Thread regarding Chevron Corp. layoffs

My advice is to look carefully at the tax impacts of the pension restoration plan which arrives the year after you retire, unless you specify otherwise.

A lot depends on your specific tax situation and what other income you may have to declare, e.g. dividends, rental income, side hustle, etc. If you can minimize or avoid declaring these the idea is reasonable and various online calculators can help you figure out the details.

Most people with decent careers are not so pathetic that they have to play poor to get government handouts- lol.

I think you if you are trying to convert a large lump sum and get the full Obamacare subsidy you would need to retire early, like 50-55, and convert say 70-100k per year. If you have a more meager lump, you could retire later and still convert it all before age 70.

For me, the topic title “Annuity Optimization“, would better apply. I chose that option almost 4 years ago and it’s working out great. Thanks, Chevron.

You rollover the lump into an IRA tax free. Then you convert it to a Roth, a little bit at a time between your retirement year and age 70.5. If you are clever you can avoid income tax on it and get the full ACA subsidy.

Lump into a Roth? Even if you could, would you not have to pay taxes on the whole value of the lump in one year if you did this?

@ 1ftlc, Obamacare subsidies are based on your next years taxable income. Taking the lump sum and putting it in a qualified tax deferred retirement account, whether traditional or Roth IRA or 401k, won’t count as taxable income.

What would you estimate is the perfect number of years to convert your lump to a Roth? 10? 15? Can it be done while still qualifying for full Obamacare?

Good point. Perversely, a major market crash, Herculean efforts by the Fed to save the economy pushing interest rates to zero, and a major layoff at Chevron all coming together next year might be my perfect kickoff into retirement ;-)

@ 1etze, It seems like the contractor you know wasn’t really ready for retirement after 30 years with Chevron. Just because she returned to Chevron full time doesn’t necessarily mean she likes the work so much. Working for 30 years doesn’t guarantee anyone a financially sound retirement unless they were a person who planned and were disciplined savers. Time on the job is not a gauge of success, although it should be a good indicator. It’s the type of person themselves who determine whether they’ll have a successful retirement.

I bumped into a contractor who retired after 30 plus years at Chevron. She said she was happy to cash in the pension and put it to work in the market. With that settled, she was right back at Chevron full time as a contractor because she loved the work and hated puttering around the house.

If the much-feared stock market collapse comes any time soon, could be perfect timing to invest a giant lump!

And then you woke up.

Stars are aligning. It is after Oct 1. Interest rates are falling to historic lows. And management is hinting at layoffs with generous packages.

Perfect! That is excellent information and glad it worked out for you. Let’s see what happens between now and year end. Plenty of people would love a juicy package.

@Rwzv, The severance check will most definitely have withholding taxes taken out, as well as social security & Medicare taxes. Federal law stipulates that severance money with have a federal withholding rate of 20%. Add the usual 6.2% for social security and 1.45% for Medicare tax, then be prepared to see your gross severance reduced by 27.65%. If you live outside Texas, deduct your State’s income tax withholding rate. As to the question of timing, you have 90 days to get the signed severance papers to legal from the date you receive them. It takes 2 or 3 more weeks to get your severance check because it works on the normal payroll processing schedule. Therefore, if you get your severance packet near or after Oct 1, it’s possible for you to hold off signing and returning it for 90 days. By the time the check is cut, the date on it will be in the next tax year. I know this because I’m telling you this from personal experience.

Who can explain the tax consequences of the severance. Any withholding?

Don’t confuse the pension lump sum with a severance check. The lump can be rolled into an IRA, which means there is little different when you receive it in most cases. The severance as far as I know is on payroll the day you get it.

So for tax purposes, the tax year in which you receive the lump is the day you receive the check? This way one could adjust it by at least 90 days by delaying applying for it? The check comes with taxes withheld?

@Qnon, if severance packages are made available, the soonest the payout will be made is as follows:
First, you will stay on the payroll until the WARN period has expired, which could be 45 to 60 days. Next, you may be told you need to use up your remaining paid vacation days, unless they decide to liquidate you in cash. Once this time is used up, you will get your severance papers from the legal department by Fedex, in which you have up to 90 days to sign and return. Once the paperwork is received by Chevron in good order, you will be sent a check in the mail within 2 to 3 weeks, depending on the payroll schedule. As you can appreciate, the severance check is not immediate. There are certain time periods that must elapse.

If packages are available again, remind me the timing of payout. Is there flexibility?

Nice fed rate cut this week and more to come. Check your lump sum payout to see how big the gift was. Amazing.

I agree, but do your own stock research. The people I know who lost money were mo–ns who took advice from other people at work, chatting around the water cooler, etc.

Stock picking can be fun and profitable. Or just use any of the low-cost index funds. Come out ahead either way. Every wealthy person I know has been heavily invested in stocks or real estate or both.

That’s right, @Gvah. Now for the hard part.......always picking the good stocks and knowing when to trade them.

A few good stock picks can make all the difference between doing well and doing very well.

yes, I wish I would have bought more i-pods in 2005 too! then I wouldn't be on here pretending that I bought all sorts of APPL stock lol!

It's funny you mention APPL because I missed it in 2004 when the Ipod came out but finally picked it up in early 2005 when I broke down and bought an Ipod. Only wish I had bought a lot more!

@Beit, yes, you hit the nail on the - head plenty of "BS" as you put it is posted here if not all that is posted here. Everyone on here defies gravity with their investments after the fact. Oh, yes, I bought Apple in 2004 for $1.75 a share - lol!

"NASDAQ" is the spelling, but you get the point if you are an educated investor..

I don't know anyone who invests solely in the NAZDAQ and I wouldn't advise it. It's not common and not a good example.
Source: 45 years of investing , including through the dot-com bust.

Correct, I'm guess that person has done well in the market and/or had a fair sized lump sum (e.g. > $2 million).

Umm, i guess you can do your own math.my calculator suggests a 2015 starting point of as little as $1.2 millions grows when invested in the Nasdaq despite the named withdrawals.

@Bxzz, That math doesn’t compute. I call BS .... like in big time exaggeration.

i took the lump in 2008. I have drawn down around $150,000 per year. The total invested is still a bit higher than what I started with. I’m amazed.

“percentage of the original amount”. I took the lump in 2010 and the value has almost doubled. Have not touched it because I have been spending down my non-tax-deferred accounts. That said, before the end of the year I need to start my forced min withdrawals, so the free ride is coming to an end.

@zmfj, I took the lump sum at the end of April 2018 and invested all of it in various 401k offerings. In a year and a half, with all the ups and downs in the market, the value has grown ~16%.

Who has retired so far with the lump sum when and what percentage of the original amount do you still have?

Not necessarily a nightmare but plenty of tax due if the RMDs are especially large. Plan carefully!