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Forced into taking pension by Nov 1st. 2016 ???
Old 10-21-2016, 10:18 AM   #1
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Forced into taking pension by Nov 1st. 2016 ???

Randomly discovered this morning the projected monthly benefit on my cash balance pension drops $118.00 per month from $1518 to $1400 Dec 1st. Due to the 2017 int. rate change. Seems like a no brainer taking it now, by Nov. 1st.
Was just surprised / shocked & wasn't planning on taking it for a few years. As its been growing nicely at about $10.00 a month.
Am 55, the pension cash balance is $291k or $1518 monthly if I take it now.
At the new rate, it would take over a year to get back up to $1518. And who knows after that? Cashing it out is not an option for me. Always planned on taking the annuity, so taking the cash does not interest me. Would not know where to put it anyway. Not to mention the Tax hit.

Took me 30 years to get the $1500 a month.
Nothing like what I signed up for in 1984. LOL LOL But its better than nothing.
Just looking for input as this caught me completely off guard 10 minutes ago.
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Old 10-21-2016, 11:22 AM   #2
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I assume you are still working? Thus the extra time to get it back to the current amount, based on base amount factor and age factor increases? Can you even take the pension while still working?

If you are not working, and were just letting the base amount and age factors increase, then you just have to decide on the long term value trade-off. Basically you get 2-4 years of the pre-Nov 1st money $1518 for rest of your life, vs waiting 2-4 years for that amount to increase over $1518 and then taking that amount for rest of your life.

I tend to be in the nickel today is better than a dime later philosophy. Even of you do not need the money now, just take it and invest it. This will extend that date of crossover.
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Old 10-21-2016, 11:32 AM   #3
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Originally Posted by almost there View Post
....Not to mention the Tax hit....
There is no tax hit unless you are foolish enough to have them cut you a check for the lump sum. Typically, the lump sum is rolled into a tIRA and it is not a taxable event.

Both $1,400 and $1,518 are better than what $291k could buy on the open market... but obviously $1,518 is bettern than $1,400.
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Old 10-21-2016, 11:37 AM   #4
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I retired 3 yrs ago. (left the real work force)
And yes, rolling into the IRA would be the other option.
But would probably have to do a 72T between now and 62.
So, no real interest it growing the Roth or trad IRA with these funds.
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Old 10-21-2016, 05:41 PM   #5
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Seems to me a no brainer to take it 11/1.
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Old 10-21-2016, 06:37 PM   #6
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Yea. Pulled the trigger today.
Funny how I just stumbled on it.
What a fluke.
Guess they don't advertise it. LOL LOL
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Old 10-21-2016, 06:55 PM   #7
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I thought once given it cannot be taken away (other than court order/bankruptcy), so how can you get less on 11/2/2016 than 11/1/2016?
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Old 10-21-2016, 07:11 PM   #8
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The lump sum / cash payout wont go down, but the annuity can. Its insured to like $5k a month, so I am safe. Barring Armageddon. Then who cares anyway. The calculation is based on a gov corporate bond interest rate as I recall. And that changes every Sep. and takes effect Jan one of the next year.
Last day of the year to lock in is prior to is Nov 1st for a Dec 1st distribution. Going off memory here, but I think that's pretty much it.


Found it:
For 2017, a 4.18% annualized rate will be used to calculate Cash Balance interest credits. This is a decrease from the current annualized rate of 4.98%. The 2017 rate is based on the third segment of a corporate bond yield curve determined by the IRS for August 2016 (see table below).
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Old 10-22-2016, 07:09 AM   #9
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Are you referring to the PBGC rate? It changes monthly.
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Old 10-22-2016, 09:14 AM   #10
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Just referring to the number they give as the "third segment of a corporate bond yield curve" Provided by the IRS. That's used for non grand fathered employees.
Still a great rate if one wanted to grow the lump sum & take the cash.
But for the folks in the annuity camp, this seems like a good time to start.
My monthly anunity would not go back up to where it is now until 05/01/2018. (If rates stayed the same next Sep)
And would miss $25,500 / 1518 monthly by waiting.
Also, it could go lower next Sep. Making it again go lower.
That was my rationale anyway.
Seemed like a good idea to me............ And so far
nobody has said otherwise. That's why I check in here.
To see if I missed anything...............

Example:

2014 1st segment 1.36% 2nd 4.60% 3rd 5.58%

2015 1st segment 1.24% 2nd 3.86% 3rd 4.96%

2016 1st segment 1.68% 2nd 4.05% 3rd 4.98%

2017 1st segment 1.39% 2nd 3.27% 3rd 4.18%

4,18 is as low as I have ever seen it. And I hate to say it
but I don't see rates jumping back up anytime soon.

Probably a signal they are about to sky rocket. LOL LOL
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