I'm a 2nd level manager from what was Leg-T and I'm thinking about retiring at the end of the year. I have met MR75. I know they typically use Nov interest rates to calculate the next years' lump sum amount. If I retire in early December and request my pension lump sum, if my lump sum doesn't come through until January, do I get the lump sum amount shown for 2023 or an updated lump sum amount for 2024? With the interest rates dropping, I was hoping my lump sum would increase for 2025. Hope this makes sense.
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[I did this in 2022 before the rates turned.
Your last day on payroll can be the last work day in November. Then you get the 2023 lump which su-ks comared to 2022.
If your last day is in December or later, you will get the new rate calculated late in November 2024 for.
You will still get a bonus, at least I did in 2023.]
I had several coworkers retire in December just at the end of the year so they could get their vacation from next year. They got the pension amount they were anticipating.
I retired November 5, 2021. It felt amazing walking away with the Lump Sum and spinning both the pension and my 401K into my Fidelity IRA. Of course, 2022 came and pinched me for 18% to the downside. But, it's all back now and things are good. Healthcare cost are high, but 65 is just around the corner. If you have some monies in your After-Tax bucket, flip that into a ROTH and let it grow tax-free. From what I hear things have gotten really bad in many areas of AT&T. I think it's clear that the ship is sinking fast. Also, I hung around waiting to get laid off and get the six months of severance, but that never came to be. So I punched out and never looked back. Telecom will need to consolidate to survive. Still have a few thousands shares that I may just have to dump and cut all remaining ties. Good luck!
I left Nov 2022 or I would have lost 30% of my lump sum due to interest rate hike. Left with $1m instead of $700k. Rate hike was huge so when I modeled it based on the letter that came out from our leadership, I took advantage. Yes I did have 38 years so it was time to go. Being away from the hustle bustle of Dallas is great.
Reply to @1fyb+1qER6xeF (my post):
More money in your lump sum I should say. Interest rates won't affect pension, that depends on tenure, base pay, and inflation, and is fixed for life.
If you don't lump sum, you're also trusting John Stankey and his successors not to pull some Sears or GM style bankruptcy pension foolishness in years to come. I couldn't sleep with that thought.
Worth noting that the minimum segment rates appear to have peaked in October 2023, with a drop downward of 0.38% in November 2023. The rate difference on the 2021-2022 Novembers was 2.8%, which is why many retired voluntarily without severance before December 2022 (which would have paid out in January 2023 with 2022 rates).
That's what I should have done in retrospect, but I had no idea there would be force reduction (which is what RTO is about. Pajama videos, hot wing contests, and "collaboration" are all ruses.)
If interest rates fall through November, that's more money in your pension. I would guess the change won't be anything near 2.8%; rates won't be near zero again in our lifetimes (at least those of us who were older RTO layoffs). I could be wrong (as can anyone predicting the future of markets and rates.)
To OP, I'm in a similar position (across the MR75 line, legacy Ameritech) and waiting for severance or the end of the year to GTFO and take lump sum January '25.
Each month the IRS publishes a set of "Minimum Present Value" segment rates for the previous month, so November rates are published in mid-December. The table hasn't been updated yet for December 2023, but the separate notice for December (published 1/16/24) shows a nice drop from November, 5.01/5.13/5.15 versus 5.50/5.76/5.83. You can see how this affects things by using the estimate tool on NetBenefits page and tweaking the rates in your estimate. Good luck to you and everyone else trying to hang on just a bit longer. And definitely talk to Fidelity to make sure you have the correct info, it's a free call to set up an appointment and walk through it with them.
https://www.irs.gov/retirement-plans/minimum-present-value-segment-rates
https://www.irs.gov/pub/irs-drop/n-24-21.pdf
“ If u retire in dec u wont get a 2024 bonus- u have to work till after jan”
100% wrong.
My understanding is the interest rate used to calculate the payment is based on the current year's interest rate. For instance, lump sum payments for 2024 payments are based on the 2023 interest rate. So, if you retire in 2024 it will be based on the 2023 rates. If you wait until 2025 it will be based on 2024 interest rates.
The IRS segment rates from Nov of the previous year apply if you choose a lump sum. When I left att and the Segment rate from the previous year was .53. Every percent that the segment rates goes up decreases your limp sum by 10%. Last I looked the IRS segment rate was 5+ percent meaning my lump sum would be cut 50%. Timing and knowledge can make you money.
"can AT&T force me to make pension decision then and I’m stuck with Nov 2033 rates" - I had same question - of course call Fidelity and speak with a pension specialist that can look at your plan (he said there are like 70 different plan variations). I was told I can take current or draw next year (or even year after). You can take the pension on the +1 day after leaving or 1st of any month following. I thought to be able to take 2024 rates (draw 1/1/25) I had to be on payroll Dec 1st - nope. Call and have them look in your plan document though.
If you retire with rule of 75, you still get the prorated bonus that will be paid out in March.
You can also leave the pension if you thought the rates would get better. For example, if you retire in August, you could take the lump sum the following January if you thought interest rates were headed down to get the November rate. You can only due that if you're under 65, I believe.
My guess would be if you initiated lump sum in Dec 2024 you would be subject to the Nov 2023 IRS segment rates, but I would confirm with Fidelity. My similar question, if I choose not to live my designation and I roll off payroll in June 2024, can AT&T force me to make pension decision then and I’m stuck with Nov 2033 rates, or can I delay a decision until Jan 2025, and then get (hopefully lower) Nov 2024 rates? Not sure if Fidelity or AT&T HR has the answer to this.
I did this in 2022 before the rates turned.
Your last day on payroll can be the last work day in November. Then you get the 2023 lump which su-ks comared to 2022.
If your last day is in December or later, you will get the new rate calculated late in November 2024 for.
You will still get a bonus, at least I did in 2023.
Contact fidelity for the correct answer
If u retire in dec u wont get a 2024 bonus- u have to work till after jan 1