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

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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.

Professional financial planning for a P&G retiree using charitable giving and stock strategies to reduce taxes during retirement.

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.