Thread regarding Chevron Corp. layoffs

Lets get back to federal withholding tax differences between your Chevron Vanguard 401k and a regular IRA account. If you want to take the lump sum pension, you'd have to direct transfer it into one of these two qualified retirement accounts to avoid having Uncle Sam slip his boner up your backside in taxes. Which route to take, you must decide. If you put it in the Vanguard 401k, they'll withhold 20% in Federal taxes when you make withdrawals or take regular monthly distributions. If you instead, transfer your lump sum pension into an IRA account of your choice, you have the option of taking distributions or withdrawals without any Federal taxes. The way I see it, if you wanted to leave the country to live abroad and never come back to the US, it's conceivably possible to sell all your assets, put your lump sum in an IRA, then withdraw it all without withholding one cent in Federal tax, then skip the country. That way, you can slip Uncle Sam your boner instead.

@aumy - I'm not sure what you mean. Vanguard has several classes of mutual funds. The ones in the 401K are Institutional shares, have the lowest expense ratio and are not available any other way. The Admiral shares (which require a larger minimum initial investment) and ETFs, have a slightly higher expense ratio. The Investor Shares which have the highest. There are also several classes of accounts, Personal, Voyager, Voyager Select, and Flagship which have different account minimums and different costs for stock and non-Vanguard ETF transactions. $500,000 gets you the Voyager Select. However, I don't think the CVX 401K allows you to have a Vanguard brokerage account option anymore (maybe I'm wrong about this), so you can't trade stocks or ETFs there anyway. And actually, if you plan on being an active stock trader then I think there are better options than Vanguard, though they're not bad if you are a less active trader. However, if, like me, you want to put the bulk of your money in index funds and ETFs, then Vanguard is probably the best choice, either the 401K or the IRA, depending on whether you want the flexibility of ETFs and a larger variety of mutual funds.

Actually awsp, vanguard told me the IRA fees are lower if you have over $500,000 I. Your account.

Yes, it works the same for the lump sum. It will be paid out within 30 days or less (usually 15 to 20 days) from the time Chevron receives your properly signed documents. If you elect the lump sum, it is advisable that you open an IRA account somewhere first and request a direct payment if your lump sum to the IRA. You can also request it to be transferred durectly to your Vanguard 401k account. Both methods will save you from paying taxes on the lump sum until you make withdrawals. You can decide the pace and amount of the withdrawals to control your tax liability. If you separated from Chevron st age 55 or older, you won't be subject to the 10% IRS penalty if the withdrawal is taken from the 401k account. If you were younger than 55 when you separated from Chevron, you'd need to wait until you are 59.5 years old to avoid the penalty. Withdrawals from any IRA will have to wait until you are 59.5 to avoid the penalty.

There's something to understand about Federal tax withholding when it comes to making withdrawals from your Vanguard 401k and any IRA account. Vanguard is obligated by the IRS to withhold 20% in federal taxes no matter the amount you are taking out. On the other hand, no such is obligated under IRS rule when withdrawing money from an IRA. The default amount is 10% federal tax withholding, but, you are in total control and under present law, can instruct your IRA institution to not withhold any federal taxes whatsoever. So, in that regard, having your money in an IRA gives you more liberty to take your money out and determine the amount of taxes, if any, for satisfying your tax liability. Additionally, the IRA has a much larger selection of funds and securities to invest your money in. The Vanguard 401k advantage is having lower expense ratios.

Does it work the same for lump sum requests ?

BTW, all Chevron annuity payments are actually paid on the LAST business day of the month. It's curious that the first day of the month is the default day for annuity commencement requests, but the payments are on the last business day.

When I returned my signed pension commencement papers in November last year, requesting a December 1 start date, I ended up getting paid for both November and December months with a nominal amount tacked on for interest.

So, even though you sent your paper work on August 12th, you still go paid from August, I thought if they receive the paper work after the 1st of the month, the payment will commence the First of Next month ?

Got my first pension check today, with back pay for last month with a small interest payment.

Paperwork was sent in 8 -12

How about you just call and talk to someone? Why speculate about something so important? People forgot how to talk and ask questions to the people who have the answers. Man, give me a break.

There was supposed to be a ? At the end of my last comment. Hope my understanding is correct ie submitting after November 1st in order to have the Lump sum paid on December 1

First day of the month after the filing date So, if the OP wants to be paid on Dec 1, the paperwork will need be submitted after Nivember 1st. ..

Just to be clear, for the lump sum, there are different options depending on when your file an election vs when you employment ends, and whether you are 65.

Part 2 - Effective Date of Lump Sum Calculation

If your employment ends before age 65:

A. If you File An Election Before Date Employment Ends - Your lump sum will be calculated based on your age and the conversion factors in effect on the first day of the month after the date your employment ends.

B. If You File An Election Within 60 Days After Date Employment Ends - You must choose the date used to calculate your lump sum

1. I elect to have my lump sum calculated based on my age and the conversion factors in effect on the first day of the month after the date my employment ended.

2. I elect to have my lump sum calculated based on my age and the Conversion factors in effect on the first day of the month after the date file a valid election form.

C. If You File An Election More Than 60 Days After Date Employment Ends - Your lump sum will be calculated based on your age and conversion factors in effect on the first day of the month after the date you file a valid election form.

If your employment ends on or after age 65:

D. If Your Employment Ends On or After Age 65 - Your lump sum will be calculated based on your age and the conversion factors in effect on the first day of the month after the date your employment ends.

@2rbg, When requesting your retirement commencement packet, you are asked for a "start date". This is the target date the calculations are based on. It is also the date you are telling Chevron to start your pension. It's up to you to get the paperwork signed and sent back in a timely manner. Good luck.

I did not realize you can pick a date for your payment. I thought it is automatically on the first of the month following the month Chevron receives it

When your retirement packet is mailed to you, it is valid for 90 days. You, however, select a commencement date when you make the request for Chevron to send you the papers to sign. If you have decided on December 1, go ahead and request your commencement papers now. That should take 5-7 business days to arrive. Fill them out, sign the documents, make a copy for your records, and send it back asap. Chevron states it takes about 30 days to process, but in my experience, it only took maybe 7-10 days. It's best to send your paperwork back as soon as possible. If they process it sooner than your Dec 1 requested date, all the better.

I am going to go with the Lump Sum option. I want to be paid on December 1st. When I should I send my paperwork, I was thinking around the second week and f November

When I mailed back my signed retirement papers, I remember it took a few weeks at best. I wasn't too concerned since I was told the payment (annuity in my case) is paid on the last business day of the month. When my check arrived in the US Mail, the amount was for two months. It seems Chevron paid me for the current month, but also went back one month to make up for the month they originally received my paperwork. They also added an extra nominal dollar amount for one month's interest. My second annuity payment was received the following month by Direct Deposit to my checking account.

Don't be overly concern for the delay, since Chevron is probably processing many retirement requests at present. It should be that much longer before your get your pension payment, plus a little extra in interest.

That is a long time, maybe you should call and ask for a status

A Related question,

I mailed in my package on 8-10 and it was signed for in Dallas on 8-12 I haven't heard anything since.

Is this normal?

Unless they changed things very recently, all you can do online is order the packet with the paperwork. You can't complete the forms online. There aren't really that many forms to fill out, mostly just choosing your option (annuity, lump sum) and providing the information required for that option. Most of the packet is informational, explaining your options, etc.