2024 Tax Changes and Inflation

People must be made aware of any recent adjustments made by the IRS. The following will be the primary elements affecting employees:

The standard deduction for 2024 will rise to $21,900 for heads of household, $29,200 for joint filers, and $14,600 for single taxpayers and married filers filing separately.


Individuals who are blind or over 65 can increase their standard deduction by an extra $1,550. If you are not a surviving spouse or are not married, that amount increases to $1,950.

Contributions to retirement accounts: You can lower your tax liability by making contributions to your employer's 401(k) plan, and the maximum amount you can save has been raised for 2024. In 2024, the maximum contribution amount that people can make to their 401(k) plans will rise to $23,000, from $22,500 in 2023. For workers who are 50 years of age or older, the maximum catch-up contribution will rise to $7,500.

You should be aware of the following significant changes to the Earned Income Tax Credit (EITC) if you are a taxpayer who works for a corporation:

For qualifying taxpayers with three or more qualifying children, the maximum Earned Income Tax Credit amount for tax year 2024 is $7,830, up from $7,430 for tax year 2023.
Those who are married and file separately may be eligible: If you fulfill certain requirements, you may be eligible to claim the EITC as a married filing separately. This was not accessible the year before.


Cash charitable contribution deduction: The special deduction that let individuals who are not itemizers to claim a deduction of up to $300 (or $600 for married couples filing jointly) for cash gifts to approved charities has ended.

Changes to the Child Tax Credit

For children aged five and under, the maximum tax credit is $2,000; for children aged six to seventeen, it is $3,000 per qualified child. Furthermore, unlike in 2023, you are not eligible to get a portion of the credit in advance.
If your adjusted gross income is less than $200,000 if you're filing singly or less than $400,000 if you're filing a joint return with a spouse, you qualify for the Child Tax Credit as a parent or guardian.
A partial refundability of 70% that applies to people whose tax liability is less than the credit amount.

2024 Tax Brackets

 

Over time, inflation diminishes buying power because rising prices result in a basket of products becoming more expensive. You will need to account for increasing costs in your plan if you want to keep your retirement quality of living the same when you leave your business. Although the Federal Reserve targets an annual inflation rate of 2%, in 2023 that rate skyrocketed to 4.9%, a sharp rise from 1.4% in 2020. Even though costs have increased significantly overall, there are certain areas, like healthcare, to be mindful of if you are close to or already retired from your employer.All of these elements must be taken into account when creating a comprehensive retirement plan from your employer.

*Source: Forbes, Bankrate, Yahoo, IRS.gov

Planning Your General Mills Retirement

Planning for retirement is a verb. And whether you are twenty or sixty, you have to take consistent action. The majority of Americans actually do not know how much money they should save or how much income they will require.

No matter where you stand in the planning process, or your current age, we hope this guide gives you a good overview of the steps to take, and provides some resources that can help you simplify your transition into retirement and get the most from your benefits.

You know you need to be saving and investing, but you don’t have the time or expertise to know if you’re building retirement savings that can last.

"A separate study by Russell Investments, a large money management firm, came to a similar conclusion . Russell estimates a good financial advisor can increase investor returns by 3.75 percent."

Source: Is it Worth the Money to Hire a Financial Advisor?, the balance, 202

Starting to save as early as possible matters. Time on your side means compounding can have significant impacts on your future savings. And, once you’ve started, continuing to increase and maximize your 401(k) contributions is key, and can lead to huge windfalls later on in your life.

As decades go by, you’re likely full swing into your career, and your income probably reflects that. However, the challenges to saving for retirement start adding up: a mortgage, raising children and saving for their college.

One of the classic planning conflicts is saving for retirement, versus saving for college. Most financial planners will tell you that retirement should be your top priority, because your child can usually find support from financial aid while you’ll be on your own to fund your retirement.

Your particular financial situation and goals will always determine how much we advise you to invest for your retirement. Nonetheless, during your 30s and 40s, think about setting aside at least 10% of your income for retirement funds.

Your prime earning years should be upon you as you approach your 50s and 60s, and some of your biggest expenses—like a mortgage or raising children—should be in the past or soon to be in the rearview mirror. This can be a good time to consider whether you have the ability to boost your retirement savings goal to 20% or more of your income. For many people, this could potentially be the last opportunity to stash away funds.

In 2024, workers age 50 or older can invest up to $23,000 into their retirement plan/401(k), and once they meet this limit, they can add an additional $7,500 in catch-up contributions for a combined annual total of $30,500. These limits are adjusted annually for inflation.

 

Why are 401(k)s and matching contributions so popular?

Research published in 2022 by Principal Financial Group identified that 62% of workers deemed company 401(k) matches significantly important to reaching their retirement goals.

According to Bank of America's "2022 Financial Life Benefit Impact Report", despite 58% of eligible employees participating in a 401(k) plan, 61% of them contributed less than $5,000 during the current year.

The study also found that fewer than one in 10 participants’ contributions reached the ceiling on elective deferrals, under IRS Section 402(g) — which is $23,000 for 2024.

A 2020 study from Financial Engines titled “Missing Out: How Much Employer 401(k) Matching Contributions Do Employees Leave on the Table?”, revealed that employees who don’t maximize their company match typically leaves $1,336 of extra retirement money on the table each year.

For example, if your company will match up to 3% of your plan contributions and you only contribute 2% of your salary, you aren’t getting the full amount of the company match.  By simply increasing your contribution by just 1%, your company is now matching the full 3% of your contributions for a total combined contribution of 6%. By doing so, you aren’t leaving money on the table.

Recent Layoff Announcements & Other General Mills News

Restructuring and Layoffs: General Mills is implementing a restructuring plan that includes laying off approximately 700 employees globally. This move aims to reduce costs and improve operational efficiency (Source: General Mills). Financial Performance: The company reported a strong financial performance in Q3 2023, with net sales increasing by 8% year-over-year (Source: General Mills). Strategic Adjustments: The restructuring is part of General Mills’ broader strategy to focus on its core businesses and enhance profitability (Source: General Mills).

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General Mills Pension

Eligibility Service

*Eligibility Service is generally your total service as an employee of the Company (or one of its subsidiaries or affiliated businesses while part of the Company) beginning with your first day of employment and ending with your termination date, your retirement date, or your date of death, whichever occurs first. A 12-month period of service is one year of Eligibility Service. Periods of less than 12 months are prorated. Eligibility Service requirements for pensions are as follows:

•  *Normal or Late Retirement Pension- If you are age 65 or older and an active participant, you are eligible for a normal or late retirement. There is no Eligibility Service requirement.
• *Early Retirement Pension- If you are age 55 and have 10 or more years of Eligibility Service at the time your employment terminates, you qualify for an Early Retirement Pension. If you are under age 55 and your employment is terminated due to a plant shutdown, you must have 25 or more years of Eligibility Service to qualify for an Early Retirement Pension.
• *Disability Retirement Pension - To qualify for a Disability Retirement Pension, you must have 9½ or more years of Eligibility Service on the date you stopped working because of disability and 10 or more years of Eligibility Service as of your disability retirement effective date.
• *Vested Pension- You must have 5 or more years of Eligibility Service at the time your employment terminates to qualify for a Vested Pension.

 

Benefit Service

The amount of your pension benefit is based on your years of Benefit Service as an active participant in the Retirement Plan. Benefit Service is determined as follows:

Normal and Late Retirement Pension

Your Normal Retirement Date is the first day of the month coinciding with or following your attainment of age 65. If you retire after your Normal Retirement Date, the first day of the month following your termination of employment will be your Late Retirement Date and will also be the first day you are eligible to receive your pension. Normal and late retirement pensions are calculated in the same manner. The amount of your pension is based on your years of Benefit Service and the negotiated benefit level on your termination of employment date.

 

Example: Normal Retirement

John was born on January 10, 1959. His last day of work is January 31, 2024. His Normal Retirement Date is February 1, 2024, (first of the month following 65th birthday). He has 28 years of Benefit Service as of February 1, 2024. His monthly-accrued benefit at age 65 in the Life Only form of payment is $2,380.

 

(Benefit Level: $85) x (Years of Benefit Service: 28)

=

Monthly Lifetime Pension: $,2,380

 

Early Retirement Pension

You are eligible for early retirement benefits if you have at least 10 years of Eligibility Service and terminate employment after age 55 and before age 65. If you retire between these ages, you may elect to start receiving your pension benefits effective the first of the month following your termination of employment, or the first day of any month you specify, but no later than age 65. Your Early Retirement Pension will be calculated in the same manner as a Normal Retirement Pension. However, your pension will be reduced if your Early Retirement Pension payments begin before you reach age 62. The table above shows the percentage of your Normal Retirement Pension you will receive at each age.

 

If you retire with 30 or more years of service and commence benefits on or after age 60, your pension will be reduced, and you will receive the following percentage of your Normal Retirement Pension:

Even though you haven't reached the minimum Early Retirement Pension requirements of being 55 years old and having 10 years of eligibility service, you are still eligible for an Early Retirement Pension if your employment is terminated due to a "plant shutdown" and you have completed 25 or more years of eligibility service. If you were 55 years old when you separated, your Early Retirement Pension under the life-only form of payment will be computed similarly to a conventional Early Retirement Pension. Unless the kind of payment option you have selected allows for payment after your death, the first payment will be given to you on the first of the month that follows the date of your separation and will continue until the first day of the month that you pass away. If you begin receiving benefits before the age of 55, however, please refer to the Forms of Payment section for information on how the Level Income Option is determined.

 

Example: Early Retirement

Carol retires on March 1, 2024, at age 60 with 20 years of Benefit Service. Her monthly accrued benefit payable at age 65 in the Life Only form of payment equals $1,700.

 

(Benefit Level: $85) x (Years of Benefit Service: X 20)

=

Total Benefit: $1,700

 

If she starts her pension benefits at age 60, she will receive 94% of her monthly accrued benefit payable at age 65.

 

(Age 65 Benefit: $1,700) x (Early Retirement Reduction Factor: X .94)

=

Monthly Life Only Pension: $1,598

 

Vested Pension

If you have completed at least five years of Eligibility Service and leave the company before reaching age 55, you will be vested in your accrued pension benefit from the Plan. If the total single sum value of your pension benefit under the Plan is $5,000 or less at the time you leave the Company, you will automatically receive a lump sum in lieu of monthly payments. See Single Sum Payments for more information. If the total single sum value of your pension benefit is greater than $5,000, you will be entitled to a monthly Vested Pension benefit which can begin on or after you reach age 55 and must begin no later than age 65. Your Vested Pension benefit will be equal to the amount of your accrued benefit earned as of the date your employment ends (or the date you become ineligible to accrue additional benefits under the Plan, if earlier). If you choose to begin to receive benefits prior to age 65, your monthly benefits will be reduced to reflect the longer payment period. The table to the left shows the percentage of your Normal Retirement Pension that you would receive at each age.

 

Example: Vested Pension

Michael leaves the Company on February 3, 2024, at age 35 with 8 years of Benefit Service with the Company. His monthly-accrued benefit payable at age 65 is $680 ($85 benefit level times 8 years of Benefit Service). If he elects to have his pension benefits begin at age 55, his monthly Life Only benefit payable from the plan will be equal to 60% of $680, or $408.

 

 

General Mills Stock Options and Restricted Stock Units (RSUs)

General Mills provides various equity compensation plans to its employees, including stock options and restricted stock units (RSUs). These plans are designed to align the interests of employees with those of shareholders, incentivizing long-term performance and retention.

 

Stock Options

Stock options give employees the right to purchase a certain number of shares of General Mills stock at a predetermined price, known as the exercise or strike price, after a specified vesting period.

1. Granting of Options: Stock options are granted to employees based on their role, performance, and tenure with the company. The strike price is typically set at the market price of the stock on the grant date.

2. Vesting Schedule: Options usually vest over a period of several years. For instance, an employee might be granted options that vest at 25% per year over four years.

3. Exercising Options: Once vested, employees can exercise their options, meaning they can buy the stock at the strike price. The difference between the market price at the time of exercise and the strike price represents the employee's gain.

4. Expiration: Stock options have an expiration date, often ten years from the grant date, by which they must be exercised or they will expire worthless.

Example Calculation

Consider an employee granted 1,000 stock options with a strike price of $50. If the current market price of General Mills stock is $70, the employee can exercise the options and purchase the shares for $50 each, then sell them at $70, resulting in a gain of $20 per share.

· Grant: 1,000 options at $50 strike price.

· Market Price at Exercise: $70.

· Gain per Share: $70 - $50 = $20.

· Total Gain: 1,000 shares x $20 = $20,000.

 

Restricted Stock Units (RSUs)

RSUs are company shares given to employees as part of their compensation. Unlike stock options, RSUs do not require the employee to purchase the stock at a strike price.

1. Granting of RSUs: Employees are granted a certain number of RSUs, which will convert to company shares upon vesting.

2. Vesting Schedule: RSUs typically vest over several years. For example, an employee might receive 400 RSUs that vest at 100 shares per year over four years.

3. Receiving Shares: Upon vesting, the employee receives the company shares, which can then be held or sold. The value of the shares at vesting is considered taxable income.

4. Tax Considerations: The market value of the shares at the time of vesting is subject to income tax, and any subsequent gain or loss upon selling the shares is subject to capital gains tax.

 

Example Calculation

Consider an employee granted 400 RSUs, vesting over four years (100 RSUs per year). If the market price at each vesting date is $60, the employee receives shares worth $60 each year.

· Year 1 Vesting: 100 shares x $60 = $6,000.

· Year 2 Vesting: 100 shares x $60 = $6,000.

· Year 3 Vesting: 100 shares x $60 = $6,000.

· Year 4 Vesting: 100 shares x $60 = $6,000.

· Total Value at Vesting: $24,000.

 

General Mills 409A Deferred and Executive Compensation Supplemental Savings Plan

General Mills offers a 409A deferred compensation plan and executive compensation supplemental savings plan to provide additional retirement savings opportunities and benefits for its executives and key employees. These plans are designed to supplement the standard retirement benefits and align with IRS regulations under section 409A.

 

Key Features of the 409A Deferred Compensation Plan

1. Eligibility: The 409A deferred compensation plan is generally available to senior executives and highly compensated employees. Eligibility is determined based on position, salary level, and other criteria established by General Mills.

2. Deferral of Compensation: Participants can elect to defer a portion of their salary, bonuses, and other forms of compensation into the plan. These deferrals are not subject to income tax until they are distributed.

3. Investment Options: Deferred amounts are credited to accounts that mirror the performance of selected investment options. While the investments are notional and do not represent actual ownership, they provide a way to grow the deferred compensation based on market performance.

4. Vesting: The plan may include a vesting schedule for company contributions, if applicable. Typically, employee deferrals are fully vested immediately, while company contributions vest over a period of years.

5. Distribution: Participants elect the timing and form of distribution at the time of deferral. Options typically include lump-sum payments or installment distributions beginning at retirement, a specified future date, or upon separation from service.

6. Compliance with 409A: The plan adheres to IRS regulations under section 409A, which set strict requirements for election timing, distribution events, and penalties for non-compliance.

 

Executive Compensation Supplemental Savings Plan

1. Purpose: This plan is designed to provide additional retirement benefits to executives beyond the limits imposed by qualified retirement plans. It supplements the standard 401(k) and pension plans.

2. Eligibility: Similar to the 409A plan, this supplemental savings plan is available to senior executives and other key employees.

3. Contributions: General Mills may contribute additional amounts to the plan on behalf of eligible executives. These contributions are often tied to company performance and executive performance metrics.

4. Vesting and Forfeiture: Contributions typically vest over several years. Vesting schedules encourage long-term retention of key executives.

5. Distribution and Taxation: Distributions from the supplemental savings plan are subject to income tax when received. The timing and form of distribution are generally flexible, allowing for lump-sum payments or installments.

 

Example of Deferred Compensation Calculation

Assume an executive, John, elects to defer $50,000 of his annual bonus into the 409A plan. Over ten years, with an average annual return of 5%, the deferred amount grows as follows:

1. Initial Deferral: $50,000.

2. Annual Growth: 5% per year.

3. Future Value Calculation: Using the formula for compound interest: FV=PV×(1+r)nFV = PV \times (1 + r)^nFV=PV×(1+r)n.

· Year 1: $50,000 \times 1.05 = $52,500.

· Year 10: $50,000 \times (1.05)^{10} = $81,445.

John’s deferred compensation would grow to approximately $81,445 over ten years.

Forms of Payment

The forms of payment available under the Plan are described below. To elect a form of payment other than the “normal form” (as described below), you must make an election in writing before the first day of the month in which your benefits will begin. Elections can be made no more than 90 days prior to the date your pension benefit is to begin. If you do not elect a form of pension prior to the date that pension benefits must begin, your benefits will be paid in the "normal form". If you are married and want to (1) elect a form of payment that would not provide your spouse with a surviving spouse benefit at least as great as the 50% Joint and Survivor Annuity, or (2) name someone other than your spouse as a joint annuitant, your spouse must waive his or her right to the "normal form" of pension payment. The waiver must be in writing, must be specific as to the form of payment being elected and as to the designation of anyone other than the spouse as a joint annuitant, if applicable, and the spouse’s signature must be notarized. You may only choose one joint annuitant, and that joint annuitant cannot be your estate. If the monthly pension amount payable to a joint annuitant would be less than $10, a joint annuitant cannot be named.

Life Only Annuity

This payment option will provide you with a monthly pension payable for your lifetime. Upon your death, no further pension payments will be made. This is the "normal form" of payment for participants who are single at the time pension benefits begin.

50% Joint and Survivor Annuity

This payment option will provide you with a reduced monthly lifetime pension. Upon your death, your designated joint annuitant will receive 50% of your monthly pension if he or she survives you. Should your joint annuitant die after your benefits start, you will continue to receive the reduced benefit amount and upon your death all benefits will stop. This is the “normal form" of payment for a participant who is married at the time benefits begin, with his or her spouse named as the joint annuitant. If you and your joint annuitant are the same age and pension commences the first of the month following your 65th birthday, the amount of the pension that would be payable to you under this option is 87% of the Life Only amount. If your joint annuitant is older than you, the 87% amount will be increased by .8% for each year the joint annuitant is older. If your joint annuitant is younger than you, the 87% amount will be decreased by .8% for each year the joint annuitant is younger.

Example: Sharon starts pension payments at age 55. Her joint annuitant is 57 (2 years older than Sharon). Her monthly pension under the Life Only option beginning at age 55 is $842. If she elects a 50% Joint and Survivor Annuity, her monthly benefit decreases to $746.01, calculated as shown: $842 x [.87 + (.008 x 2 years)] = $746.01

75% Joint and Survivor Annuity

This payment option will provide you with a reduced monthly lifetime pension. Upon your death, your designated joint annuitant will receive 75% of your monthly pension if he or she survives you. Should your joint annuitant die after your benefits start, you will continue to receive the reduced benefit amount and upon your death all benefits will stop. If you and your joint annuitant are the same age and pension commences the first of the month following your 65th birthday, the amount of the pension that would be payable to you under this option is 83% of the Life Only amount. If your joint annuitant is older than you, the 83% amount will be increased by .8% for each year the joint annuitant is older. If your joint annuitant is younger than you, the 83% amount will be decreased by .8% for each year the joint annuitant is younger.

Example: Susan starts pension payments at age 55. Her joint annuitant is 57 (2 years older than Susan). Her monthly pension under the Life Only option beginning at age 55 is $1,114. If she elects a 75% Joint and Survivor Annuity, her monthly benefit decreases to $942.44, calculated as shown:

$1,114 x [.83 + (.008 x 2 years)] = $942.44

                                           

100% Joint and Survivor Annuity

This payment option will provide you with a reduced monthly lifetime pension. Upon your death, your designated joint annuitant will receive 100% of your monthly pension if he or she survives you. Should your joint annuitant die after your benefits start, you will continue to receive the reduced benefit amount and upon your death all benefits will stop. If you and your joint annuitant are the same age and pension commences the first of the month following your 65th birthday, the amount of the pension that would be payable to you under this option is 79% of the Life Only option. If your joint annuitant is older than you, the 79% amount will be increased by .8% for each year the joint annuitant is older. If your joint annuitant is younger than you, the 79% amount will be decreased by .8% for each year the joint annuitant is younger.

Example: Steve starts his pension payments at age 61. His joint annuitant is 58 (3 years younger than Steve). His monthly pension under the Life Only option beginning at age 61 is $1,385. If he elects a 100% Joint and Survivor Annuity, his monthly benefit decreases to $1,060.91, calculated as shown:

$1,385 x [.79 – (.008 x 3 years)] = $1,060.91

Level Income

This payment option will provide an increased pension amount payable until the date you specify on your Application for Pension as the date you plan to begin receiving Social Security benefits. After such date, you will then receive a reduced pension amount for your lifetime, with no further payments made after your death. If you do not specify the date you plan to begin receiving Social Security benefits on your Application for Pension, the Plan assumes you will begin receiving Social Security benefits at age 62. The Level Income option cannot be selected if:

• *The reduced monthly pension after Social Security benefits begin would be under $10, or
•  
• *You are applying for a Disability Retirement Pension.
•  

This option is available only to those retiring on an Early Retirement Pension. Your Early Retirement Pension is computed by adding a percentage of your projected Social Security benefit to your pension amount payable under the Life Only option. The percentage of the projected Social Security benefit added to your Life Only amount is based on the number of years between the date pension benefits begin and the date you indicated on your Application for Pension that you will begin receiving Social Security benefits. Your projected Social Security benefit will be calculated based on your actual General Mills earnings history and estimated earnings for years prior to your employment with General Mills. The resulting amount is payable until the date you have indicated you will begin to receive your Social Security benefits on your Application for Pension. At that time, your pension will be reduced by 100% of your projected Social Security benefit. The table above shows the percentage of projected Social Security benefits added to your Life Only amount.

 

 

Example: Level Income option

Chris retires at age 57 with a pension of $1,240 per month (based on the Life Only option) and a projected age 62 Social Security benefit of $800 per month. Chris will receive a monthly pension payment of $1,740 until he reaches age 62. After he attains age 62, his monthly pension payment will be $940 until his death. The calculation is as follows:

 

Single Lump Sum Payments

Your pension benefit will automatically be paid as a lump sum, in lieu of monthly payments, if the total single sum present value of your pension benefit under the Plan is $5,000 or less (or the amount set by federal law, if higher) at the time you retire or terminate. The single sum payment is calculated as of the date of the distribution. The assumptions used to calculate the single sum payment are based on the mortality and interest rate assumptions required by federal regulations in effect on October 1 of the preceding Plan Year (the "Plan Year" is January 1 through December 31). If you receive a lump sum distribution that is greater than $1,000 and equal to or less than $5,000 prior to reaching Normal Retirement Age, and you do not make an election regarding your lump sum distribution, it will be automatically rolled over to an individual retirement account. You will have the opportunity to have the payment in a lump sum sent directly to you or to have the payment rolled over to another qualified retirement plan or to an individual retirement account of your choice.

Lump-Sum vs. Annuity

Retirees who are eligible for a pension are often offered the choice of receiving their pension payments for life, or receive a lump-sum amount all-at-once.  The lump sum is the equivalent present value of the monthly pension income stream – with the idea that you could then take the money (rolling it over to an IRA), invest it, and generate your own cash flow by taking systematic withdrawals throughout your retirement years.

The upside of electing the monthly pension is that the payments are guaranteed to continue for life (at least to the extent that the pension plan itself remains in place and solvent and doesn’t default). Thus, whether you live 10, 20, 30, or more years after retiring  from your company, you don’t have to worry about the risk of outliving the monthly pension.

The major downside of the monthly pension are the early and untimely passing of the retiree and joint annuitant.  This often translates into a reduction in the benefit or the pension ending altogether upon the passing. The other downside, it that, unlike Social Security, company pensions rarely contain a COLA (Cost of Living Allowance).  As a result, with the dollar amount of monthly pension remaining the same throughout retirement, it will lose purchasing power when the rate of inflation increases. 

In contrast, selecting the lump-sum gives you the potential to invest, earn more growth, and potentially generate even greater retirement cash flow. Additionally, if something happens to you, any unused account balance will be available to a surviving spouse or heirs. However, if you fail to invest the funds for sufficient growth, there’s a danger that the money could run out altogether and you may regret not having held onto the pension’s “income for life” guarantee. 

Ultimately, the “risk” assessment that should be done to determine whether or not you should take the lump sum or the guaranteed lifetime payments that your company pension offers, depends on what kind of return must be generated on that lump-sum to replicate the payments of the annuity. After all, if it would only take a return of 1% to 2% on that lump-sum to create the same monthly pension cash flow stream, there is less risk that you will outlive the lump-sum. However, if the pension payments can only be replaced with a higher and much riskier rate of return, there is, in turn, a greater risk those returns won’t manifest and you could run out of money.

 

Your General Mills 401(k) Plan

In addition to the Employee Stock Ownership Plan (ESOP), the General Mills 401(k) Plan qualifies as a retirement plan. With the help of the Plan, you can make tax-favored retirement contributions by combining your personal payroll deduction contributions with matching funds contributed by General Mills. The Plan gives you the responsibility to invest the contributions in a broad array of investment choices.

"Retirement" can mean different things to different people these days. You are ultimately in charge of getting ready for retirement. In order to assist you in reaching your retirement planning objectives, the Plan is crucial. It has been demonstrated that having tax-favored savings is a highly effective way to save money for your golden years and achieve your financial objectives.

ELIGIBILITY AND ENROLLMENT

You are eligible for the retirement program if:

• You are a non-union non-production employee, and

• You were initially hired or last rehired on and before May 31, 2013, as a regular or casual employee, and

• You work at a location that has adopted the Plan,  OR

• You are a non-union production employee initially hired or last rehired before January 1, 2018, and

• You are classified by General Mills as a regular or casual employee, and
• You work at a location that has adopted the Plan

These individuals become eligible to participate on the date they become permanent U.S. regular or casual employees (formerly known as full-time, part-time, short-hour or regular non-scheduled). 

You were eligible for the Plan on your first day of employment or your first day of eligibility, if later.

Automatic Enrollment and Annual Increase Option

You might have been enrolled automatically in the Plan when you were eligible. Your contribution rate will automatically increase by 1% annually until it reaches 10% if you did not take any further action, were automatically enrolled, and have been a member of the Plan for at least 12 months.

If you take affirmative action (e.g., change your contribution rate) contributions will escalate on the next regular escalation date. You will be notified in advance of each increase, and you will have an opportunity to decline or make changes.

 

Note: If you voluntarily terminate your employment, you may not be eligible to receive the annual contribution.

Your Contributions

Earnable Compensation

Base pay, overtime, commissions, incentives/bonuses, vacation and holiday pay, jury duty, bereavement, paid time off for illnesses and emergencies, and other cash compensation for services as specified in the Plan are all examples of earned compensation. You are not eligible to make contributions to the Plan while on a leave of absence unless you are paid while away.

Maximum Contribution Rates

Most employees may choose to contribute to the Plan up to 50% of their total earnable compensation (pre-tax and Roth 401(k) combined). The maximum combined rate for pre-tax, Roth 401(k), and catch-up contributions for those employees who qualify for them cannot be more than 80%. Contributions for catch-up cannot exceed 50% on their own.
Highly Compensated Employees (HCEs) are eligible to make pre-tax and Roth 401(k) contributions up to 15% of their total earnable compensation. For HCEs eligible to make catch-contributions, the maximum combined rate for pre-tax and Roth 401(k) contributions cannot exceed 65%. Catch-up contributions alone cannot be greater than 50%.

Annual Dollar Limits

The total amount of pre-tax and Roth 401(k) contributions that an individual may make each year is capped at a certain level. Every calendar year, this restriction is subject to modification. The current year's limit can be found by calling the Benefits Service Center or by visiting My Benefits. When you hit the annual contribution cap, you will no longer be able to make contributions. The notification that your contributions have ceased will arrive in the form of your paycheck. Your contributions will automatically resume to your contribution rate election on file at the beginning of each new calendar year.

You should be aware that the annual dollar limit is an aggregate limit that covers all potential deferrals under this Plan as well as any other cash or deferred arrangements you may be making (such as simplified employee pensions, tax-sheltered 403(b) annuity contracts, or other 401(k) plans, including Roth 401(k) plans, in which you may be involved). Generally speaking, if the total amount of deferrals you make during a calendar year under all cash or deferred arrangements exceeds the yearly dollar cap, the excess has to be included in your income for that year. It is therefore preferable to ask for a written request to have these extra deferrals reimbursed to you. If you don't ask for this kind of return, you can end up paying taxes twice when the excess deferral is eventually paid out of the Plan. You need to choose the plan or arrangement that you want the surplus returned. You have until April 1st, after the end of the calendar year in which the excess deferrals were made, to notify the Benefits Service Center in writing if you determine that the excess should be dispersed from this Plan. You will receive a refund of any earnings and the excess deferral by April 15th.

Pre-Tax Contributions

Pre-tax contributions lower your current taxable income because they are withheld from your paycheck prior to taxes. Your federal and the majority of state taxes will therefore be computed using fewer dollars. If you don't roll over your pre-tax 401(k) contributions to an Individual Retirement Account (IRA) or another tax-deferred qualifying plan, they become taxable when they are delivered to you. The income from these contributions will be taxed when it is distributed rather than while it is retained in the plan.

After-Tax Contributions

Contributions after-tax were accepted through December 31, 2015. There might be an after-tax balance for some participants who were hired before that date. The earnings on after-tax contributions do not grow tax-free and are taxable at distribution, which is one way that after-tax contributions differ from Roth contributions. This document contains provisions relating to after-tax contributions labeled "after-tax" and provisions relating to Roth contributions labeled "Roth."

Company Match

For every dollar you contribute up to 6% of your earnable compensation, the Company will match 50 cents. The Company does not match any contributions over 6%.

Company Match vests over five years:

 

Over half of plan participants admit they don’t have the time, interest or knowledge needed to manage their 401(k) portfolio. But the benefits of getting help goes beyond convenience. Studies like this one, from Charles Schwab, show those plan participants who get help with their investments tend to have portfolios that perform better: The annual performance gap between those who get help and those who do not is 3.32% net of fees. This means a 45-year-old participant could see a 79% boost in wealth by age 65 simply by contacting an advisor. That’s a pretty big difference.

Getting help can be the key to better results across the 401(k) board.

A Charles Schwab study found several positive outcomes common to those using independent professional advice. They include:

• Improved savings rates – 70% of participants who used 401(k) advice increased their contributions.

• Increased diversification – Participants who managed their own portfolios invested in an average of just under four asset classes, while participants in advice-based portfolios invested in a minimum of eight asset classes.
• Increased likelihood of staying the course – Getting advice increased the chances of participants staying true to their investment objectives, making them less reactive during volatile market conditions and more likely to remain in their original 401(k) investments during a downturn. Don’t try to do it alone. Get help with your company's 401(k) plan investments. Your nest egg will thank you.

In-Service Withdrawals

Generally speaking, you can withdraw amounts from your account while still employed under the circumstances described below.

It’s important to know that certain withdrawals are subject to regular federal income tax and, if you’re under age 59½, you may also be subject to an additional 10% penalty tax. You can determine if you’re eligible for a withdrawal, and request one, online or by calling the General Mills Benefits Center.

Rolling Over Your 401(k)

As long as the plan participant is younger than age 72, an in-service distribution can be rolled over to an IRA. A direct rollover would avoid the 10% early withdrawal penalty as well as the mandatory 20% tax withholding. Your plan summary outlines more information and possible restrictions on rollovers and withdrawals.

Because a withdrawal permanently reduces your retirement savings and is subject to tax, you should always consider taking a loan from the plan instead of a withdrawal to meet your financial needs. Unlike withdrawals, loans must be repaid, and are not taxable (unless you fail to repay them). In some cases, as with hardship withdrawals, you are not allowed to make a withdrawal unless you have also taken out the maximum available plan loan.

You should also know that the plan administrator reserves the right to modify the rules regarding withdrawals at any time, and may further restrict or limit the availability of withdrawals for administrative or other reasons. All plan participants will be advised of any such restrictions, and they apply equally to all employees.

Borrowing from your 401(k)

Should you? Maybe you lose your job, have a serious health emergency, or face some other reason that you need a lot of cash. Banks make you jump through too many hoops for a personal loan, credit cards charge too much interest, and … suddenly, you start looking at your 401(k) account and doing some quick calculations about pushing your retirement off a few years to make up for taking some money out.

We understand how you feel: It’s your money, and you need it now. But, take a second to see how this could adversely affect your retirement plans.

Consider these facts when deciding if you should borrow from your 401(k). You could:

Lose growth potential on the money you borrowed.
Deal with repayment and tax issues if you leave your employer.
Repayment and tax issues, if you leave your employer.

Net Unrealized Appreciation (NUA)

When you qualify for a distribution, you have three options:

• Roll-over your qualified plan to an IRA and continue deferring
•  taxes.
• Take a distribution and pay ordinary income tax on the full amount.
• Take advantage of NUA and reap the benefits of a more favorable tax structure on gains.

 

How does Net Unrealized Appreciation work?

An employee must first be qualified to receive benefits from a qualifying company-sponsored plan. The employee often accepts a "lump-sum" payout from the plan, disbursing all assets over the course of a year, upon retirement or reaching age 59 1⁄2. You can roll over the mutual fund and other investment portion of the plan into an IRA to further avoid taxes. After that, the highly valued firm stock is moved to an account that isn't for retirement.

When you move business shares from a tax-deferred account to a taxable account, you will receive a tax benefit. You currently apply NUA and are liable for ordinary income tax on the stock's cost base alone. The stock's increased value over its base is taxed at the lower long-term capital gains rate, which is now 15%, rather than the higher regular income tax. This could result in savings of more than 30%.

Would you be interested in speaking with a financial advisor from The Retirement Group one-on-one for a complimentary one-on-one session to learn more about NUA?

IRA Withdrawal

There are three things you can do if you're eligible for a distribution.:


IRAs, 401(k)s, taxable accounts, and other retirement funds could be included in your retirement assets.

After quitting your job, how should you use your retirement income to maximize efficiency?

Instead of first taking money out of tax-deferred funds, you might want to think about using taxable accounts to cover your income needs in retirement.

This could extend the life of your retirement funds with your employer, allowing them to grow tax-deferred.

It is also necessary to schedule the required minimum distributions (RMDs) from traditional or rollover IRA accounts as well as any employer-sponsored retirement plans.

This is because, starting in 2024, the IRS will mandate you to start taking withdrawals from these kinds of accounts when you turn 73. The excise tax is lowered from 50% to 25% starting in 2024 for each dollar of your RMD that is not disbursed as intended.

According to recent legislation, account holders may postpone taking their first RMD until April 1st of the year that they turn 73 or, in the case of a corporate retirement plan, retire.

Your IRA has two options for flexible distribution.

You have a few options when it comes to using your IRA to make money or to collect your required minimum distributions. Whichever option you select, IRA distributions are taxable on your income and, if you're under59½, may also be subject to penalties and other requirements.

Partial withdrawals: You can take out any quantity from your IRA whenever you want. You must withdraw enough money from one or more IRAs to cover your annual required minimum distribution (RMD) if you are 73 years of age or older.

Systematic withdrawal plans: Set up recurring, automated withdrawals from your IRA at a frequency and quantity that will suit your post-retirement financial requirements. If your withdrawal plan does not comply with Code Section 72(t) regulations, you may be liable to an early withdrawal penalty of 10% if you are under 59½.

You can establish a systematic withdrawal strategy, ascertain RMD obligations, compute RMDs, and comprehend distribution choices with the assistance of your tax advisor.

Your General Mills Benefits

General Mills Benefits Annual Enrollment

HSA's

Health Savings Accounts (HSAs) are frequently praised for helping people with high-deductible health plans manage their medical costs. Beyond only controlling medical costs, HSAs offer advantages over more conventional retirement plans such as 401(k)s. This is especially true if employer matching contributions have been fully utilized.

Recognizing HSAs

Individuals with high-deductible health insurance policies can open tax-advantaged accounts called Health Savings Accounts (HSAs). High-deductible plans are those that have a minimum deductible of $1,600 for single people and $3,200 for families as of 2024, according to the IRS. Triple tax benefits are offered by HSAs, which permit pre-tax contributions, tax-free investment growth, and tax-free withdrawals for approved medical costs.

HSA yearly contribution caps for 2024 are $4,150 for singles and $8,300 for families, plus an extra $1,000 for those 55 years of age and above. HSA funds, in contrast to those in Flexible Spending Accounts (FSAs), accrue and are carried over for an unlimited period of time.

Evaluating HSAs and 401(k)s After Matching

Contributions beyond the employer's maximum match in a 401(k) result in less immediate financial rewards. HSAs can serve as a strategic supplement in this situation. 401(k)s provide tax-deductible contributions and tax-deferred growth, but withdrawals are subject to taxes. In contrast, health savings accounts (HSAs) offer tax-free withdrawals for medical costs, which account for a sizeable amount of retirement spending.

HSA as a Tool for Retirement

The HSA shows its strength as a powerful retirement tool after age 65. The money can be taken out for anything, with the exception of ordinary income tax if it is used for non-medical costs. This flexibility is comparable to that of typical retirement plans, plus it comes with the bonus of tax-free withdrawals for medical bills, which is quite helpful considering the rising cost of healthcare in retirement.

Moreover, unlike Traditional IRAs and 401(k)s, HSAs do not have Required Minimum Distributions (RMDs), giving investors greater flexibility when it comes to retirement tax planning. Because of this, HSAs are especially beneficial for people who wish to reduce their taxable income or who may not need to access their savings right away when they retire.

HSA Investment Strategy

First, you should invest in an HSA cautiously, making sure that there are enough liquid assets to pay for short-term deductibles and other out-of-pocket medical costs. But after a safety net is in place, investing in a diverse range of equities and bonds and managing the HSA like a retirement account can greatly increase the account's long-term growth potential.
Utilizing HSAs in Retirement

In retirement, HSAs can cover a range of expenses:

• Healthcare Costs-Pre Medicare: HSA's Can pay for healthcare costs to bridge you to Medicare
• Healthcare Costs-Post Medicare: HSAs can pay for Medicare premiums and out-of-pocket medical costs, including dental and vision, which are often not covered by Medicare.
• Long-term Care: Funds can be used for qualified long-term care services and insurance premiums.
• Non-medical Expenses: After age 65, HSA funds can be used for non-medical expenses without incurring penalties, although these withdrawals are subject to income tax.

 

Conclusion

In summary, HSAs offer unique advantages that can make them a superior option for retirement savings, particularly after the benefits of 401(k) matching are maximized. Their flexibility in fund usage, coupled with tax advantages, makes HSAs an essential component of a comprehensive retirement strategy. By strategically managing contributions and withdrawals, individuals can maximize their financial health in retirement, keeping both their medical and financial well-being secure.

Temporary and Permanent Disability

Short-Term: You can be eligible for short-term disability (STD) benefits, depending on your plan.

Long-Term: If you miss work for six months or more as a result of an eligible illness or injury, your plan's long-term disability (LTD) benefits are intended to pay you a salary.

What Takes Place Should Your Job Terminate

Unless your job ends due to disability, your life insurance coverage and any optional coverage you purchase for your spouse, domestic partner, and/or children expire on the date of your employment. Benefits for both your basic life insurance and any supplementary life insurance you choose are paid to your beneficiary if you pass away within 31 days of the termination date.

Take note:

You might be able to choose portability for any optional coverage or convert your life insurance into an individual policy.

Should you cease making additional donations, your coverage will terminate.

You should receive information outlining your options in the mail from the insurance company if you pay for supplemental life insurance and you are at least 65.

Don't forget to update your recipients. For further information, view the General Mills SPD.

Appropriate Designations

It is crucial to choose a beneficiary for the proceeds of your benefit programs in the case of your death as part of your estate and retirement planning. General Mills will use this information to determine to whom to distribute your final benefits and pay. This can include any pension or savings balances you may have, as well as payments from life insurance.

Next Action:

Make sure you update your beneficiaries when you retire. An online beneficiary designation form is available from General Mills for life events including marriage, divorce, death, childbirth, adoption, etc.

Give one of our advisors who specialize in General Mills a call if you have any questions about the perks offered by the company.

Make an Appointment to Talk

Medicare and Social Security

Understanding Social Security and filing for benefits can be challenging for many retirees, but knowing the best ways to do so is crucial to budgeting for your retirement income. Social Security benefits should be a component of your overall withdrawal strategy rather than your exclusive source of retirement income.

Gaining an understanding of Social Security's fundamentals and utilizing them to your advantage will enable you to obtain the maximum benefit possible.

When you initially become eligible, it is your obligation to enroll in Medicare parts A and B. You must continue to be enrolled in order to receive coverage for costs that qualify for Medicare. This also holds true for your dependents who qualify for Medicare.

You should be aware of how your Medicare eligibility or retirement medical plan selections affect your available possibilities. Prior to retiring, visit ssa.gov, give your local Social Security office a call, or give the U.S. Social Security Administration a direct call at 800-772-1213.

They can assist you in establishing your eligibility, enroll you and/or your qualifying dependents in Medicare, or give you details on other government programs. Give us a call if you would like more detailed information on Social Security.

Check the status of your Social Security benefits before you retire. Contact the U.S. Social Security Administration, your local Social Security office, or visit ssa.gov.

Are you eligible for Medicare, or will be soon?

If you or your dependents are eligible after you leave General Mills, Medicare generally becomes the primary coverage for you or any of your dependents as soon as they are eligible for Medicare. This will affect your company-provided medical benefits.

You and your Medicare-eligible dependents must enroll in Medicare Parts A and B when you first become eligible. Medical and MH/SA benefits payable under the General Mills-sponsored plan will be reduced by the amounts Medicare Parts A and B would have paid whether you actually enroll in them or not.

For details on coordination of benefits, refer to your summary plan description.

If you or your eligible dependent don’t enroll in Medicare Parts A and B, your provider can bill you for the amounts that are not paid by Medicare or your General Mills-specific medical plan … making your out-of-pocket expenses significantly higher.

According to the Employee Benefit Research Institute (EBRI), Medicare will only cover about 60% of an individual’s medical expenses. This means a 65-year-old couple, with average prescription-drug expenses for their age, will need $259,000 in savings to have a 90% chance of covering their healthcare expenses. A single male will need $124,000 and a single female, thanks to her longer life expectancy, will need $140,000.

Check your plan summary to see if you’re eligible to enroll in Medicare Parts A and B.

If you become Medicare-eligible for reasons other than age, you must contact the General Mills benefit center about your status. *Source: General Mills Summary Plan Description

Divorce

 

The ideas of 'happily ever after" and 'til' death do us part' simply won’t materialize for 28% of couples over the age of 50. Most couples have saved together for decades, assuming all along that they would retire together. After a divorce, they face the expenses of a pre-or post-retirement life, but with half their savings (or even less).

If you’re divorced or in the process of divorcing, your former spouse(s) may have an interest in a portion of your retirement benefits. Before you can start your pension — and for each former spouse who may have an interest — you’ll need to provide General Mills with the following documentation:

1. A copy of the court-filed Judgment of Dissolution or Judgment of Divorce along with any Marital Settlement Agreement (MSA)

2. A copy of the court-filed Qualified Domestic Relations Order (QDRO)

Provide General Mills with any requested documentation to avoid having your pension benefit delayed or suspended. To find out more information on strategies if divorce is affecting your retirement benefits, please give us a call.

You’ll need to submit this documentation to your company’s online pension center regardless of how old the divorce or how short the marriage. *Source: The Retirement Group, “Retirement Plans - Benefits and Savings,” U.S. Department of Labor, 2019; “Generating Income That Will Last Throughout Retirement,” Fidelity, 2019

Social Security and Divorce You can apply for a divorced spouse’s benefit if the following criteria are met: You’re at least 62 years of age.

You were married for at least 10 years prior to the divorce.

You are currently unmarried.

Your ex-spouse is entitled to Social Security benefits.

Your own Social Security benefit amount is less than your spousal benefit amount, which is equal to one-half of what your ex’s full benefit amount would be if claimed at Full Retirement Age (FRA). Unlike with a married couple, your ex-spouse doesn’t have to have filed for Social Security before you can apply for your divorced spouse’s benefit, but this only applies if you’ve been divorced for at least two years and your ex is at least 62 years of age. If the divorce was less than two years ago, your ex must already be receiving benefits before you can file as a divorced spouse.

Unlike with a married couple, your ex-spouse doesn’t have to have filed for Social Security before you can apply for your divorced spouse’s benefit.

Divorce doesn’t even disqualify you from survivor benefits. You can claim a divorced spouse’s survivor benefit if the following are true:

1. Your ex-spouse is deceased

2. You are at least 60 years of age

3. You were married for at least 10 years prior to the divorce

4. You are single (or you remarried after age 60)

In the process of divorcing?

If your divorce isn’t final before your retirement date, you’re still considered married. You have two options:

1. Retire before your divorce is final and elect a joint pension of at least 50% with your spouse — or get your spouse’s signed, notarized consent to a different election or lump sum.

2. Delay your retirement until after your divorce is final and you can provide the required divorce documentation.*

Source: The Retirement Group, “Retirement Plans - Benefits and Savings,” U.S. Department of Labor, 2019; “Generating Income That Will Last Throughout Retirement,” Fidelity, 2019

Survivor Checklist

 

In the unfortunate event that you aren’t able to collect your benefits, your survivor will be responsible for taking action.

What your survivor needs to do:

1. Report your death. Your spouse, a family member, or even a friend should call your company’s benefits service center as soon as possible to report your death.

2. Collect life insurance benefits. Your spouse, or other named beneficiary, will need to call General Mills's benefits service center to collect life insurance benefits.

If you have a joint pension:

1. Start the joint pension payments. The joint pension is not automatic. Your joint pensioner will need to complete and return the paperwork from General Mills's pension center to start receiving joint pension payments.

2. Be prepared financially to cover living expenses. Your spouse will need to be prepared with enough savings to bridge at least one month between the end of your pension payments and the beginning of his or her own pension payments.

If your survivor has medical coverage through General Mills:

1. Decide whether to keep medical coverage.

2. If your survivor is enrolled as a dependent in your General Mills-sponsored retiree medical coverage when you die, he or she needs to decide whether to keep it. Survivors have to pay the full monthly premium.

Life After General Mills

 

While you may be ready for some rest and relaxation, without the stress and schedule of your full-time career, it may make sense to you financially, and emotionally, to continue to work.

Financial benefits of working

Make up for decreased value of savings or investments . Low interest rates make it great for lump sums but harder for generating portfolio income. Some people continue to work to make up for poor performance of their savings and investments.

Maybe you took a company offer and left earlier than you wanted and with less retirement savings than you needed. Instead of drawing down savings, you may decide to work a little longer to pay for extras you’ve always denied yourself in the past.

Meet financial requirements of day-to-day living . Expenses can increase during retirement and working can be a logical and effective solution. You might choose to continue working in order to keep your insurance or other benefits — many employers offer free to low cost health insurance for part-time workers.

Emotional benefits of working

You might find yourself with very tempting job opportunities at a time when you thought you’d be withdrawing from the workforce.

Staying active and involved. Retaining employment, even if it’s just part-time, can be a great way to use the skills you’ve worked so hard to build over the years and keep up with friends and colleagues.

Enjoying yourself at work . Just because the government has set a retirement age with its Social Security program doesn’t mean you have to schedule your own life that way. Many people genuinely enjoy their employment and continue working because their jobs enrich their lives.

Fortune 500 employees interested in planning their retirement may be interested in live webinars hosted by experienced financial advisors. Click here to register for our upcoming webinars for Fortune 500 employees.

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