Thread regarding AT&T layoffs

Just an fyi in regards to 401(k) Plans. If you pass and the spouse has not done anything with the 401k, gets remarried, and then passes before the new spouse the entire 401k goes by law to the surviving spouse. Not the intended beneficiary’s as it was originally set up for.

https://www.investopedia.com/articles/personal-finance/120715/what-happens-retirement-accounts-if-spouse-dies.asp

Things are slightly different with a 401(k). You will still complete a form that designates who receives your benefits when you pass away. If you’re married, though, the law says your spouse becomes the recipient. Even if you’ve been legally separated for years and now live with somebody else, your spouse is entitled to the account upon your death. The only way that can change is if your spouse signs a document giving up their rights as a beneficiary.

Divorce settlements generally include provisions for whether ex-spouses are entitled to any 401(k) money, in keeping with the rules of each spouse's plan.

“Always update your employer 401(k) beneficiary designation paperwork immediately after a divorce to reflect the intended beneficiary and consult an estate planning attorney to ensure your intended wishes will be carried out at your death—especially if you have remarried—to avoid future conflict. Otherwise, your ex-spouse may get something that was not agreed upon," says Michelle Buonincontri, CFP®, CDFA™, and founder of Being Mindful in Divorce.

If you’re single, the people on your beneficiary form receive the account.

The recipient’s options with a 401(k) are the same as with an IRA—keep it, roll it over somehow, cash it out (a non-spousal beneficiary must do this within a decade), or decline to receive it.

Pros and Cons to annuity pension payments:

Pros: Monthly payments guaranteed for life.

Cons:

1. If you die your spouse/partner will get half of your monthly payments. If both of you die the pension stops. Meaning, you cannot pass down to your kids / beneficiaries.

2. Monthly payments don't adjust to raising cost of living each year. For example, if you get $2000 per month in annuity payments, it'll be worth a lot less in the future because of the rise in inflation because your monthly annuity will remain the same.

3. If you are in need of emergency money you will not have that available to you. Hopefully you are prepared with some sort of savings outside of your pension

There are risks either way. However, based on the market trend you are more likely to come out ahead if you take your lump sum and invest it.

Serious question. Can you provide insight on the pro's and cons for annuity payments?

An annuity provides a guaranteed income stream. Depending on your retirement and estate goals (along with emotions about income), this can be a good option. In the current climate annuities that one can buy with a lump sum provide more income then AT&T.

The con is fees and potentially underperforming the market in terms of growth. Less flexibility with the money.

In response to:
"And some smarty pants think monthly annuity is bad. This is different for everybody. One size does not fits all."

Serious question. Can you provide insight on the pro's and cons for annuity payments?

I see a lot of financial advisors here. Many of them have no idea what is pension and what is 401K. And some smarty pants think monthly annuity is bad. This is different for everybody. One size does not fits all.

My monthly annuity stay same.

Here is how the lump sum works folks. When interest rates go up, lump sum goes down, when interest rates go down, lump some goes up. The amount you get is based on the IRS pension rate table (https://www.irs.gov/retirement-plans/minimum-present-value-segment-rates) from the November BEFORE the year you leave. The most important number is the one under "Second Segment" column, that has the biggest impact on lump sum. Example, if you had left the company in 2021, your lump sum would be based of the Nov-20 number, in this case the second segment rate was 2.31. If you left in 2022, your lump would be based on Nov-21 rate which was 2.72. Not a huge difference between those to years. But now if you are to leave in 2023 look at Nov-22 rate, it's 5.60!!! As an approximate guideline, for ever 1% change in rate your lump sum falls 10%. Since the rates changed from 2.72 in Nov-21 to 5.60 in Nov-22 your lump sum will take an approximate hit of just under 30%. For those asking whether the lump sum could go back up in the future, it really depends on the Feds. You can see from the table above that in the past the rates have rarely been as low as they were in 2021, so it's unlikely to make it back to where we were any time soon.

I’m legacy T craft, or was, and virtually all the people in my group were unaffected with by the segment rate increase as they had the cash balance. I would have taken north of a $200,000 hit if I didn’t leave back in November and IMHO I don’t the lump sum recovers from this, at least not within a ten year time frame. Way too many variables at play here for someone my age

How would you expect them to write you a 876k "401k check" from your pension? Two separate accounts buddy. You may want to seek professional advice.

Like I said.
My Pension Lump Sum reflects an increase of $215k. Now this is since dementia Joe.
and
My 401 is $876+k.

I do know the difference. I'm sitting on the job for another 25 years as I bank that pay check for doing nothing.

Just a bunch of whiners here?

It is downright alarming how misinformed and flat out wrong so many of you are regarding how your own retirement funds work. Some of you don’t even seem to know the difference between your 401k and pension. Frightening.

Lump sum will go back up after Biden tanks economy if you can keep your job for few more years. When recession hits fed will begin to lower interest rates and lump sum will go back up. People I’ve spoken with that left last year can’t find a job that pays as well as AT&T so they might not have made the best choice leaving.

@ubv+1ktMUoWJ
“damn that is a lot . is there a chance lump sum could go back up again in the near future?”

Yes, the lump sum will eventually go back up when interest rates eventually go back down, whenever that happens.
Most likely that won’t happen until 2 years from now. Keep all this in mind when you vote in the next presidential election, it really makes a difference!

Mine is up $215,000, so I don't understand why everyone's reporting loss.
Fidelity would have to write me a 401k check for $876,050 - just checked.

This guy obviously has no idea how to compute the lump sum using the new market segment rates. He's in for a big reality check at some point.

It's not really a loss until you cash it in. Here's the funny thing, the lump sum amount is based on an assumed return on safe investments. If you take the lump sum and invest conservatively you haven't lost anything. Higher interest rates pushed up the returns on less risky investments.

Wait couple of years and you will be OK.

Mine is up $215,000, so I don't understand why everyone's reporting loss.
Fidelity would have to write me a 401k check for $876,050 - just checked.
I'm stoked.
Cheers

“ 26% hit! My lump sum pension estimate is $221,655 less than it was when I checked 8 months ago. I think I’m going to throw up“

Genuine question…did you somehow not know this was going to happen?

Because it’s hard to fathom how that’s possible.

Not sure why it’s still being discussed. Anyone to be affected was warned literally all year long. Presumably those that were going to be impacted and stayed anyway factored that into their personal situation. If not, it’s 100% on them.

I gave my notice in September because at that time I was going to lose 28% of my pension. Good thing I left because Novembers numbers would have caused me to lose close to 40% of my pension. That would have been about $180,000 of my pension.
Unfortunately a lot of people didn't really look into it :-(

In response to:
"damn that is a lot . is there a chance lump sum could go back up again in the near future?"

It may take 10-15 years to recover what you lost. Even if you do, you'll be back to where you were last year. This means that most will have worked a year or two for free.

T hid this from people and most thought that if the segment rates dropped it would put back what they lost. Unfortunately that is not the case. If rates go lower it'll only apply to the new balance you have now. :-(

damn that is a lot . is there a chance lump sum could go back up again in the near future?

Everyone was warned.

26% hit! My lump sum pension estimate is $221,655 less than it was when I checked 8 months ago. I think I’m going to throw up 🤮

$200k lost

Correction... I believe you meant 2022? If so, I would have lost 30% of my pension. Leaving was the best move in my situation.

25% loss for mine.