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

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Procter & Gamble (P&G) recently announced a pivotal update to its Profit Sharing Trust (PST) Plan, signaling the end of an era. After decades of allocating preferred shares to employee retirement accounts, P&G has depleted its reserves of these shares. This shift alters future PST contributions and carries distinct implications for employees based on their tenure.

What’s Changing?

Going forward, PST contributions will consist solely of P&G common shares, replacing the prior mix of common and preferred shares. This change stems from the exhaustion of P&G’s preferred stock pool, finalized in 2024.

Impact on Tenured Employees

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

  • Net Unrealized Appreciation (NUA) Strategy: The NUA opportunity—allowing tax savings via long-term capital gains rates on company stock appreciation—remains intact. However, with preferred shares (fixed $6.82 basis) no longer added, the tax advantage may lessen slightly as common shares (with market-based cost basis) dominate.  

  • Retirement Planning: The shift to common shares will gradually reshape PST account composition, prompting a review of retirement strategies and diversification options.

Impact on Newer Employees

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

  • Reduced NUA Appeal: With minimal or no preferred shares in their PST accounts, newer employees will see less NUA benefit, diminishing its role in tax planning.  

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

P&G’s move away from preferred shares reflects an evolving retirement benefit landscape. Staying informed and proactive is key to aligning your financial plan with these changes.  

At Vaultis Private Wealth, we specialize in navigating P&G’s unique benefits. Whether you’re a tenured employee maximizing NUA or a newer hire exploring fresh approaches, our advisors offer tailored guidance. Contact us for a personalized consultation to adapt your retirement strategy to this update and your financial goals.

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.