If you’re a P&G employee eligible for a one-year package, you’re likely looking at a large lump sum—paid out this year. On paper, that sounds like a win. But without a plan, it can also trigger one of the biggest tax bills of your career.
We work closely with clients navigating this exact transition. And with the right planning, a severance package can be a launchpad—not a liability.
Here’s how we help P&G employees manage the tax impact and build a strategy that protects their wealth:
Max Out Your Savings Plan
Even if you’re on your way out, you can still contribute to the Savings Plan. That means deferring
up to $30,500 in 2025 ($23,000 plus $7,500 catch-up if over 50) into tax-deferred savings. If you were not maxing it out previously, go ahead and bump that up with payroll to get as many pre-tax dollars into your traditional 401(k) as possible. This will likely be the highest tax year of your life! This is the first step in lowering income in this high-tax year.
Use a Donor-Advised Fund (DAF) to Your Advantage
If charitable giving is part of your plan, this may be the year to front-load those donations. Contributing appreciated PG stock to a DAF allows you to take a full deduction this year, offsetting your high income, and you can give away the funds over the rest of your lifetime.
It’s one of the most powerful ways to turn taxes into long-term impact.
Bonus Tip: Use your lowest basis PG stock, typically the shares that come out of the plan under net unrealized appreciation.
Defer Stock Option Income
If your stock options are vested but not yet exercised, consider waiting. Option exercises generate ordinary income and will stack on top of your package pay—pushing you into a higher bracket.
We often model multiple exercise timelines to help clients reduce tax drag and keep more of what they’ve earned.
Avoid Roth Conversions (For Now)
In many cases, we hit pause on Roth conversions during a package year. Converting IRA assets when your income is already inflated can result in unnecessary taxation.
Instead, we often plan conversions after the severance year, when income drops, and you may be in a much lower bracket.
Don’t Overpay the IRS—Use Safe Harbor Rules Wisely
Withholding on lump sum payments is often aggressive—and it’s easy to feel pressure to send the IRS more than necessary through estimated tax payments.
But here’s the key: you only need to meet your safe harbor to avoid penalties (typically 100–110% of last year’s tax). Anything beyond that is an interest-free loan to the government.
We help clients strike the right balance—meeting their obligation without unnecessarily draining liquidity.
Coordinate the Full Picture
Every case is different. We tailor plans to include:
- Capital gains harvesting
- Timing of itemized deductions
- IRMAA strategy for Medicare
- Cash flow and liquidity planning
The goal: minimize lifetime tax—not just this year’s bill.
In Closing
A one-year severance package can feel like a financial windfall. But without a coordinated plan, it often creates avoidable tax consequences.
At Beyond Wealth Partners, we specialize in helping P&G employees turn complexity into clarity. If you’re considering a package—or have already accepted one—there’s still time to act before year-end.
Let’s build a smarter exit plan.
