I am a bit surprised that no one has mentioned on this board that ex-employees were given an opportunity to cash out of their 80 point plan regardless of age. I got the notice in late summer 2017 and had to make a choice by think it was 10/31/17. The decision greatly depends on your age. If your 55 or under then your going to wait another +10 years before you can touch it and given time money value maybe its best to take the lump sum cash now and invest on your own. If your 60sh probably makes sense to wait. Everyone is obviously unique situation. Curious if any other ex-employees on this board received the same offer or know someone that did?
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Good thread
Great responses - thank you all for taking time to chime in.
I did but at age 45 it made no sense to take the 80-point plan lump sum payout and have to discount it something like 80% due to being 15 years shy of age 60. I left it with them but rolled over my APF portion into an IRA. I'm vesting into another pension plan at a different company so I didn't need the money. For it to work for me I would have needed to get at least 60% of the lump sum.
The money could be rolled over to IRA and pay no taxes on it or break it up into cash and rollover. Therefore the $100k in 10 years could be substantially more if invested properly giving more compelling reasons to take the money now. Also, it was not offered the same year I got a severance package lump sum payout so no compounding tax issues.
Your going to pay taxes on it no matter your decision. When your 65 and start the monthly installments that will be taxable income. The time value of money is also a factor. If your 55 now and someone offered you $100k today or said wait 10 years and get $700/month, what would you do? Remember that $700 is going to be worth roughly 20% less in 10 years with just a 2% annual inflation rate. So you will actually net roughly $500/month in today's dollar value. It is going to take a lot of monthly payouts to equal $100k in today's value - like 200 at least. Don't forget the company is hoping and betting on you kicking off sooner rather than later. Question, will you live long enough to collect that money you worked your whole life for? Like everything there are no guarantees, especially guessing on your life expectancy. Waving $100k in your face now is a guarantee. Think about it.
Op are you serious. The only reason why a person should take the lump sum is if the company is expected to go bankrupt. If you take the money you will be taxed on it. The calculation would be YTD earnings + layoff package + lump sum = one heck of a tax payment due.