Pension Plans in Corporate America for those 40 and under

[ziggy29]

On this poll alone we have had almost half the people respond that they have a pensions. I find it [-]amusing[/-] scary that the people who are probably best off in terms of potential for comfortable retirement are the ones here on this board sharing startegies and goals, while the ones most at risk of coming up short seem to be oblivious to the vast resources of this forum, nevermind the rest of the internet.

Well, for one thing I suspect this forum is skewed a little toward older workers (i.e. 40s and 50s). These are more likely to have a pension than those in their 20s and 30s. Maybe some of them are voting even when it was intended to be for folks under 40?

We also seem to have a high ratio of government employees and military folks.

 

[Marquette]

I'm 30.

401(k) only. Current employer is 100% match to 6% plus another gift in March based on being at the company for the entire year previous.. Gift is based on planned versus actual benefits spending. That gift has run 1.5% the last three years. (probably longer, but I wasn't eligible my first year here, started in May).

I've been here just over 4 years now (gosh, 9 days ago... that's pushing it for me). I've put in $50k so far. The company has put in $30k.

 

[ats5g]

I personally wish my DB plans could be converted to a cash equivalent. I'd much rather have a big pile of cash in my 401k than some insurance product.

Can't you roll the lump sum of the pension over to an IRA when you leave the company?

btw - Nebraska forced people hired after 2002 into a Cash Balance pension plan b/c employees didn't fair well in the DC plan Nebraska sees red over its 401(k) plans.

 

[ziggy29]

Can't you roll the lump sum of the pension over to an IRA when you leave the company?

I suspect you could if you were offered a lump sum buyout on the pension. (And I believe you would have to roll it over to avoid penalties if you were under age 59.5, but I could be wrong.)

I suspect mine will be bought out. I have a small pension coming to me from a previous employer. I doubt the present cash value is even $20,000 -- it's something like $260 a month at 55 or $630 a month at 65. I have a feeling they may want to just cash me out of it when I turn 54 (a year before becoming eligible to collect). There's no point in them offering now when I could still croak and get nothing before turning 55.

 

[ats5g]

I suspect you could if you were offered a lump sum buyout on the pension. (And I believe you would have to roll it over to avoid penalties if you were under age 59.5, but I could be wrong.)

Each person would have to check out their own plan's Summary Plan Description (SPD), but in most corporate pension plans you're able to roll the lump sum over to an IRA when you terminate service. I think you're correct that any lump sum distribution from a pension plan that is not rolled into an IRA would be subject to income taxes and possibly the 10% penalty if done before 59.5. Though there may be special plan rules if you terminate after age 55.

I suspect mine will be bought out. I have a small pension coming to me from a previous employer. I doubt the present cash value is even $20,000 -- it's something like $260 a month at 55 or $630 a month at 65. I have a feeling they may want to just cash me out of it when I turn 54 (a year before becoming eligible to collect). There's no point in them offering now when I could still croak and get nothing before turning 55.

Again, check the SPD. Most corporate pension plans can only automatically "cash you out" [read: send you a check] if your lump sum is below $5,000 or so. Otherwise, you have to voluntarily take the lump sum. Though, there may be special rules spelled out in the SPD if the entire plan is terminated.

- Alec

 

[2B]

Again, check the SPD. Most corporate pension plans can only automatically "cash you out" [read: send you a check] if your lump sum is below $5,000 or so. Otherwise, you have to voluntarily take the lump sum. Though, there may be special rules spelled out in the SPD if the entire plan is terminated.

- Alec

I tried to cash out but if their calcs said the cash value was over $5K you got the annuitized amount. I agree with your conclusions.

 

[kaudrey]

I'm 39, but I am a govvie, so I have both a pension and a 401(k) - the TSP.