Offered a package, would you stay or go??

[jim584672]

This may be true... or may not be true. It's up to the plan. Please verify with your 401k plan documents whether you can withdraw between the age of 55 and 59.5 penalty free. The law states that plans CAN offer this provision to allow non-penalty withdrawals if you separate after age 55... but it is not required. So check your plan.

I would take the deal in a heartbeat.

I don't think it depends on the plan. Looking at the U.S. Code §72(t)(2)(A)
(v) "made to an employee after separation from service after attainment of age 55," is exempt from early distribution penalty.

But I am not a tax guy, so who knows?

 

[MRG]

I don't think it depends on the plan. Looking at the U.S. Code §72(t)(2)(A)
(v) "made to an employee after separation from service after attainment of age 55," is exempt from early distribution penalty.

But I am not a tax guy, so who knows?

It must be in the plans Summary Plan Description, additionally they must have a provision to provide early withdrawals, many don't.

Doesn't matter about the regulations if the plan doesn't allow for it. There's many older discussions on this topic.

 

[Sasset]

I went through a similar situation a couple of months ago. The decision came down to retiree medical benefits for me by working 3 to 4 extra months until I was 55. I would double check on medical benefits, but if you don't get extra benefits at 55 and you can cover expenses, I would go now! I do think about the fact that if I had taken the package I would be done in less than 2 weeks, but I know I am closer everyday. Also, I didn't have the risk of being let go without the package anyway. This all comes done to a Pro vs. Con decision. Based on what I know, the decision to take the package sounds like all Pro to me.

 

[ziggy29]

Financial difficulties... presumably no DB pension or other retiree benefits in play? That being the case, I'd take it but want to stick around until at least 1/1/2016, because then you will have turned 55 in the year your separated from employment and you could access your 401K without penalty (only ordinary income taxes) assuming the plan is set up for that properly.

Dollar for dollar up to 9% is just about the most generous 401K match I've seen... but it isn't enough to constitute "golden handcuffs", IMO, given that you are being given 6 months salary and 3 months of health insurance.

 

[bclover]

Congrats on the offer. I would take it.

Since you would be laid off, would you not qualify for unemployment? This would narrow the $ lost for the last 3 months.

Sent from my SPH-L720 using Early Retirement Forum mobile app

No, we were told that since this is actually a voluntarily separation, we have to sign a waiver from unemployment benefit.


Thanks all, I am 85% sure I'm going to go for it. I have 500K in a few taxable vanguard accounts that I plan on using, that is 8 years living expenses that I can tap. my only debt is my mortgage, which I always include in my living expenses because I'm definitely not waiting to pay that off to retire. I know here everyone says your mortgage should be paid off but that isn't going to happen. lol


I do have two college students, presently at home. they are currently 21 and 24 who are still on my health insurance. they both work part time at companies (fed ex and wawa) that offer benefits so I may have them see if they are eligible. but my main concern is health benefits for them for the next two years.

 

[stepford]

Once one is in the "grey zone" - I think I have enough to retire but I'm not completely sure - it is always easy to make excuses to work another year. I was offered a package similar to the OP's in 2013 and again in 2014 and refused both times. Whether I'll be able to get such an offer again is by no means certain.

So was I right or wrong to stay? Depends on the age-old your money or your life question. Any of us could always use another few years of salary socked away. If it's worth those years of your life is only yours to answer.

 

[youbet]

No, we were told that since this is actually a voluntarily separation, we have to sign a waiver from unemployment benefit.

Apply anyway. If your company is also doing involuntary layoffs, they may not challenge the "volunteers" who apply for for UI. The layoff people alone will likely put them in the highest premium category so having you and other volunteers collect will make no difference to them financially. This is how it worked at my MegaCorp when we were going through all this.....

I know here everyone says your mortgage should be paid off but that isn't going to happen. lol

Actually, everyone here does not say that. In actual dollars and cents, as long as your mortgage is at a low interest rate, it will make very little difference whether it's paid off or not. Yes, many experience a feeling of euphoria and "peace of mind" when paying off a mortgage, but it won't matter much to your FIRE situation.[/QUOTE]

 

[jollystomper]

At this stage if I was offered a package I would likely take it. My Megacorp has offered similar packages periodically in the last 7 years, though with slightly more generous health terms (6 month of health coverage at the same cost as employees). I would use the lump sum as a health insurance reserve, since that is the most variable unknown in retirement, and Megacorp no longer provides us much retiree insurance (just a "slush fund" that can be used towards paying their health insurance options but at current rates would only last 2-3 years).

 

[Brat]

The first package, historically, is always the best. Take it and figure out how to max your family health insurance options.

 

[Car-Guy]

If I were faced with the conditions you presented, I would have already submitted the paperwork.

 

[Ed_The_Gypsy]

I don't think it depends on the plan. Looking at the U.S. Code §72(t)(2)(A)
(v) "made to an employee after separation from service after attainment of age 55," is exempt from early distribution penalty.

But I am not a tax guy, so who knows?

It is my interpretation that this means you are separated from the company AND you are over 55. You do not need to wait until 55 to separate, just be gone and old enough. You could be working somewhere else as well.

 

[Ed_The_Gypsy]

P.S.
I would take the package in a New York minute.

IIRC, DuPont did something like this in the '80's and had the results noted above. The people they did not want to leave (engineers) left and those they wanted to leave (middle managers) stayed.

 

[MBAustin]

Have you run FIRECALC with both scenarios just for grins?

For the kids, exchange HI is pretty reasonable for young people, especially if you are willing to cover a high deductible for them.

 

[retire2020]

OP: Take it! I think you can also collect unemployment and read up on obamacare...Since you'll be retired, you can keep your MAGI below 400% FPL and get a subsidized health insurance.

I'm five years away from my retirement but I would jump onto any offer like yours my megacorp offers.

 

[Brat]

The OP was considering retiring in the future. Now there is a potential severance package. No need to decide she will be retiring as a result of the severance offer. She can look for employment after termination or retire as best suits her analysis.

 

[ziggy29]

OP: Take it! I think you can also collect unemployment and read up on obamacare...

Taking an early retirement package is a voluntary separation, not a firing or a layoff which allows unemployment benefits.

 

[Texas Proud]

OP: Take it! I think you can also collect unemployment and read up on obamacare...Since you'll be retired, you can keep your MAGI below 400% FPL and get a subsidized health insurance.

I'm five years away from my retirement but I would jump onto any offer like yours my megacorp offers.

He may, or he many not.... when I was let go last time I got a whopping 2 weeks severance.... but the boss said that if he needed me he would call... that meant that I was NOT let go for unemployment....

From the first post, I would think he would qualify.... but that is a state decision.... and since he will be one of many, I bet the state will look into it a bit more than just a one off....

 

[48Fire]

Take it, no brainer.

 

[Brat]

The package offered may or may not be 'early retirement'. In practical terms for the OP it may be earlier retirement but for the workforce as a whole 'retirement' may not be a factor.

I have seen a lot of 'right sizing' offers, an employee about ready to retire would not be one I would select -- heck they will go without the incentive, why offer an inducement.

Button your lip about your options. The word does get around.

 

[travelover]

At MegaMotors, the first wave got a generous severance package, the second wave just got the boot. Be in the first wave.

 

[Turn_the_Page]

I would take it, period. If you're ready to retire, then you've got a nice bonus to kick you off. If you want/need to work a bit more, you've got some breathing room to get your self re-employed.

 

[robnplunder]

At MegaMotors, the first wave got a generous severance package, the second wave just got the boot. Be in the first wave.

Well said. Packages can get progressively worse as the company's financial struggle continues.A previous megacorp I worked for went through this.

 

[Texas Proud]

Well said. Packages can get progressively worse as the company's financial struggle continues.A previous megacorp I worked for went through this.

Not all layoffs are due to financial struggles.... some are due to decisions to get out of a certain business.... some are due to mergers where you are getting rid of overlapping workers....

I remember that my brother was working for a tech company and they announced a huge number of layoffs along with record profits....


Now, if the company is doing layoffs to try and stay afloat, that is something you need to look at....