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Old 09-09-2011, 10:51 AM   #21
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It had a DB pension which I could start drawing at 55, otherwise it would have been deferred until 'full' retirement age at 62.

However, the big carrot was retiree health insurance which I could sign onto at 55 at the same rates as employees, otherwise Cobra at full group rates for 18 months.
Those are excellent reasons to stay.

We basically get no health insurance when we leave...even if we do retire. Why do I say "basically"? Because policy says that if you retire, you can purchase a policy through the same company that our corporation does, but you must pay for the entire premium yourself. I looked at this, and the benefit is actually not that great...I can do just as well on the open insurance market...and we don't have an health issues which will preclude us from doing that.
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Old 09-09-2011, 10:52 AM   #22
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Thanks! Just posted there
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Old 09-09-2011, 10:53 AM   #23
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Originally Posted by Alan View Post
It had a DB pension which I could start drawing at 55, otherwise it would have been deferred until 'full' retirement age at 62.

However, the big carrot was retiree health insurance which I could sign onto at 55 at the same rates as employees, otherwise Cobra at full group rates for 18 months.
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Old 09-09-2011, 10:54 AM   #24
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Again below.
I'll have to see if I can roll my DC plan balance into an IRA...if so I'd definitely do that.

My DC plan is completely separate from my 401k. I already have plans to roll the 401k into my IRA...but wasn't sure if I could do this with the DC balance. As I said, I'll wait until I'm closer to research this.
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Old 09-09-2011, 03:59 PM   #25
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F. Dave,

I don't think your company's rules for separation versus retirement are unusual, which is why I hung on for an extra 3 years until I was 55, even though I was than more than ready to leave at 52.
+1

Think of it this way, Finance Dave - - - from the point of view of your company, you would not be retiring, you would be quitting. There's a huge difference.

Like Alan, I did not quit as soon as I was FI. I worked an extra 2 years in order to qualify for genuine retirement. In my case, among other advantages my formal retirement from federal employment included lifetime membership in group medical, for a monthly fee, as well as an immediate (tiny but nice-to-have) pension.

Seems like a lot of people are started on blood pressure medications and cholesterol medications in their mid 50's. I guess that could present some insurance problems (such as pre-existing conditions if you need to get a new policy). If so, it may be nice to be able to keep your health insurance, even though you have to pay both ends of it.
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Old 09-09-2011, 05:58 PM   #26
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Our bonus plan is similar in that even if you quit as soon as it is paid you have 2.5 months (20%) of next year's bonus that you are leaving on the table. That's just the way it is.

I have some things similar to you in that I would have to stay another 6 years to be a retiree, but want to leave much sooner. Not that it is a bad place to work but more because I'm just tired of working.

If losing out on the retirement benefits bothers you, you could consider dropping down to 50% time from now to retirement and see if it would count. (It would in my case).
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Old 09-09-2011, 06:37 PM   #27
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My ex-employer will pay the bonus in the year after retirement prorated to the number of days you worked in the year you retired. The previous practice was to allow your former boss to use discretion is allocating the bonus funds among the current workers and the recently retired. Needless to say they exercised discretion in allocating $0.00 to recently retired. After a lawsuit they changed the policy to what I described in the first sentence. My former boss has nothing to do with it.
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Old 09-09-2011, 10:15 PM   #28
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I'll have to see if I can roll my DC plan balance into an IRA...if so I'd definitely do that.
I recently left my former (Canadian) company and rolled my DC pension lump sum ($196K after 21 years service) into a Locked In Retirement Account (LIRA). My other options were to annuitize it (not in this interest rate environment or at my age!) or take the cash (which would have generated a big tax hit).

What Is A Locked-In Retirement Account (LIRA)? Canadian Finance Blog

Apparently at some point I can elect, one time, to move 50% of the LIRA over to a RLIF (registered life income fund). LIRAs and RRSPs (registered retirement savings plans), being tax sheltered vehicles, are usually kept for as long as possible to defer taxes, but at age 71, forced withdrawals begin. One caveat is that if you have a lot of money in them, your forced taxable withdrawals may be more than your expenses. In my case that is likely. So I may elect to start withdrawals earlier than I am required to, at a time when I have little or no other income, and will be in a low tax bracket.

By the way, you are very lucky to have bonuses. And your DC "pension" is more the rule than the exception nowadays. It's a misnomer, because a pension implies guarantees, and with a DC plan, there are none and the employee takes all the risk.

But you know that, because you are a Finance Dave!
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Old 09-13-2011, 05:44 AM   #29
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i face a similiar issue. My company has a Definied benefit Pension but accumulation was frozen a few years back. Full retirement at 65, reduced by 5% per year for early retirement with 10 years of service. So at 55 you get only 50%.

But i have a deferred comp plan which has early retirement option at 55 with 5 years of service. And I have a big chunk of money in there. If I leave before 55 then it is considered separation and i get the money in ONE lump sump which throws me in the top tax bracket for that year (defeating the purpose of the original tax deferral). So for me - i need to hang on until 55 (even though I have been ready for a while) just to avoid that tax hit.

I plan to not start the definied pension withdrawl until 65 so I am planning to use 2 different retirement dates.

Since I do not want to show my hand this early, I have not been able to ask a clear question to HR but have nosed around a bit and think it will work.

Good luck
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Old 09-13-2011, 08:23 AM   #30
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i face a similiar issue. My company has a Definied benefit Pension but accumulation was frozen a few years back. Full retirement at 65, reduced by 5% per year for early retirement with 10 years of service. So at 55 you get only 50%.

But i have a deferred comp plan which has early retirement option at 55 with 5 years of service. And I have a big chunk of money in there. If I leave before 55 then it is considered separation and i get the money in ONE lump sump which throws me in the top tax bracket for that year (defeating the purpose of the original tax deferral). So for me - i need to hang on until 55 (even though I have been ready for a while) just to avoid that tax hit.

I plan to not start the definied pension withdrawl until 65 so I am planning to use 2 different retirement dates.

Since I do not want to show my hand this early, I have not been able to ask a clear question to HR but have nosed around a bit and think it will work.

Good luck
Yes, I see what you're saying...similar to my issue. Perhaps you can poke around and find out of you can roll that lump sum to an IRA without showing it in reportable income that year.

I know what you mean about not showing your hand, I'm in the same submarine boat.
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Old 09-13-2011, 09:16 AM   #31
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Where I am now I have somewhat similar rules to live by. Cash balance pension that vests after 5 years of service, earliest allowed annuitization at 50, but subsidized retiree healthcare (worth vast sums) does not begin until 55. The twist that we have is that a couple years ago they decided they would allow the purchase of additional payout credits with 401k funds. This is allowed once a year and can be in any amount of at least $25k. Since I am a couple years away from vesting in the cash balance pension (at which time I will be 40), all of this is pretty far away. We'll see how long I enjoy working where I am and then make decisions based on what the rules are.
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Old 09-13-2011, 03:01 PM   #32
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Originally Posted by Finance Dave View Post
I'll have to see if I can roll my DC plan balance into an IRA...if so I'd definitely do that.

My DC plan is completely separate from my 401k. I already have plans to roll the 401k into my IRA...but wasn't sure if I could do this with the DC balance. As I said, I'll wait until I'm closer to research this.
My plan sounds very similar to yours and it does allow you to roll the funds into another qualified plan (IRA).
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Old 09-13-2011, 03:29 PM   #33
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I often felt trapped by my megacorp's retirement program. It was (overall) relatively generous (subsidized medical ins. being the biggie in my case). It was, however, extremely rigid. One day "nothing", the next day "benefits" - no exceptions. It also had the increasing-benefits-due-to-time-served that many have described. This tended to lead to the "one more year" syndrome.

Very early retirement could be very expensive. Everything was back-loaded. So, for me, I "titrated" the benefits to fit my needs - retiring later than I had hoped, but earlier than most of my peers.

Oddly, at one point when retirement first became available, I decided to stay because i was in one of the periods when I was enjoying my w*rk. When that changed, I pulled the plug, leaving some (but not a lot of) benefits on the table. Overall, I'm okay with the way it worked out. Anyway, regrets are for fools.
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