Do I have to wait until retirement age to cash out my vested pension if I leave the company for any reason?
Thank you for your time.
15 replies (most recent on top)
I just retired. It depends on the legacy company rules you are covered under. Consult a financial planner that is familiar with AT&T plans. I left 11/11 and my planners and I had everything worked out by October 15th (how and what distributions would be requested and where they would go). Fidelity is not always as well versed on tax implications as financial planners, especially since there are differences by state. Good luck!
Once you are off the payroll, just log onto NetBenefits and go to pension section. It will present you with all available options. If you have cash balance only plan, you can request withdrawl either cash with penalty and taxes withheld or roll to an IRA account. Some annuity pensions require either 65 or Modified Rule of 75 be met.
No. Take your lump sum immediately but roll it into your 401k or IRA
my understanding the pension stays where it is until you retire. when you retire you can chose to take it out in lump sum.
unless you leave the company and they decide to do a buyout of your pension and they give a lump sum total. this happened in my case and so glad i did I put in an ira and it is making a whole more than if I did not take the payout.
leaving att was the best decision in my life. don't miss the cesspool at all.
Reagarding the post by: 1kft+1dZYxY1J
Well said and great summary on specifics.
Contact a private (reputable) investment firm and get some advice. They will probably advise you to roll over with them, because of the fees that they will receive, but in my experience, the fees are minimal. The more you make, the more they make, so win-win! Check around, and find one you're comfortable with. I don't regret moving my 401's, pension's , etc. to a private firm. And yes, I had more than one of each!
@1kft+1dZYxY1J Thank you so much! Wow...I understand why it's so complicated for folks to understand with all of the hoops and bureaucracy. I appreciate your time. I really needed the details!
O.P., I feel people are not reading your question completely, or are not giving a complete answer. Here is the complete answer to your question:
If you are covered by a pension plan, once you have worked consecutively 5 years and one day, you are vested in the pension and that cannot be denied you.
Your question specifically asks if you need to wait till retirement age, and some are saying no you do not have to wait but that is incorrect.
If you hired on when you are 18 and work 5 yeas and a day, then you would be vested in your pension plan but you would only be 23 years old. You would qualify for a "deferred vested pension" , payable beginning when you become retirement age (65) and penalized a fraction of a percent for every month you are away from attaining age 65.
You are only eligible to "cash out" your pension if you have qualified with 30 years service at any age or the MR75 rules... Under either of these instances you do not necessarily have to be 65 years old to qualify....
The deferred vested pension only begins paying at 65 years of age, but, there is an exception. The company has no interest in keeping the books on what will actually be no more than a mere pittance of a monthly payment when you turn 65 so they will very likely make you a buyout offer. This offer will probably be surprisingly low but you can weigh the value of the offer to the value that you would actually begin to receive in how many ever years it will be before you reach 65 and the payments begin.
A few people I have known have left after being vested but not yet qualifying for retirement and still 15 or more years from attaining age 65. The severe penalty of the deferred vested pension turned their monthly pension payment into very little and they have ended up taking the buyout offer... They have said it was appallingly low , but, so would the payment be and that would not start for many years.
If you are non-management the numbers are all in your contract and you can figure out your individual numbers from that, if you are management the calculations will be basically the same as far as the age penalty. Or, you can ask Fidelity to do your specific calculations..... Do not be surprised at the relatively low number you will receive depending of course on your amount of service and how many months you are from attaining age 65.
Everyone will have different numbers, hope this helps.....
Left the company in management, and took retirement at age 59, commenced pension (annuity) the following year at age 60.
So, yes you can take the pension before age 65, if you are assuming age 65 is normal retirement age.
Nope. You can take the lump sum anytime after you leave the company. I left mine in the fund 2 years ago. It went up enough for me. It took it mid-Oct and it arrives in my Fidelity IRA early Dec. Never take it as a check else you will have to pay taxes on it.
Invest it wisely. It has to last the rest of your life...
It took 7 weeks for the deposit to hit my traditional IRA. Fidelity allows you to upload notarized documents which is a nice timely alternative to USPS. Netbenefits will give you updates if your paperwork was accepted and then a deposit date. It was a straightforward process.
I punched out on November 5th and took the Lump Sum. It takes week for AT&T to release the money. I expect to hear about mine during the first week of December. Simply open your IRA accounts at Fidelity, or elsewhere. This is the optimal time to take the Lump Sum while rates are low. When rates go up, your pension goes down. You can see on LinkedIn that many AT&T'ers are punching out....many good people.
There is a reason people ask questions on this blog. It is always good to check with a couple of sources to make sure one is getting a correct answer.
The OP has a very simple question. I am surprised you (@uvl) do not know the answer to a very basic question. Once the pension is vested, one can take the balance as a lump sum.
Maybe, maybe not. Contact Fidelity , not some smuck on this blog.
No.
You can take your pension as a lump sum when you leave the company. Fidelity can tell you approximately how many weeks it will take for your lump sum to arrive.