Offered a package, would you stay or go??

[Bamaman]

The only downside is the Cobra insurance issue. Are you able to purchase healthcare insurance through a DW's company, for example? Of course you may be eligible to purchase O'Bamacare if you were cut loose.

You've got to go for it.

[Aiming_4_55]

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

[Animorph]

That's the jackpot, severance right when you were planning to leave anyway. Take it. You won't miss the missing few months of pay.

[pb4uski]

Quote:

Originally Posted by Bamaman The only downside is the Cobra insurance issue. Are you able to purchase healthcare insurance through a DW's company, for example? Of course you may be eligible to purchase O'Bamacare if you were cut loose. You've got to go for it.

I interpreted it as she would get the same COBRA as if she quit, it is just that the company will pay for her first 3 months of COBRA.

BC, I would go. Congratulations.

Just remember that if your retirement plan relies on 401k withdrawals that you need to be able to stay to Jan 1, 2016 (I presume the year you turn 55) in order to access your 401k penalty-free.

My mega did one of these voluntary separation offers about 25 years ago. The impact was that the employees with good job skills (other than some who were tied to the area) left, pocketed the bonus and quickly found other jobs and none of the deadwood signed up because they knew it would be hard to get a job elsewhere. So then we had more deadwood and less good employees left to do the same work. It was an unmitigated disaster.

[bingybear]

Quote:

Originally Posted by bclover don't want to name names but let's say it's one of the largest chemicals company's located id De.

IT is well documented in the press... no great insider information. Actually the layoff numbers are pretty tame. Nothing like the Lucent in the early 2000's.

Take the gift and hope you are not too important to let go of.

[jim584672]

Quote:

Originally Posted by rodi 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]

Quote:

Originally Posted by jim584672 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]

Quote:

Originally Posted by Aiming_4_55 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]

Quote:

Originally Posted by bclover 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.....

Quote:

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]

Quote:

Originally Posted by jim584672 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.