I'm considering quitting, or getting laid off, or fired,at some point this year. I can tell something is up and my boss is not being transparent. I'm in my early 40s and do have the Pension part 2 I believe. I see a lot of people saying to take the lump. Can I and should I if I bounce this year? It's only $150k but ii could invest it.
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@1jyf+1lrGRsDk:
To the second guy who is early 40s on portfolio 2 pension and wants to take the annuity starting now: No, you can't begin annuity payments before age 55. If you want the money before age 55, you'll have to take the lump sum.
Search 3M Go for Portfolio II Pension and it should lead you to a pdf copy of the summary plan description for Portfolio II. You can read all about it. I was Portfolio I, so I don't know all the differences between I and II.
The original poster indicated age was "early 40s". If OP leaves 3M before turning age 55, he/she will lose the RMSA money anyway regardless of whether they take COBRA or not. However someone age 55+ and eligible for full retirement benefits will lose RMSA if they take COBRA.
I too am in my early 40s and on the portfolio 2 pension. Are you guys saying if I get let go I can elect to take my annuity starting now? If so this would be great safety net looking for other career paths. Thanks for the advice
A correction to item 4) in the previous post:
You never lose your HSA (health savings account) no matter if you retire, quit, or get fired. That money is yours to keep. However, if you take COBRA, you do lose your RMSA (retiree medical savings account).
And yes, COBRA medical insurance is expensive. When I left, I was quoted over $1,300 per month just for medical. Don't recall what dental cost.
- Consult with Wilson Towers Wilson and a financial planner and tax experts.
- Review your pension options; 1) sole annuity, 2) surviving spouse annuity and 3) the time certain options, and 4) the lump sum (it does take two months to process).
- Build yourself a spreadsheet comparing all options over an expected life span and find your break even year.
- HSA - medical insurance is expensive. Check your HSA $ amount to see if it can pay premiums until you can apply for Medicaid. If you take Cobra, I believe you forfeit the HSA funds.
- Social Security - set up your account, and check the payouts at several ages.
- If you plan to get another job, start networking now in every industry and function you are interested in. On LinkedIn, get your connections over 500, comment on posts of interest and reach out to anyone that interests you.
👋🏻Hi! Timely topic, thanks for asking!
Willis Towers Watson actually picked up the phone on the first ring.
You don’t have to take the lump sum the day you are terminated. Let the dust settle and wait to decide until you have a clear path toward.
My experience was I got a new job 18 months later. 3M pension is qualified, so I simply rolled it into my new 401k with my new employer. No taxes at this time.
It took me 2 months to get my check.
Only you can decide if a lump sum or the monthly annuity option is best for you. Your health/life expectancy, amount of other investments (IRA, Roth IRA, taxable brokerage, checking/savings/CDs, US savings bonds, etc.), marital status, expected social security benefit, retirement budget, health insurance costs (if u retire before medicare eligible), income tax implications, and whether you desire to leave a legacy/inheritance for children or others are a few things to consider.
How confident are you that 3M will still be around to pay your monthly pension in 20-30 years time? How likely are they to default and pass responsibility for monthly pension payments to the PBGC? Are you confident you can invest and manage a lump sum or will you pay an advisor 1% ($1,500) per year to do it for you? Will one option make you sleep better than the other option?
If you roll over a lump sum to a Roth IRA, you will owe federal and state taxes on the entire amount in the year you do the rollover. If you roll the lump sum into a Traditional IRA, then federal and state taxes are deferred until you take distribution(s) from the Traditional account in future year(s).
Willis Towers Watson is the pension plan administrator and can also be a resource for questions about rollovers. Their phone number should be on 3M Go.
When I bailed, I rolled my lump sum over to a Traditional IRA to avoid a big tax hit in one year. I'm doing small annual IRA to Roth IRA conversions to spread the tax hit out over several years and eventually will get all the money to the Roth IRA where future earnings and withdrawals are not taxed and the Roth will not be subject to IRS required minimum distributions (RMDs) starting at age 73.
If you roll the lump sum into an IRA, taxes for federal & state are deferred.
If you take a lump sum payout there is considerable Federal and State taxes due with the distribution if rhe lump sum. I would strongly advise talking to a certified Investment advisor or CPA/tax accountant. You will save considerable amount of money on taxes if you consider having pension distribution invested in Roth IRA account. Consider the cost of Cobra or insurance before considering mmediate separation. I would encourage having another position lined up before leaving. A lot of us will probably not get the choice the way things seems to be going at 3M. I know with this week's layoffs we have losses valuable contributing team members and leaders that a lot of us feel discouraged about. Have lost valuable team members, and people that did a lot of work. These round of cuts were to the bone at a lot of manufacturing sites. There is considerable pain, I don't see morale improving any time in the near future. A dark cloud is looming over it all.