Procter & Gamble’s Dividend Increase - Announced 04/08/2025

Procter & Gamble (P&G) has once again demonstrated its commitment to shareholders by announcing another dividend increase, marking its 69th consecutive raise. Additionally, P&G has paid a dividend for an impressive 135 consecutive years.

The quarterly dividend is now $1.0568 per share, which comes out to a 5% increase. This compares to increases of 7% in 2024, 3% in 2023 and 5% in 2022, proving P&G’s commitment to returning cash to share owners in the form of dividends.

For those with significant P&G holdings, like many current and former employees, this represents an increase in the annual income you will receive on your shares, whether they are owned in your PST, Savings Plan, RSUs or direct purchases. Pay close attention to the shares you own in taxable accounts, as the increased dividend may have income tax implications.

At Vaultis Private Wealth, we specialize in helping Procter & Gamble employees navigate the unique complexities of retiring from P&G. Our team understands the unique aspects of P&G's compensation and benefits structure, allowing us to offer tailored advice that aligns with your specific situation and goals.

Learn More About the Announcement

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

Procter & Gamble (P&G) employees rely on the Savings Plan (401(k)) and Profit Sharing Trust (PST Plan) to build retirement wealth. 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.  

P&G Retirement Plan Rules

The Savings Plan permits investment across its full menu at any time, providing flexibility to diversify beyond P&G stock. The PST Plan defaults to P&G common stock until age 50, when you can begin diversifying while maintaining a 40% minimum allocation. Below is a summary of 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.

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.

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 Your LTIP Options at Procter & Gamble

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.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.

A Look at the Differences

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. This means RSUs always retain some value as long as the stock is worth something, and they require no action on your part to receive them. The key distinction is that options offer more upside potential but higher risk, while RSUs provide more certainty and lower risk.

Your LTIP Choices

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.

Comparing Stock Options and RSUs

Stock Options

Pros:

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

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

Cons:

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

• Requires active management and decision-making

• Higher risk compared to RSUs

Restricted Stock Units (RSUs)

Pros:

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

• Simple—no action needed for delivery at vesting

• Earn dividend equivalents during vesting

• Lower risk than stock options

Cons:

• Less upside potential than stock options if the stock price rises significantly

• Fixed delivery and tax event at vesting (typically year 3)

Understanding Tax Implications of Your LTIP Awards

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.

1. Restricted Stock Units (RSUs): RSUs are taxed as ordinary income at the time they vest—typically after three years. The value of the shares delivered to you at vesting is considered income, and P&G will automatically sell a portion of your shares to cover the required tax withholding. This means you’ll receive the net shares or cash after taxes have been deducted.

2. Stock Options: Stock options are taxed as ordinary income at the time you exercise them, not at grant. When you exercise your options (anytime between years 3 and 10 after the grant), the difference between the grant price and the market price at exercise is treated as income. Like RSUs, P&G will sell a portion of your shares at exercise to cover tax withholding, and you can elect to receive the remainder in shares or cash.

Choosing the right Mix

The optimal blend of Stock Options and RSUs depends on your financial situation, risk tolerance, and long-term goals. Consider the following:

• Risk vs. Value: Stock Options offer greater upside but come with more risk; RSUs provide stability with less potential reward.

• Time Horizon: Options are best for long-term growth (up to 10 years); RSUs deliver value in 3 years, which may suit shorter-term needs.

• Stock Outlook: While past performance is not a predictor, your view of P&G’s future can inform your decision.

• Cash Flow Needs: RSUs provide predictable income at vesting; options can be exercised later to meet future goals such as retirement or major expenses.

It’s also important to monitor overlapping grant cycles, as you may have RSUs vesting and options expiring in different years. Consider how each award fits into your broader financial plan—whether you’re planning for a home purchase, education, or retirement.

LTIP decisions are complex and can have a significant impact on your long-term financial success. Vaultis Private Wealth specializes in serving P&G employees, helping you analyze your options, assess risks, and build a strategy tailored to your unique needs. Contact us to schedule a personalized consultation.

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

The Frank Duke PST Distribution Strategy offers Procter & Gamble (P&G) employees a powerful way to optimize their retirement assets. Named after Frank Duke, a former P&G employee, this two-step approach leverages the Profit Sharing Trust (PST) and IRS tax provisions to potentially boost after-tax value. By pairing Net Unrealized Appreciation (NUA) with a 60-day rollback, it’s tailored for retirees seeking tax efficiency and flexibility from their PST holdings.

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: vaultis.com/procterandgamble/nua

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 to 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.

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 powerful tool for P&G employees seeking to maximize their retirement assets. However, its complexity demands careful planning and expert execution. At Vaultis Private Wealth, we specialize in helping P&G professionals navigate these decisions, ensuring you make the most of your hard-earned benefits.

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 may 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

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 Savings Plan, where you have more flexibility to diversify your investments at any time.

The Risks of Concentration

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 you near retirement, managing a concentrated stock position becomes even more critical:

• 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.

Strategies for Risk Management

To balance your loyalty to P&G with prudent financial planning, consider these strategies:

• 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.

• Option Strategies: In certain cases, sophisticated option strategies can help hedge concentrated risk (requires specialized expertise).

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 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.

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

Managing a concentrated stock position within the framework of P&G’s benefits requires specialized knowledge and a personalized approach. At Vaultis Private Wealth, we specialize in guiding P&G employees through these complexities, balancing the rewards of company loyalty with the need for prudent risk management.

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.