To @hpk+1gUhKE1d Yes!! If those people who didn't leave at the end of 2020 (lumpsum using August of 2020 rates) and leave at the end of this year (getting their payment in January of 2023---Using August of 2022 rates) will essentially have worked for nothing.
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No. The people who didn't leave in 2020 did not miss out on a large lumpsum. There was not a significant increase in rates through August 2021. Those August 2021 rates are in effect for distributions this year. August 2022 rates are used for 2023 calendar year dustributions. You can see through April, there has already been a significant increase in rates compared to last August. This will translate to a substantial reduction in lumpsum payout - over a year's pay.
To @mhh+1gUhKE1d All 3 of those rates on the August line are used. The formula is broken down into three segments. The formula uses your life expectancy, and uses the first interest rate for the first 5 years after you retire, then the next interest rate is used for the next 10 years of your life, and the third is used in the formula for your remaining life expectancy years. It's a complicated formula.
Some people who didn't leave back in 2020 lost out on a very large lumpsum. So, essentially, they have worked the last year and a half for nothing. The difference in their lumpsum is more than what they go paid to work the last year and a half.
Here is a link to a Mobil Oil video that explains how the rates affect lumpsums. It's a video for Mobil Employees, but Ford works the same way. Fast forward to the 8:15 minute in the video where they talk about how the interest rates affect the lumpsum
https://www.youtube.com/watch?v=WXoDZ1kTZbQ
Check out the government rates at this link: (Ford uses August)
https://www.irs.gov/retirement-plans/minimum-present-value-segment-rates
Your lump sum number for this year is locked until 12/31.
On 1/1/23 the numbers the company run in August go into effect the first day of the year. so, watch the interest rates key factor.
Which does it use, first, second or 3rd segment rates?
So if we want the higher lump sum this year, give notice of retiring, or try to wait for a possible involuntary? How long can we wait?
Is it August 1st rates or end of August rates?
If any of you are looking to retire and thinking of taking the lumpsum, you best do it this year in 2022. If you wait until next year the lumpsum will be significantly smaller. The government segment rates that Ford uses are climbing fast. Ford uses the values from August from the year previous to determine the lumpsum value. So, if you retire this year and get your lumpsum paid to you this year, the August 2021 government rates are used. If you wait and get your lumpsum payment in 2023, Ford will use August 2022 government rates. The higher the rates, the lower the lumpsum. So, if you are thinking of retiring and taking the lumpsum... DO IT THIS YEAR! Get your lump sum before the end of 2022. It is a huge difference in the lumpsum.,,, don't wait !
https://www.irs.gov/retirement-plans/minimum-present-value-segment-rates
Because they cut you loose. Pay you according to the documented SIRP, and they are done. Voluntaries include other expensive incentives.
How are involuntaries cheaper?
Involuntaries are cheaper.
No.