For those qualified like myself, any thoughts to the downside of clicking that “accept” button?
You don’t have to sign the separation document on Oct 5 and resume your duties.
You can sign it on Oct 5, leave Cisco and change your mind within 7 calendar days and resume your job.
If you click the button before 9/2, don’t make the approved list in 9/8, you lose nothing.
What am I missing?
+1 OP
Does anyone know if a lot of people applied ER so far? There are only two days to the deadline.
As far as taking the ER there are a few considerations:
(a) with the lump sum occurring in 2020 you will be paying more taxes but probably less FICA
(b) If you are like me, I am almost already maxed out on 401k contributions so that is not useful to hide income.
(c) I have not made use of the Roth 401k option but my understanding is the $ put into that must remain 5 years before you can begin withdrawal. It still does not help reduce taxes.
(d) With increased income for 2020, you may exceed income limits on using Roth IRA (outside of 401k)
(e) Keep in mind, if you have any RSU (restricted stock units) that will be accelerated you will be paying taxes on that too (by selling some shares for taxes).
Insurance: Cobra vs ACA vs New employer
(a) If you can join spouse's medical coverage it might be cheapest route (qualify as a significant event?)
(b) Use Cobra until new job coverage?
(c) Take out ACA insurance policy (probably less coverage but cheaper than Cobra)?
(d) If you happen to be 65+, take the Cisco RMAP insurance along with Medicare or some other Part-D insurance with MC.
every company and not just Cisco should offer an early out. I think that Cisco should be doing an ER every 3-5 years. It lets people go with dignity and avoid a mass purge every 6-8 years. This is going to be a mass purge folks btw. 6500-10000 people no doubt about it. I would totally take the ER if i qualified. why would i stay if i was 50 with marketable skills? If it's this bad why not offer it to any employee that has age plus Cisco experience that equals 62. Why the cutoff at 50? I would exit in 2 seconds if I could have that package. It's a no brainer
"That’s because of anti-discrimination legislation. If they tell you the ER is better than the LR, then you are guilty of age discrimination by forcing older people into ER. "
So would the company have an incentive to conceal
a) that the later package (LR) is lesser, or
b) that the packages are comparable/equal (is this even a realistic option?)
I realize that b) might sound dumb, but I don't know whether there is some legal thing that would make that necessary/advisable.
HR keeps saying that the ER and LR (phase 1) benefits are "SIMILAR". What does that mean?
That’s because of anti-discrimination legislation. If they tell you the ER is better than the LR, then you are guilty of age discrimination by forcing older people into ER.
"I can't get a straight answer to this question despite asking multiple times. R keeps saying that the ER and LR (phase 1) benefits are "SIMILAR". What does that mean? Has anyone heard details about the LR package? That would help us all make better decisions. "
You are not the only one trying to get an answer to this.
Sorry, I meant to say:
I can't get a straight answer to this question despite asking multiple times.
I get a straight answer to this question despite asking multiple times. HR keeps saying that the ER and LR (phase 1) benefits are "SIMILAR". What does that mean? Has anyone heard details about the LR package? That would help us all make better decisions.
If we extend into Jan 4, then we have to pay for about $8500 of extra social security taxes (6.2% up to the wage limit of $137,700).
If don't extend into Jan 4, then we potentially could be kicked into the higher marginal tax bracket depending on our own income levels.
Damn if you do, damn if you don't.
What are you guys thinking?
They want the OPEX off the books, so I don’t see them entertaining any extensions.
We're talking to our tax accountant and financial advisor Monday. Having your boss extend till January 4 is great, but that requires SVP approval. I hate the tax hit and would love to spread over two years, but I'm not sure how easy that's going to be, so our best bet is to add extra to our 401(k) so we can shelter it. Timing is everything! Any other ideas???
caveat emptor:
if you elect ER you voluntarily forfeit WTO phase 1 LR equal package. There is no backing out of ER and getting an equivalent LR package. It is forever lost once you elect ER option. This is not understood by a lay person and HR is not telling you this hoping you will simply elect to exit. Add in that you cannot file for unemployment in most states if you select ER.
If you extend ER to Jan 4th, then you will pay full year of social security taxes in 2021 on lump sum which would be almost 10% additional taxes than if you leave in Oct
I thought your last day would be Oct 2 for ER.
so let's say you do that.
What's to stop them from then dropping you during the LR that will be coming after Oct 7 (3 options, LR package, LOA and I forgot the 3rd)
Then you would lose the ER package and get the even lighter probably LR package...
Options are tough..
Managers are of no help with any info...
Where are the details about possibly extending the actual leave date to Jan 4, 2021? That would be ideal from a tax perspective...
Life is good after Cisco...very good.
bottom line, it's not a very good package at least to previously offered packages like in 2011
I admire the tactic. Not sure I have the cajones to try that. How does it look to your manager? Should I care about that? I'd love to take it and extend the exit date, but that seems unreasonable, or is it a common strategy. It's like ... "hey, I really hate it here, but I want to stay just a little longer if you're ok with that ..."
There should be some flexibility build into this, but that hasn't been a talking point so far.
I think they plan to approve all ERs. If agreed to by your mgr, because they need you to stick around a little longer, the ER exit date can be pushed out to Jan 4, 2021. Ideal for tax purposes. While not particularly a great ER, if you can collect SS and plan to live off of that plus 401k money, this is the best chance to pick up some cash. If I can't get my exit date extended into next year, I'm going to load up on IRAs and HSA to defer taxes. Anyone have other tax deferral ideas? Done with 529s and donations.
if I click "accept" and take the ER, I'll never look back.