.

The remaining assets from the PST would typically be rolled into an IRA. This allowed the P&G employee to diversify their asset mix, while the appreciated stock benefited from a shift in tax treatment—from ordinary income to long-term capital gains rates. For simplicity, this example does not include any tax mitigation strategies, which could further enhance the benefits of NUA.

Tax Benefits of NUA 

• Lower Rates: Long-term capital gains rates (typically 15-20%) are generally much lower than ordinary income tax rates (up to 37%), especially for those in higher tax brackets.

• Tax Deferral: You control when to realize the gain, giving you flexibility in your retirement income planning.

Key Considerations 

• Age: If you are under 59½, plan for the 10% penalty on the cost basis and consider alternative income sources or penalty-mitigation strategies.

• Comprehensive Planning: NUA is most effective as part of a broader retirement strategy, not in isolation.

• Tax Law Changes: Future changes in tax law could impact the advantages of NUA—timing is important.

• Complexity: Precise execution is critical; errors or mistimed distributions can result in higher taxes.
  

Why It Matters for P&G Employees

With the low $6.82 cost basis of P&G preferred shares, NUA offers a rare opportunity to unlock significant value from your PST. Optional strategies like the Duke Rollback or charitable giving can further enhance the benefits. While NUA is a complex strategy, careful planning can transform your P&G stock into a highly tax-efficient retirement asset.

If you’re approaching retirement or considering your next steps at P&G, evaluating the NUA opportunity is a smart move. At Vaultis Private Wealth, we specialize in helping P&G employees navigate these unique benefits. Contact us for a complimentary consultation to see if NUA fits your retirement goals.

Disclosures:
The information in this article is for educational purposes only and is not intended as personalized investment, tax, or legal advice. The Net Unrealized Appreciation (NUA) strategy may not be suitable for everyone, as individual financial goals, risk tolerance, and circumstances differ. Consult a qualified financial advisor, tax professional, or legal advisor before acting to evaluate your specific situation and determine if this strategy fits your needs. Tax laws and regulations are complex and may change, potentially affecting the strategies described. This content reflects tax laws as of March 17, 2025, and future changes could impact outcomes. Past performance does not guarantee future results. All investments involve risks, including the potential loss of principal, and values may fluctuate. The description of the P&G Profit Sharing Trust (PST) reflects current plan details as understood by Vaultis Private Wealth and may change. Refer to official PST documents for the most accurate, up-to-date information. Vaultis Private Wealth does not guarantee the accuracy, completeness, or outcome of this information and is not affiliated with Procter & Gamble, which does not endorse this content. Verify the qualifications of any advisor before engaging their services.

A Guide to P&G's Retirement Plans

As a Procter & Gamble (P&G) employee, you’re equipped with two retirement plans to secure your financial future: the Profit Sharing Trust & Employee Stock Ownership Plan (PST Plan) and the Savings Plan. Understanding how these plans work—and how to make the most of them—can set you on the path to a confident retirement.

The PST Plan: Building Wealth Through Company Ownership

The PST Plan is a hallmark of P&G’s commitment to its employees, offering a company-funded path to long-term wealth accumulation and ownership.

• Annual Company Contributions: Each year (July 1–June 30), P&G contributes to your PST account in the form of cash for Common Stock and, if eligible, Preferred Stock shares. This aligns your financial growth with the company’s performance.

• Stock Details: Common Stock is allocated at its market price on the purchase date, while Preferred Stock (no longer issued after 2024) retains a fixed cost basis of $6.82 per share—a valuable feature for future tax planning. 

• Diversification at Age 50: Once you reach age 50, you gain the flexibility to diversify your PST holdings, provided you maintain at least 40% of your account in P&G stock. This allows you to balance company loyalty with prudent risk management.

• Vesting: You become fully vested after four years of service plus 1,000 hours in your fifth year, or immediately upon reaching age 65, disability, or death—rewarding your long-term commitment to P&G.

The Savings Plan: Your Flexible 401(k) Option

The Savings Plan empowers you to take an active role in your retirement savings, complementing the PST Plan’s company-funded benefits.

• Employee Contributions: You have the flexibility to contribute either pre-tax or Roth 401(k) dollars directly from your paycheck—up to 50% of your pay or the IRS annual limit ($23,500 in 2025, with additional catch-up contributions available if you’re age 50 or older). Please note that Highly Compensated Employees may be subject to lower contribution limits than the IRS maximum. Automatic enrollment makes it easy to begin saving, but you can adjust your contribution rate or opt out at any time.

• Immediate Vesting: Every dollar you contribute is 100% yours from day one, with no waiting period.  

• Investment Choices: Select from 12 investment options to build a portfolio that matches your risk tolerance and retirement goals, including funds beyond P&G stock.  

• Rollovers: Easily consolidate retirement assets from previous employers or IRAs into your Savings Plan account, with no rollover fees, for streamlined management.

Maximizing Your P&G Retirement Plans

To make the most of your retirement plans, consider these best practices: 

• Leverage Both Plans: While the PST Plan grows through company contributions, supplementing it with your own Savings Plan contributions can accelerate your retirement savings. 

• Stay Informed: Take advantage of P&G’s plan guides and the Financial Education Center to deepen your understanding, or consult with a financial advisor who specializes in P&G benefits.

• Review Regularly: Periodically reassess your Savings Plan investments to ensure they align with your evolving goals and risk profile.

• Monitor Company Performance: Since the PST Plan is tied to P&G’s stock, keep an eye on company performance and consider diversification strategies as you approach retirement.

P&G’s retirement plans offer a strong foundation for your financial future. By understanding and actively managing your PST and Savings Plans, you can build a resilient retirement portfolio tailored to your unique needs.

Navigating these plans can be complex. Vaultis Private Wealth specializes in helping P&G employees maximize their unique benefits. Our team provides personalized advice to align your retirement strategy with your long-term goals. Contact us today to enhance your retirement planning and secure your financial future.

Disclosures:

The information in this blog is for educational purposes only and is not intended as personalized financial, investment, tax, or legal advice. The retirement plans discussed may not be suitable for everyone, as individual goals, risk tolerance, and circumstances vary. Consult a qualified financial advisor, tax professional, or legal advisor before acting to evaluate your situation. Past performance does not guarantee future results, and investments involve risks, including potential loss of principal. Tax laws may change, potentially affecting these plans; this content reflects information as of September 28, 2024. Vaultis Private Wealth is not affiliated with Procter & Gamble, which does not endorse this content or compensate Vaultis for any services.