If one gets WFR'd, are we required to transfer our HP Pension to an IRA? I have been with HP/HPE for 23 years now. I received a mail about options to transfer out the pension to an IRA. Maybe because I am with HPE. I ignored it and kept it where it is. The interest on the pension is calculated quarterly. Some say it is earning at an annual rate of 8%. However, my calculation based on the latest quarterly interest is 19.12% annually. Anyone out there that got WFR'd but kept the HP Pension intact with Fidelity?
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After getting axed around four months ago, I transferred the CAPP I had from digital/Compaq, the HPE 401K (which was just the HP 401K cont'd), and the traditional HP pension to an IRA. Luckily I was fully vested in the HP pension before Carly terminated it. Fidelity made it extremely easy to transfer everything into one nest egg. No checks to endorse and some papers to sign at the local Fidelity office. These transfers should not amount to any kind of hassle on my 2017 tax return. The Fidelity lady told me that she has seen many HP and HPE WFRs take a portion or all of their accrued retirement to pay off their mortgage to avoid losing their home.
Since HPE was effectively spun off of Hewlett-Packard Company (HP became HP Inc. in name) you were effectively terminated from HP on November 1st, 2015. So, as an HPE employee you were able to roll your pension(s) to an IRA, with Fidelity Investments , or anyone else. You can still do that today. But you do not have to. As far as the rate of return, that 8% number is the default for modeling. As another poster pointed out, that's a "made up" number, just for using the modeling tool. Since a pension is effectively an annuity, you can only state a rate of return, upon exercising it.
I did modeling every year for about the last 10 years of my employment, using the current date as taking the annuity, I found the rate of increase, not rate of return, to be about 6.2%. This is pretty consistent and realistic across most USA pensions.
The good news is the HP Retirement Plan (HPRP) is well (fully) funded and since it's effectively closed to new particiapants and funding it should be OK.
If you would have rolled the lump sum into an IRA right after the split, even the most conservative investment mix should have easily out performed leaving it in the pension. And with an IRA you control your withdrawal rate.
Here's the big kicker to remember, it you start taking pension payments and die , unless you have a spousal benefit option, that money stays with the pension. Even with the spousal option when the two of you die, the remaining money stays in the pension. With an IRA you can pass it to your estate.
Last, if you are an old fortunate survivor HP,HPI or HPE that has both the HPRP and the Hewlett-Packard Deferred Profit Sharing Plan (DPSP) you can roll that to an IRA as well. Only caveat you can not roll the RP to an IRA unless you roll the DPSP first.
If you have both, the last kick in the nutz is if you die while still employed, or after leaving, but not drawing the the RP or the DPSP, upon your demise your spouse will only receive half of the DPSP lump sump. For me that was just over $100k. That's a big kick.
Read and understand the fine print. Fidelity can help, but you have to speak with the Fidelity team that knows HP's pensions. Last I talked with them they said there is about a dozen mostly based in Dallas, TX. The company did send these notices to everyone, but it looked like junk mail, and a lot of folks ignored it, or didn't understand it.
Note: the above only applies to original Hewlett-Packard Company (pre CPQ). Sorry, the old Digital , EDS folks really got screwed. Good Luck to All!
From the hpalumni.org site: If you move IRA or 401(k) money, be sure you insist that any checks be made out to "[Trustee] FBO [Your Name]" not directly in your name. ("FBO" means "For Benefit Of") While you can work around this, it is best that none of the retirement money touches your bank account.
Get an account (s) to transfer your 401k and your old HP annuity and fidelity 401k into. Call HP benefits and they make it very easy. They will send YOU a check with "Athene account for benefit of John Doe" and you will send it to Athene and no tax penalty. They really make it quite easy. Depending on your time with HP/HPE, you will get one, two or three checks.
Best of luck.
As what I just posted, the interest from August to November came out to 4.78%, for an annualized rate of 19.12%. I don't know where you pulled your 2% or 1% from. I am looking at actual numbers unless there have been a mistake by Fidelity. As further proof my pension account has appreciated 82% since Carly Fiorina discontinued it more than a decade ago.
Whoever told you your HP/HPE pension is earning 8% interest must be from some other world. Consider yourself lucky if it earns even 2%. I think it is closer to 1%.
You can transfer what you have in your pension to your 401K, tax free. If you withdrawe as cash, it will attact income tax. You can do it at any time, not necessarily be WFR'd or retire to do that. Anyone who has anything in their pension account is fully vested since company stopped contributing to pension plan more than 10 year ago.