Thread regarding AT&T layoffs

Take the lump sum and move it to either IRA or roll into existing AT&T 401k account at Fidelity.
The total stock market index and total bond market index funds in the 401k account are the best in terms of low cost; I cannot thing of any other funds with 0.02% expense ratio. Split the money in 50:50 between the funds and keep the ratio until you retire.
If you want an annuity - go with Fidelity and/or Vanguard - These have guaranteed payments but very poor returns and many a years no returns at all because of down market conditions.
If you have more than 15 years until retirement you will definitely come up above the annuity route.

Another thing to keep in mind is that the company could transfer the pension to an insurance company at any time as Verizon did with their management pension plan a few years ago. Once it is transferred to an insurance company, the Pension Benefit Guaranty Corporation no longer backstops it in case of default. You are totally dependent on the financial wellbeing of the insurance company. I'm not saying this is definitely going to happen, but look at how the company is outsourcing different parts of the business. The only thing that may make it difficult for T to send the pension to an insurance company is the large amount of company stock in the pension fund. Not sure if that would need to be unwound.

Some comments below not correct - payment for benefits can be electronic and automatic (also transfers into/out of fidelity). Also do not follow blindly recommendations to transfer into IRA since you may lose non-penalty withdrawal...

@1lcn

Your post doesn't make much sense. A lump sum is a one time distribution when you leave the company. You've got the lingo backwards.

One potentially useful website for pensions is the U.S. Government Pension Benefit Guaranty Corporation - https://www.pbgc.gov/.

I took the 2015 offer and went with Vanguard's low cost funds. My 2019 YTD return for a 50/50 stock/bond portfolio is a bit over 11%.

Everything is about comparisons. Talk with Fidelity, Vanguard, your favorite independent financial advisor, and anyone else, just like buying a car. See what they charge to manage a portfolio. Then see if they handle add-ons like annual tax reporting and Required Minimum Distributions. Next, have each of them build a free sample portfolio based upon your age, assets, expenses, future retirement date. Compare their experience and cost.

As for a lump sum, it pays the same amount every year forever. But inflation ravages it. Let's say you get an annual lump sum amount of $24,000 in 2019. With current inflation at 1.8% (through July) you'd only be able to buy 98.2% of what you did this year in 2020. If it goes to 3% in 2020 you're purchasing power goes down another 3% to 95.2% in 2021. I considered a lump sum and figured with a 50/50 portfolio of stocks/bonds I would actually stay ahead of inflation and exceed the lump sump payments after 12.5 years and then forever. One caveat is if you're family ancestry has a short lifespan, it might be better to take it. However, decedents may not be able to inherit except for a spouse which is a reason not to take it and roll-over to an IRA

One thing to ignore is comments about what the market is going to do in the next year or so. No one can predict the market; only minimize the risk appropriately based upon age, retirement date, expenses, etc.

Get your lump sum number, and talk to a financial adviser. That is what I did, and after that, I went with the lump sum and retired. I based my decision on the following: 1) The drain on the pension plan that these lump sum distributions is causing. 2) The amount of T stock that is in the plan. 3) The debt load of the company. 4) Senior management's boneheaded decisions. 5) The possibility that AT&T might just sell the pension plan off anyway. 6) If the company goes belly up in the next few years, the pensioners will be at the end of the line of creditors. 7) I could take the lump and buy an annuity if I eventually got concerned about keeping it in an IRA. Right now it is in a well diversified IRA, and it is growing even though I started taking disbursements from it. Good luck with your decision.

Do not trust them - take the lump sum and work with a financial planner

Once they sell all asset and outsource everything, where do you think they will look next?
The Pension money - nothing new here, been done by many corporations in the past
Randall is playing the enron game, hope he gets what he deserves

The lump sum is pretty standard now and they won't be reversing that; it's in their interest. That's said, if you take that lump, roll in to IRA or your 401K and make sure you're properly diversified, you're probably going to do better in the long run. I listen to Dave Ramsey a lot and agree with much of his financial advice; most of which is actually very simple. He recommends ALWAYS taking a lump sum if that's an option.

With the way AT&T has managed the business and its employees... do you actually trust them with your hard earned pension?

Yes they take benefit cost from pension payments and if no pension payment you can setup automatic payment from a checking account etc. also A before 65 pension take has impacts to the overall value of the pension. I haven’t looked at any extra tax penalty for taking before a certain age.

First of all 3.4% is a great return nowadays with no downside risk and you are still beating the inflation rate (for now).
If you take the lump sum you have an option to diversify that bucket of money to Stocks, REITS,
Bonds..etc.. by a percentage of your choosing. Depending on you age and time to retirement you may want to take on more risk than the pension plan offers. I plan to take the lump sum and manage it with my 401k through retirement and hopefully when my days are over I leave a little legacy money to my heirs....Best of luck to all.

If the Fed lowers the interest rate, the lump sum grows a lot in addition to the 3.4%. I realize that Fidelity can beat the 3.4% in an IRA but I also know that we are headed to a recession. The Fed is leaning towards lowering rates if the economy worsens. I may delay my decision until after the Fed meets again and after the Board of Trustees meets to decide on the pension rate which is usually in Nov. It takes 6-8 weeks for the money to move from the pension to an IRA. I may just move my 401K to the IRA and use that a decision maker to whether to leave the pension system or not. I have a meeting with Fidelity later this week.

If you are getting the retiree medical benefits from AT&T, they subtract your monthly premiums from your pension electronically. If you have no money in the pension system, they mail you a bill every month and you have to pay the bill by check every month. There is no other way to electronically pay your monthly premium for medical benefits. You literally use snail mail every month to get billed and to pay.

The company only offers a lump sum because its beneficial to them. I personally think that funding the pension with AT&T stock as they’ve done is too risky . Do you really trust them to act in your best interest? They are in deep debt, the officers want their millions, and they really only answer to stock holders. You will be collateral damage.

Get everything you have away from AT&T.

Was supposed to say “fidelity OR whomever”

I would take the lump sum, move it to an Ira and let Fidelity it whomever manage it for you. Your money will earn a lot more than the 3.4 percent in an IRA ; plus you have more flexibility with an IRA. You can move money around in different investments in it. You have more control over your money. Don’t leave it in the pension. You’re leaving money on the table if you do. Just my opinion of course