Thread regarding Chevron Corp. layoffs

Severance Package

What is the percentage of taxes being taken out of severance packages that have been received? Ball park figure please. SP is base salary, not including CIP correct?

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Post ID: @OP+FSIxCnF

19 replies (most recent on top)

@2bfj, don't forget to collect your unemployment benefits. You get a maximum of 6 months. You should be able to collect the max of $465/week ($1980) in Texas. You can apply online at Texas Workforce Commission. Don't leave a stone unturned or a buck on the table, my friend.

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Post ID: @2arb+FSIxCnF

SG 24. - 37%. But got to roll out my pension, will get good % of CIP, and CVX let me have medical at normal cost for six months. Thanks CVX, enjoyed working with you, best of luck to all.

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Post ID: @2bfj+FSIxCnF

SG 24. - 37%. But got to roll out my pension, will get good % of CIP, and CVX let me have medical at normal cost for six months. Thanks CVX, enjoyed working with you, best of luck to all.

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Post ID: @2ohp+FSIxCnF

There is some good information here. I am the OP with 30+ years and have requested to be left standing in the ESP. Hope it happens, thanks for the feedback and good luck during these trying times.

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Post ID: @1bic+FSIxCnF

@1vwy, I was laid off last year from Chevron after 26 years with the company. I am currently 58 years old. I will try to answer your questions the way I understand the information you provided. I understand you are the wife of a Chevron employee with 37 years of service. If so, my congratulations to your husband for his long career. He must be a high earner. This is what happens under two scenarios. Scenario 1) If your husband retires voluntarily on his own terms, he doesn't get offered the SESP severance program that includes a lump sum severance payout (52 weeks pay in his case), nor the 6 months of subsidized COBRA medical (at the current rates he gets deducted from his paychecks), nor the 6 months of State Unemployment Insurance benefits. Additionally, Chevron will likely obligate him to use up all of his remaining vacation days before terminating active employment. Under Scenario 2) If he is laid off (and you are both prepared for his retirement), it couldn't work out better. Apart from being sent home for 2 months on the payroll, he will get the severance payout upon termination, then 6 months of subsided COBRA medical, he can start collecting up to 6 months of State U.I. benefits, and he gets paid for any unused vacation days. A sweet deal in his case.

Once your husband's 6 months of Chevron subsidized COBRA medical run out, you have several choices. If he and you are not yet 65 years of age, you can opt to be covered under your employer's medical plan. If both of you are 65 or older, then going under the Chevron Retiree Medical Plan could be a good choice. At 65 years of age, Medicare starts paying for a good part of your overall coverage and the Chevron Retiree Plan essentially becomes your supplement coverage. The premiums you then pay is much less than the Pre-65 Chevron Retiree Plan. Once you decide to retire from your employment and if you are still younger than 65, you can consider Obamacare. There are so many private insurance plans from big name insurers out there in the Healthcare Marketplace. You can check them out on www.healthcare.gov. Keep something in mind with Obamacare, your premiums will be based on what you declare your total annual household will be. If you will still be working and he will be drawing from his IRA or 401k or his Chevron annuity, the total annual income you anticipate will go on your joint IRS 1040 will determine your medical premiums. The more you make, the less the federal subsidy. The premiums will vary by plan level (Bronze, Silver, Gold or Platinum), the medical plan type (HMO, PPO or hybrid plan) and the amount of annual deductible you choose.

You need to sit down with a Certified Financial Adviser you trust. Actually, have a meeting with at least 3 advisors. Vanguard provides a plan for you if you are 50 years of age or older. All CFA will perform this service for you free. There's no obligation to invest with them, so use their time and advise to guide your decisions. Before doing this, prepare a list of all your assets and liabilities with accurate values. Also prepare a detailed budget - how much you spend every month on mortgage, utilities, food, medical premiums, car insurance, cable tv and Internet, annual travel & vacation money and even haircuts. This will help a lot when you are asked how much do you need to live on each month.

Don't forget Social Security. How many more years will you wait until taking your S/S benefits? You will need to know the monthly amounts you expect to receive and work this income stream into your retirement plans. One last thing - Do not be over optimistic on getting great stock market returns for the foreseeable future. An honest CFA will tell you so too. The 4% withdrawal rule no longer applies and the stock/bond market will provide returns under the 8% average of yesteryears.

Good luck to both of you. Remember, the best plan is to have "a plan".

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Post ID: @1sao+FSIxCnF

@1vwy - COBRA (which has been around much longer Obamacare) requires that Chevron offer you the option to keep your current health plan for 18 months if you leave the company for any reason; however you are required to pay the full cost (i.e. Chevron kicks in nothing). Chevron on its own decided that it would subsidize the first 6 months of COBRA if you qualify for the current company severance packages, so that you only pay what you were paying as an employee. When you husband leaves the company he will be automatically put on the retirement health plan. Sometime later, probably in a few weeks, he will be able to apply for COBRA coverage at the subsidized price. This coverage will be retroactive to the first day of the month after he separated. After Chevron is notified that he signed up for COBRA they will cancel his retirement health plan and you will be on COBRA for six months. You may have to make a payment for the retirement health care before the COBRA gets processed, but they will credit you with the premium (and refund it if you request) after they are told you have signed up for COBRA. At the end of the six months, your husband will have the option to go on the retirement health care, continue COBRA at higher prices, or have no health insurance through Chevron. At that point you both can go on the health care from your employment for as long as you want. Your husband can then sign up for the Chevron Retirement Health Care at a later time. Normally, that has to be during an open enrollment period, but I suspect that if you retire, that would be considered a qualifying event and you can do it at that time (you should probably check this out though by calling HR). And just to be clear, none of this is affected in any way by his choice of when to start collecting his pension (or lump sum). He can do that right away or wait, it does not effect his health care options.

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Post ID: @1jww+FSIxCnF

I have a question and maybe you can help… I am the spouse of a 37 yr Chevron man… we do think we were blessed with Chevron to be my husband's employer. We are ready for retirement. I have a question about the insurance… with Obama care if I am correct your employer is required to give you the option to keep your health insurance at your current premium for 6 months. We don't plan on taking the Chrevron retirement insurance because I am employed and can get healthcare at a much cheaper rate than the Chevron retiree coverage. My questions is when does my husband request his retirement package at the end of the 6 months? My plan is take the Chevron coverage for 6 months then get on my health insurance. I think if he applies before the 6 months they will tell him he is retired and he will have to take the retiree health insurance… thanks for any advice… Not sure what will happen with your career but good luck on your future.

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Post ID: @1vwy+FSIxCnF

@olc, you are most welcome. I wish you the best outcome in these uncertain times. The best plan is to have "a plan". You can start off by arranging a 1-hour consultation with a Vanguard Certified Financial Advisor. This service is available for free to any Chevron employee of 50 years of age or older. You can set up a phone call appointment (for a time and date of your choosing) by simply going online into your Vanguard account or giving them a call. You will first need to complete a questionnaire that will help the advisor in building some investment scenarios in advance. You can always tweak the scenario during your conversation.

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Post ID: @uiz+FSIxCnF

@sjy, thank you very much. There is a lot of non-sense floating around this forum, and to be honest I wish I didn't even know about it. Thanks for the informed post. Hopefully I am in the 40% during ESP selection, but you never know. Being an expat doesn't help IMO. It will be very hard to displace people working in the U.S. even with an excellent track record. And the chances of staying overseas don't look too good. I'm just hoping for the best but planning for the worst. I am just sad to see Chevron in this shape and feel bad for everyone this is going to affect. Although I think Chevron has made mistakes I don't feel like most of these other posters. I have had a great career up to this point, and have learnerd a ton along the way. I do think we will have to change in the future. We cannot give people the free rides we have been giving over the years. If you are not performing at a level at or above your peers you need to be gone. Plain and simple. I have covered a bunch of folks in my career. Never complained just kept my head down and kept on working. We will see if they realize that or not in the next month.

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Post ID: @olc+FSIxCnF

@kke, your Chevron pension is safe and can be taken at any time you want. There's no need to take your pension right away, although many ex-employees do so. First, you will have to request a Retirement Commencement Package. This can be done at any time through a call to the Chevron HR Service Center at 1-888-TALK2HR or online at www.hr2.chevron.com with your social security number and PIN. You can get information beforehand on the various forms of pension payout. You can take your pension as an annuity (several choices), or a lump sum. The lump sum can be paid directly to you in a check (most expense route, as you will pay taxes on the whole amount in one shot), you can do a direct roll-over of your lump sum amount into an IRA anywhere you like, or into your Chevron ESIP Vanguard 401k. If you are at least 55 years old, but not yet 59.5, the option of putting it all in your Vanguard ESIP may be your best solution to save on taxes and provide you flexibility. Once you get your Pension benefit commencement package, you will already be assigned a Retirement Case Administrator and be provided their direct contact phone number extension. Be patient, as there are only 2 or 3 such persons and most times you will need to leave them a voicemail. It recommend you provide them a mobile number for them to call you back, as they can call you at any time.

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Post ID: @sjy+FSIxCnF

To @nts - You are correct, I double checked my severance check payment stub and ESIP 401k contribution was not deducted. I stand corrected. Thanks for pointing this out. - @ itk.

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Post ID: @hhh+FSIxCnF

You can take your pension (which is an annuity essentially) and roll it over into a retirement account with no tax penalties or you can pay the tax penalties and get it as cash. It took me almost 3 months for them to give me my money out of it.

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Post ID: @qkv+FSIxCnF

How long after your final day on the Payroll will Chevron send Severance form to sign

Also, When will accrued vacation be paid out (separate check or included with Severance ?)

Appreciate responses from folks who have gone through the process , thanks.

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Post ID: @pco+FSIxCnF

What happens to your pension if you get laid off? Are you able to cash out the lump sum balance? I have been with CVX 8 years and if I'm not mistaken you are vested after 5. I looked on my benefits connection and the lump sum value is a little over 30k. Just wondered if anybody had experience with this.

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Post ID: @kke+FSIxCnF

The did not, and do not, take out ESIP on severance check.. they didn't on mine..

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Post ID: @nts+FSIxCnF

Federal tax withholding on severance payments is automatically 25%. You will also have social security tax (6.20%) and Medicare tax (1.45%) taken out. Chevron will also take out your contribution percentage toward ESIP. If you live in a state other than Texas, you will also have state income taxes withheld.

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Post ID: @itk+FSIxCnF

33%

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Post ID: @wyc+FSIxCnF

Was about 36% on mine...

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Post ID: @lad+FSIxCnF

Keep in mind it is a lump sum payment so accounting for all taxes and government schemes it could be as high as 40%. There are several strategies you can look into to minimize the amount you are loaning to the government free of fees or interest. I'll confess ignorance on the specifics of Chevron's package, but at past companies I was able to straddle the payout over two years which helped tax-wise. You can also max out your 401k contributions if you are not already doing so. If you have a significant other that has significant earnings you may want to considering doing this especially if your going to leave your 401k parked for awhile. With the stock where it's at it is worth considering until it's time to profit take.

There are a ton of articles out there about severance taxation percentages and corresponding strategies.

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Post ID: @rxn+FSIxCnF

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