Anyone with experience getting a lump sum for severance? How would one calculate what that amount would be? Do the just take your gross pay for X amount of weeks? Taxes? 401k loans? Etc
I’m expecting the ax soon and am wondering how I could ballpark the sum.
Once you're put on leave you have the opportunity to change your benefits because it's considered a major life event to be put on leave. Then when the end of your notice period ends you can again change your benefits because the major event is that you're laid off.
Run the numbers and verify eligibility in whatever program you want to sign up for first, because once you notify WF you want a lump sum and submit the completed form, that's it. There's no undo for that.
What if I'm eligible for my state's free healthcare program? Would it make sense for me to take the lump sum so I'm not needlessly paying for health insurance? I don't need the other stuff, like life insurance/etc.
Another said it, but I'll repeat it: If you take the lump sum, all your benefits stop immediately. For many, that is huge, as you might currently be paying, say, $250/month for health insurance through the company and could see it skyrocket to $1200/month if you switch to COBRA or perhaps $700/month via ACA coverage.
As for the tax impact, that's going to depend on years of service. If you get laid off in mid July, the end of the notice period will be around mid September, which would be about 7 pay periods. Since the severance is 1 pay period per year of service, the tax impact would likely be a wash if you have under 7 years of service, but would potentially be more in your favor to not take the lump sum if you have over 7 years.
Another option would be suppose you had 20 years of service and get laid off in a couple weeks and it takes until around the end of this year for you to get a new job. In that case you'd be on your new company's benefits by the start of 2024 and still have perhaps 13 WF severance pay periods left. Once in 2024 and on your new company's benefits, then it would potentially make the most sense to just take the WF lump sum for the remainder.
WF lets you switch from regular pay to lump sum at any time in your severance, but once you make the choice, you can't undo it. So the safest time to take the lump sum is only after you've started your new job or gotten on your new health insurance one way or another.
@1sja+1npnWGTu
Exactly. I’ve been here 16 years and it actually used to be a really good place to work. So many opportunities. I was able to travel to take training, to train others, and could take local development courses. Great benefits. Actual recognition. Leaders who invested in our development and truly wanted us to succeed.
That’s all long gone. I’m glad I had those opportunities but it’s awfully sad to see how things have gone downhill so quickly. The biggest investment I have now around this place is severance.
"Astounding that anyone would spend 24+ years at WF."
The last four are not indicative of the prior 20.
Astounding that anyone would spend 24+ years at WF. Enjoy your 12-mo. severance. Hope it was worth it.
I hve 12 months severance plus 60 days non working. Going to ride it out until next May and retire to keep my benefits. A nice 14 month vacation!
@rlt actually, it could push you up a tax bracket, especially if you are a severed employee who has a lot time with the company. You might end up paying in more in taxes when you file your 2023 return if 2024 income is pushed into 2023. Taxes are on a cash basis, not accrual.
"ballpark" is that you get 2 weeks for every year of service (minimum 8 weeks), minus tax withholding which you can estimate by looking at your current paystub.
Whether that is a good option for you or not... you should consult an accountant or some other tax advisor.
Don't forget if you get severance in a lump sum, all your benefits stop. Say bye to health insurance
Not true.
Not a great option unless you're desperate.
Severance paid as a lump sum is going push you up a few tax brackets and cause more of that money to wind up in the tax bucket than your wallet.
Sure, there are other situations or circumstances that could alter the logic on it but some of those are easy to work around.