Case Study: How We Helped 3 Clients with Their AT&T Retirement Benefits
How we've approached an involuntary layoff, voluntary retirement, and a current employee nearing retirement
Our Farther Focus team has worked with many employees of telecom giant AT&T over the years. And with more than 200,000 people working at AT&T currently, there are many different situations that can unfold when it comes to financial planning, and, more specifically, retirement planning. Our goal in this case study piece is to briefly capture three different types of planning circumstances surrounding AT&T employment — involuntary separation, voluntary retirement, and nearing retirement. Let's dive into the individual cases.
Name: John
Position: Network Engineer
Age: 57 Years Old
Years of Service: 37
Planning Focus: Involuntary Separation from AT&T in 2019
John qualified for retirement benefits when he was laid off from AT&T. As such, he was able to effectively retire with his severance that was paid out for six months of pay. We recommended that he opt to receive his severance in Q1 of the following year to take advantage of his lower income taxes. He could've received his severance in Q4 of 2018, but that would've raised his income tax.
When it came to his pension, John chose the lump sum payout on his pension. Since present value segment rates had decreased over the year, we were able to recommend he wait until Q1 of the following year to initiate his pension payout. This resulted in a 15% larger lump sum payout.
Since John opted for deferral strategies for both the pension and severance, he needed to satisfy his cash flow through his 401K. We recommended leaving the 401K in the employer-sponsored plan. This enabled him to utilize the funds for post-55 withdrawal. This circumvents the normal age penalty on distributions pre-age 59.5.
Name: Phil
Position: Comm Tech
Age: 64 Years Old
Years of Service: 32
Planning Focus: Voluntary Retirement from AT&T in 2022
Phil qualified for retirement benefits and chose to retire. He considered retiring in either 2021 and 2022, and we provided consultations planning his cash flow and budget and retirement timeline. Since union employees receive full pension and retirement benefits once they have 30 years of service, he had the freedom of choosing between the two dates.
As part of the retirement process, Phil preferred to take the lump sum payout on his pension. Since the present value segment rates for both those years remained extremely low, he was not time constrained on his retirement dates and chose to retire at the latter date.
Once Phil retired, we were able to provide support by managing his pension and 401K funds. On top of that, we helped guide him through each step of the retirement process
1. Picking a date based on his cash flow situation
2. Submission of a resignation letter
3. Pension election packet through Fidelity
4. Special enrollment for Retiree Medical
5. Rollover of 401K funds
Name: Sherry
Position: Lead Product & Development Manager
Age: 64 Years Old
Years of Service: 27
Planning Focus: Currently Employed at AT&T
Sherry is a current employee at AT&T. She plans to retire sometime in the next five years. We provide ongoing consultations on picking dates and making sure she's making the most of her benefits. As a current employee of AT&T, she must keep the funds of her 401K at Fidelity. We provide management services on her 401K by rebalancing her funds and providing guidance on the after-tax rollover feature. This allows her to circumvent the salary and contribution limits to fund a Roth IRA each year she has spillover contributions. Additionally, she had an inherited IRA from her father who also worked at AT&T. We provide management services on those funds, selecting investments and following required distribution guidelines.
