As Summa Health prepares for its acquisition by Health Assurance Transformation Corporation (HATCo), many employees are understandably concerned about how this transition will affect their retirement plans. If you participate in Summa’s 403(b) or 457(b) plans, it’s important to understand the upcoming changes and how they may impact your financial future. And even if you aren’t a Summa employee, you too can learn from this article for the time you near a work or retirement transition.
Summa 403(b) Plan
The 403(b) plan is a tax-advantaged retirement account typically offered by nonprofit organizations. Because HATCo is a for-profit entity, Summa’s 403(b) plan is expected to be terminated. While freezing the plan is technically possible, full termination is more likely.
Once the plan ends, contributions will cease, and participants will face decisions about how to handle their existing account balances. Some may choose to roll the funds into a newly established 401(k) plan, allowing continued tax-deferred growth in a workplace retirement account. Others might opt to roll over their balance into an IRA. For those considering a different tax strategy, converting to a Roth IRA is an option, though it would trigger income tax on the converted amount in the year it occurs. Finally, some participants may elect to take a cash distribution, which would be treated as taxable income and could also be subject to early withdrawal penalties, depending on their age and circumstances.
For many, rolling over to an IRA may be the most beneficial option. IRAs often offer lower investment costs and much greater investment flexibility, which can help you make more strategic decisions about your retirement savings.
Summa 457(b) Plan
Summa has already announced that its 457(b) deferred compensation plan will be terminated, with all vested balances expected to be distributed in full during the fourth quarter of 2025. These distributions will be fully taxable as ordinary income in the year they are received. They cannot be rolled over into an IRA or 401(k) to defer taxation.
Many may find themselves pushed into higher tax brackets—potentially facing 37% federal rates in addition to state and local taxes. For those receiving six-figure payouts, the impact could be substantial, leading to a significant erosion of retirement savings due to taxes. Without proactive planning, high-income Summa staffers risk losing a large portion of their 457(b) plan assets to the IRS.
TALS Tax & Investing StrategyTM
One approach that has gained attention in recent years is Tax-Aware, Long-Short (TALS) investing. TALS strategies can improve after-tax investment returns through thoughtful diversification and tax-smart management. While the investing strategy is expected to enhance wealth accumulation, TALS may be customized to offset capital gains and even ordinary income. This can result in saving tens of thousands or more in income taxes. In short, TALS may be just what the doctor ordered for the Summa 457(b) distribution.
While long-short investing isn’t new, it has evolved over time, and recent innovations have made it more tax-efficient and accessible for qualified investors. These strategies are complex. Most advisors are unaware of TALS strategies or do not possess the requisite investment and tax experience to execute them properly. Even if you already work with an advisor, it may be helpful to get a fresh perspective.
Summa Employees: Time to Act Is Now
Major changes to your retirement plans, especially those involving forced distributions, are a good reason to revisit your overall financial strategy. Whether you’re a physician, executive, or other professional impacted by these changes at Summa or are nearing your own work or retirement transition elsewhere, seeking professional advice can help ensure your plans are aligned with your goals.
If you’re considering strategies to manage your 457(b) distribution for the 2025 tax year, time is of the essence. Many tax-aware strategies, including TALS, work best when implemented early and consistently throughout the year. While benefits can still be realized in future years, acting now may help you avoid a larger tax bill for this tax year.
The second half of 2025 is already underway, and the window to take meaningful action is narrowing. Whether you’re looking to reduce taxes, improve investment outcomes, or simply gain clarity on your financial life, now is the time to act.
Kevin Kroskey, CFP®, MBA, is the Founder of True Wealth Design, which provides “Accounting, Tax & Wealth Solutions To Help You Plan Smarter and Live Better.” This article is for educational purposes only. The strategies referenced apply to Accredited Investors or Qualified Purchases per SEC regulations.
PS: If you’re ready to explore a relationship, use this link to schedule a free 20-minute call with one of our experienced and credentialed professionals.
See Also:
Part 1: Tax-Aware Strategies for Successful Investors & High-Income Earners
Part 2: The Key to Tax-Aware Investing
Part 3: Tax-Aware Investing in Practice – True Wealth Design
