Thread regarding AT&T layoffs

"Know some folks that still haven’t recovered from the meltdown a decade ago and now really worried about running out of money."

If they haven't recovered from 2008, that's their own fault. Market is up over 300% since then. The only people that get hurt are the ones that jump off the roller coaster.

A Fidelity rep let me now that the special rule of withdrawing from a 401k at 55 only applies to an "active" 401k at the current company you are retiring from." For instance, If I left at&t with a big wad of cash at 54 and started over at a new company then "retired" at 55 I could only withdrawal without penalty from the 2nd company's 401k. Therefore, you would want to roll over your prior company's 401k into the 2nd company's 401k so you can access it. That advice made me think twice about rolling over to an IRA where you would need to wait until 59 1/2.

Again, I am not a certified financial consultant and you never know when laws may change.

@hik
"Why would anyone want to roll pension into a 401(k), that is a very restricted investment.. I rolled everything to IRA account. More investment choice, and I only pay for transactions. No annual management fee's, no restrictions on pulling out money, unlimited investments. "

1)Why would anyone want to roll pension into a 401(k), that is a very restricted investment....

How do you mean? My 401K has very many good mutual fund choices across all categories and provides the track records of each so you can make a decision,

2) No annual management fee's, no restrictions on pulling out money, unlimited investments

The 401K has no management fees either (unless you sign up for Financial Engines - completely optional). Your IRA has the same age restrictions as the 401K with regard to withdrawals. However..., 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. You can't do the same with your IRA , unless you qualify for a handful of exceptions.

Do you have to be Retired? Left on my own and not near retirement but would take a buyout if the amount was to my liking and I could reinvest it into something else and make it a bigger amount than what t would provide and not take a tax hit. I too got something about the buyout back in March and starting the end of July. But haven’t heard anything since.

1xqm, a number of Boomers and Gen Xers bailed on the 2007-2009 Great Recession stock market and never made it back in, it was an extremely intense period as jobs and dollars were lost. Millennials lost what little they might have had and stayed out as well and opted for safer savings options like CD’s, Savings accounts, etc. Not many people, myself included (I’m a late Boomer) ever experienced a time like that.

But if history teaches anything it’s that, since the end of WW2, recessions happen about twice every decade and last an average of 12 months. I’ve been a dollar cost average investor since the early 80’s (two recessions, ‘80-‘81 & ‘87) and took a long range outlook....the money left my paycheck, I never saw it and would never see it for 30 or 40 years, but I watched it, adjusted it....but never ran for the hills with it.

Find a CFP, Certified Financial Planner, to help you keep your mind grounded and perhaps help you decide how you want to invest. A good CFP will get to know your investment risk tolerance and let you know how to mold your investments to meet your retirement goals.

Please don't use insurance people to invest your money. They are not held to the same fiduciary standard as a certified financial planner. Also the annuity is guaranteed regardless of how the market is doing. Justin saying.

What were these people invested in a decade ago that these people still have not recovered from ?

It’s been the greatest run since. My funds in my 401k came back within 3 years from the financial meltdown and pretty much doubled since.

Spoke with a financial person also. Will the AT&T pension be a big part of your retirement income? How will you sleep at night if the market tanks and you have to take a bigger percentage out of your individual accounts to sustain you? Know some folks that still haven’t recovered from the meltdown a decade ago and now really worried about running out of money. If you have a significant other look at the life expectancy of each person. Do you believe that AT&T will indeed go bankrupt and you could lose a portion of that pension or not be able to pay a beneficiary whose family lives to be 90+. Lady basically asked me some questions I had never given much thought to. Need to look at a lot of things from a individual basis versus a using a screw AT&T mindset.

There is a loop hole you can take money out of 401k with no penalty if you retire from your company at 55 if you have to. This same rule does not hold up for an ira.

Check with a financial advisor on this, this is what I believe to be true

If I need to be corrected, please let me know in a positive manner :). I know these boards get very antagonistic and it’s uncalled for

Why would anyone want to roll pension into a 401(k), that is a very restricted investment.. I rolled everything to IRA account. More investment choice, and I only pay for transactions. No annual management fee's, no restrictions on pulling out money, unlimited investments.

I'm still of the opinion the surplusses we have been seeing this year are targeting the older workforce who are grandfathered into the pension plans. T will never openly admit it, of course, but it makes a lot more sense than their explanation of why they chose who they did. ( Collaboration Zones my a– )

That said, I'll pass on what my Financial Advisor told me:

While everyone's situation is different, he looked at what my annuity would be vs a lump sum. He then calculated how much of an annual return it would take to meet or exceed what the annuity would provide. If it's in the 5-7% range, then it's doable and it basically becomes a personal choice.

As that percentage starts to creep up, however, if you're having to pull in 8-10% returns just to match what the annuity will pay out, then you have to start thinking if you -should- take the lump sum or not.

You also have to factor in any survivor / beneficiaries because adding those into your annuity can get costly on your payouts vs a lump sum.

However, if you're like me, you're questioning where AT&T will be in ten or even twenty years. If they let Randall keep driving this train, we may well find ourselves at the bottom of a cliff :| As a result, my plan is to take the lump sum once I am retirement eligible.

Of course, we'll know for sure once the bargained for contracts start renewing. If the annuity is still an option then it kind of throws water on the whole theory of T buying out pensions and going with lump sum payouts only.

Try as I did, researched as I did, I found no definitive source of info explaining if a Pension and 401K could be joined together.....both could go into a Traditional IRA, but I’m still looking.

What I will say quite simply is not to go by any of our scholarly wisdoms, get ahold of your Fidelity CFP, or find one, and ask the question....don’t guess.

For the nervous who fear bankruptcy someday down the line for AT&T, or those that are fed up and just want out, or health history drives your decisions I don’t blame you....grab the lump sum Pension and make a break for it, hopefully you will sleep better at night. Once you’ve rolled your Pension into a Traditional IRA, sit back and find an investment vehicle that charges very low fees (something that T’s Pension already does) and hope for the best, but personally I don’t believe it will be as simple as you think.

In two years I will make Retirement and whether Surplussed now, or finish the race, a monthly Annuity will supplement my income and as @jec indicated, the Pension Benefit Guaranty Corp (they are a government run agency since 1974), will be the security blanket for those who might fear bankruptcy but simply don’t want the hassle of worrying about another financial decision in retirement....no muss, no fuss! Their payment table is based off the Social Security payment tables, Older folks get higher paiements, but over fewer years and younger people get less for a longer time.

Otherwise your normal AT&T Pension monthly Annuity plays by its own rules. Read up on it, and the PBGC provisions as well, before you get to near retirement where you might be rushed into a bad decision. Having a reliable, steady and known income source, un encumbered by market swings is a good feeling but it has a few cons besides to pros....research and read, know what you’re getting into!

@jec

"When considering taking a lump sum or not, don't forget that the pension plan can be transferred to an insurance company. "

Don't do this people. Dumb move. Direct rollover to IRA or existing 401K.

@oso
"Lump Sum payment can not be rolled into your 401k"

You are incorrect, Sir...yes it can.

Why would you not take the lump sum and roll it into a 401k?it is then yours to invest as you see fit. Nobody can take it from you. Invest it conservatively or or liberally or pay someone to do it. Pension guarantees will do nothing for you. If AT&T goes bankrupt, the whole system will be broken and you may end up getting pennies on the dollar. Take ownership of your money.

I say screw AT&T and keep your pension where it is.
You know they never do anything that doesn't benefit them!

I left in February. Voluntary surplus. I qualified for the modified rule of 75, so I took the lump sum pension, and my 401k account and immediately rolled it all over to a private investment firm. No tax implications because it rolled directly. I took the six month severance and opened a separate interest bearing savings account which will incur taxes, but hey, I’ll take it. There is life outside att!

When considering taking a lump sum or not, don't forget that the pension plan can be transferred to an insurance company.
http://www.pensionrights.org/publications/fact-sheet/what-happens-when-pension-transferred-insurance-company

While the plan is with the company, it is insured by the Pension Benefit Guaranty Corporation, with a fairly generous minimum payout. If the pension is converted into an insurance annuity, the PBGC is out of the picture, and the annuity may be insured by a state agency with a $100,000 cap.

So, there is a lot of "what ifs" in deciding what to do.

Just good business for the pension plan. No impact to T. Cash buyouts just remove the liability of having to manage it all for ever. T just has to ensure they are current with their liabilities to the plan.

What formula are they using to calculate the buy out?

Its in your best interest to have the rates drop you will get more money in your pension not less

The Federal Reserve keeping interest rates artificially low is damaging both public and private pension systems. It's no wonder why companies want out.
https://www.sr-sv.com/low-for-long-rates-pressure-on-pensions-and-insurances/

Meanwhile, companies can borrow low interest loans to buy back their shares, helping disproportionately the 1%. It's a rigged economy, with the Federal government picking winners and losers. They have designated pension plans into the loser category.

Per phone call to Fidelity – you can roll lump sum pension payout into an active 401K or an IRA. I had heard that you couldn't roll into 401K but they said you can.

Left on my own was sent something March about a buyout happening I think starting July 31st and going to the end of sept. That is all I have received. Haven’t received anything that it had officially started. If the amount is to my liking I will rollover to my 401k. My pension amount isn’t anything to sneeze at since I was there 18 years.

thank you it's been a good ride

Lump Sum payment can not be rolled into your 401k. Lump Sums would have to be rolled into a traditional IRA, although be aware of RMDs (required minimum distributions). Then you could roll out of the traditional IRA into a ROTH over the years before you hit 70.5 years of age as much as you can take on the tax consequence. There are many resources on the subject via the web.

But if you are like me, late 50s with a surplus target increasing every year...get your exit strategy in line and enjoy the show until your number is called and say thank you it's been a good ride.

Mid June Ford will move to buyout pensions......It's not going to be voluntary folks.
This comes straight from an HR insider. Manditory lump sum pension buyouts are coming within the next 4 weeks in mid to late June. You will be given a lump sum figure and that's it. Ford is getting out of the pension business while they are still profitable. HR would not say if that pension buyout ended your employment. More to cheerful garbage is coming my friends. It just won't ever end. Thank you Jim and the Ford family too. Sleep well you SOB's!

ATT isn’t the only big company doing this. It’s all about cleaning up the balance sheet.

This shouldn’t surprise us. For the past decade or more the company has been driving everything towards a market based platform from a expense standpoint. The days of comparing ourselves to other traditional telco companies are over with because that world is rapidly dying. I remember a time when that world made up 80-90 percent of our revenue base. The last time I saw numbers showing that percentage it was in the mid teens and has probably gone down.

I view it as a attempt to basically divorce people from the system completely. Lump sum and Medicare eligible for health care and no reason to keep you in a database and possibly have to deal with you. Not only lowering pension obligations but overhead costs.

I wonder if they would look to have current employees roll their lump sum into their 401ks ...if it is legally allowed

Big companies want to buy you out of your pension and pay off in lump sum because monthly pensions show as a liability with accounting rules. ATT isn’t the only big company doing this. It’s all about cleaning up the balance sheet.

People are living longer and big T don't like it.