A question for recent Anthem retirees - is severance pay included after a planned retirement date ? or is that what you would expect from a "retirement package" ?
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The IRS Rule of 55 allows an employee who is laid off, fired, or who quits a job between the ages of 55 and 59 1/2 to pull money out of his 401(k) or 403(b) plan without penalty. ... If you have money in a former 401(k) or 403(b), it's not eligible for the early withdrawal penalty exemption.
Google “IRS Rule 55”
Hello .. can someone please confirm .. if you are RIF’ed or laid off at 55 or older, will you have to pay 10% penalty if you withdraw money from your 401K or not ?
Just an FYI, I checked with my tax accountant and below is NOT accurate!
“..if you are released from your job and are 55 or older, you do not have to pay the 10% penalty for early withdrawal.”
Severance is only included after a RIF action. If the question is whether a severance plan is offered if you decide to retire on your own without any offer or RIF action, the answer is no. The only real retirement benefits you get are: 1) if you are eligible for retirement and leave the company, you will get a pro-rated AIP for the months that you worked; 2) you are eligible for the new post employment medical plan (PEM) until you turn 65 although the price is prohibitively high; 3) if you are in a stock-eligible job, some of your stock may continue to vest but perhaps on an accelerated timeline. You are also eligible for a retirement gift. There are some grandfathered, long-term employees who may have an RMSA (retiree medical savings account) or a pension plan, but both were discontinued long ago.
I worked for Anthem for 30 years and was laid off the end of March. I stayed on unemployment and SUB pay for 6 months and then decided to retire. I am 56. One thing I found out about 401K from my tax advisor - if you are released from your job and are 55 or older, you do not have to pay the 10% penalty for early withdrawal. You do have to claim any withdrawals as income though.
This is how it went for me. Got the RIF call on June 6th and worked till July 6th. Been with the company for almost 25 years. I got a new job with another company a month later. I am not a retiree but close. I was classified as one by Anthem as I was over 50. I received half my supplemental unemployment payment since I didn’t want to play the unemployment game. They don’t call it severance anymore. I have a 401k that will kick in at 59 and a small pension at 70. To answer your question I would say talk with your manager/hr about retirement benefits before you sign the RIF paperwork. Good luck.