Got pension payment offer.

Got my pension payment offer in the mail today. I quit UPS last year (moved to another state). Was there for almost 7 years, part time. The lump sum is a considerable about of money, and would really help me out. This may be a dumb question, but since I’m not there anymore, does the money keep gaining interest? The other offer they gave me was to take 400 and change when i turn 65. Will that number go up as the years go by?
 

Gipsee

Well-Known Member
Got my pension payment offer in the mail today. I quit UPS last year (moved to another state). Was there for almost 7 years, part time. The lump sum is a considerable about of money, and would really help me out. This may be a dumb question, but since I’m not there anymore, does the money keep gaining interest? The other offer they gave me was to take 400 and change when i turn 65. Will that number go up as the years go by?
No that number will not go up. That is the amount you will get should you choose not to take the offer
 

badpal

Well-Known Member
Tough decision, might be able to roll the lump in to your new jobs plan. But would think taking it could trigger some tax it too. Better have a talk with someone with brains. That extra 400 a month for life at 65 might be nice too. But dang. i would want it in ironclad writin where that money is coming from. No telling where UPS will be in 25 or 30 years .
 

Gipsee

Well-Known Member
Tough decision, might be able to roll the lump in to your new jobs plan. But would think taking it could trigger some tax it too. Better have a talk with someone with brains. That extra 400 a month for life at 65 might be nice too. But dang. i would want it in ironclad writin where that money is coming from. No telling where UPS will be in 25 or 30 years .

I thought long and hard when I decided to take it. I am already vested somewhere else and have a healthy retirement plan. By 2035 that $423 may be only worth about $150 with inflation so I'm cashing out. I was only with UPS 5 years and some months...I never planned on a UPS career. I was on the partner side (IT) so it was a starting point for my IT career.
 

badpal

Well-Known Member
I thought long and hard when I decided to take it. I am already vested somewhere else and have a healthy retirement plan. By 2035 that $423 may be only worth about $150 with inflation so I'm cashing out. I was only with UPS 5 years and some months...I never planned on a UPS career. I was on the partner side (IT) so it was a starting point for my IT career.
Prolly smart move, sounds like you got good job now, Is there a way you can roll that lump sum into another retirement plan if you wanted to avoid any tax now ? good luck
 

Gipsee

Well-Known Member
Prolly smart move, sounds like you got good job now, Is there a way you can roll that lump sum into another retirement plan if you wanted to avoid any tax now ? good luck
Didn't check... I work for Uncle Sam now and have for 18 years so I have a really healthy retirement plan. and I am already medically retired from the Navy. Plus I own a small business on the side so I will more than likely get the tax money back. I am going to pay off a few credit cards, roll some into an IRA and have a blast for my 50th next year.

I didn't work for Uncle Sam 18 years consecutively 18 years cumulative....10 years this time around.
 
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Tough decision, might be able to roll the lump in to your new jobs plan. But would think taking it could trigger some tax it too. Better have a talk with someone with brains. That extra 400 a month for life at 65 might be nice too. But dang. i would want it in ironclad writin where that money is coming from. No telling where UPS will be in 25 or 30 years .
It’ll help out a lot now. I’m not turning 65 for a few decades yet lol, so that 400 will probably be basically nothing then.
 

rod

#1 on Upstates "list"
Tough decision, might be able to roll the lump in to your new jobs plan. But would think taking it could trigger some tax it too. Better have a talk with someone with brains. That extra 400 a month for life at 65 might be nice too. But dang. i would want it in ironclad writin where that money is coming from. No telling where UPS will be in 25 or 30 years .
I hate to be the bearer of bad news but.............
 

Gipsee

Well-Known Member
Okay, thanks! Couple people told me to keep it in so it keeps gaining interest, but I didn’t think I’d do that, so I came here to ask.
yeah the first package in 2016 I didn't take and the retirement monthly amount in 2035 (the year I turn 65) is exactly the same amount but the lump sum buyout offer went up by 10k
 

overnite

Member
Didn't check... I work for Uncle Sam now and have for 18 years so I have a really healthy retirement plan. and I am already medically retired from the Navy. Plus I own a small business on the side so I will more than likely get the tax money back. I am going to pay off a few credit cards, roll some into an IRA and have a blast for my 50th next year.

I didn't work for Uncle Sam 18 years consecutively 18 years cumulative....10 years this time around.
If you don't roll it into an IRA or 401k and you're under 59 1/2 you not only pay income tax on it at your highest marginal rate, you also pay a 10% penalty.

So by spending it , or even paying down credit card debt, you lose the power of having that money work for you on a tax deferred basis, and you'll give as much as 45% of it to the Federal government (not to mention what you'll owe on state income tax depending on where you live.)

I would strongly suggest talking to a financial planner before you decide to take the lump and certtainly before you decide not to roll it over
 

overnite

Member
No telling where UPS will be in 25 or 30 years .
I wouldn't factor this into your decision making on whether to take the lump. First, UPS as company appears to be doing pretty well, certainly as well or better than the broad US economy. Second, Pension plan is about 80% funded, and with it closed to new entrants, and being frozen entirely in a couple of years, any funding gap should go down. Thus, even if UP ceased to exist, there would still be funds available to pay the pension.

Third, your pension benefit is fully insured by the Pension Benefit Guarantee Fund. If your benefit is less than $5,000 or so (it varies by age and other factors) you'e fully covered.

Forth, and most importantly, nothing is completely risk free. If you took the money and invested it yourself, i'd wager your risk that your risk of losing money in the market is greater than the risk that 1) UPS will go bankrupt, 2) the funding set aside for the pension, as required by federal statute, vanishes , and the PBGF goes away.

All 3 things have to happen for you to lose your pension and its extremely unlikely.
 

overnite

Member
yeah the first package in 2016 I didn't take and the retirement monthly amount in 2035 (the year I turn 65) is exactly the same amount but the lump sum buyout offer went up by 10k
That's because the difference in the time value of money between the lump and the pension payment stream has decreased with the passage of 3 years.

If you took the lump in 2016, you had 19 years to invest it before 65. if you take the lump now, you only have 16 years to invest it. The closer you get to your retirement age the higher the present value of the lump is. however you also closer to receiving the pension payments, so the present value of your pension payments is also higher.

Think of it this way, had you taken the lump in 2016 properly invested you would have expected to grow in the 3 years, and the higher 2019 offer reflects that.

So in real present dollars, the 2019 offer is not "better" than the 2016 offer, it just reflects that 3 years closer to retirement the present value of your pension benefit is worth more than it was 3 years ago regardless of whether you take that benefit as a lump or as a stream of future payments.
 

Pacman2253

New Member
Got mine in the mail a couple weeks ago, was scared to log on to the website to see the amount. Retired at 20 years 14 of them as a manager, ran a center. To tell you the truth i forgot about this :censored2:, i've been gone since 2001. Left them at 38 burned out, hired as a 18 year old. I looked at it got up and ran away from the computer. $214,000...i have two weeks to decide. I'm probably taking it.
 

UpstateNYUPSer

Well-Known Member
Got mine in the mail a couple weeks ago, was scared to log on to the website to see the amount. Retired at 20 years 14 of them as a manager, ran a center. To tell you the truth i forgot about this :censored2:, i've been gone since 2001. Left them at 38 burned out, hired as a 18 year old. I looked at it got up and ran away from the computer. $214,000...i have two weeks to decide. I'm probably taking it.
You need to get yourself a financial adviser ASAP-----the first consultation is usually free. I use Edward Jones but they are all about the same.

You definitely need to take the lump sum and roll it in to a Traditional IRA or 401k. DO NOT request a check because if you do and you cash it you will be on the hook for the 10% penalty and your marginal tax rate on the $214K. If you do cash it you have 60 days to "pay it back" and roll it over to avoid the penalty.

214k- what’s to think about?
A lot, actually. He need to talk to a financial adviser ASAP.
 

UPSER1987

Well-Known Member
You need to get yourself a financial adviser ASAP-----the first consultation is usually free. I use Edward Jones but they are all about the same.

You definitely need to take the lump sum and roll it in to a Traditional IRA or 401k. DO NOT request a check because if you do and you cash it you will be on the hook for the 10% penalty and your marginal tax rate on the $214K. If you do cash it you have 60 days to "pay it back" and roll it over to avoid the penalty.



A lot, actually. He need to talk to a financial adviser ASAP.
I didn’t mean that literally...geez
 
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