Pensions and Retirement Plans

Subterms

    Latest story

    100 Shares99 Views

    How Donald Trump’s Presidency Could Impact Retirement Rules

    by

    Readers had questions about individual retirement accounts, distributions and access to brokerage accounts if they moved away from the U.S. Here are some answers.Your retirement accounts may be the biggest component of your net worth. Or maybe those large balances are still only a goal, and you want to know if any changes coming in the next four years will help you get there — or get in your way.Of the 1,200 or so money-related questions we’ve received from readers in the days since the presidential election, many have been about retirement. We have some answers for what we know and context for what we don’t yet know. Most of them have nothing to do with Social Security; my colleague Tara Siegel Bernard answered questions about that program last week.But first, here’s an important caveat that is true in any administration, but especially in one like this: For things to change, President-elect Donald J. Trump has to want things to change, act on that desire and then succeed. If lawmakers are involved, they also have to have the desire, follow through and pass legislation.There will be plenty of noise, but in this particular category, it’s possible that not much of substance will look different four years from now.What did Mr. Trump say he wanted to change about individual retirement accounts or 401(k)s?Not much. Neither Mr. Trump’s campaign website nor the Republican Party platform that it pointed to said anything about I.R.A.s or workplace retirement accounts like 401(k)s, with one exception that probably wouldn’t affect many people.On his campaign website, Mr. Trump sounded off about environmental, social and governance, or E.S.G., funds and their place in workplace retirement plans. During his first term, the Labor Department issued a rule related to what sorts of funds an employer — which must act in employees’ best interest as a so-called fiduciary — can use in those plans.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    More stories

    • 138 Shares99 Views

      in Elections

      Why States Are Offering Workers at Private Companies Access to I.R.A.s

      by

      With the plans, workers are automatically enrolled and contribute through payroll deductions. The goal is to help more Americans save for retirement.Traditional pensions are increasingly rare. About half of employees at private companies don’t have access to a retirement plan. And retirees themselves say they haven’t saved enough.That is why states have decided to step in and offer retirement accounts for private-sector employees, helping workers to save more and, new research shows, perhaps even spurring companies to offer their own workplace retirement plans.Automatic individual retirement account programs, known as “auto-I.R.A.s,” typically require private employers that don’t offer workplace retirement plans like 401(k)s to register for state-run plans.Workers are automatically enrolled in I.R.A.s, often with 3 to 5 percent of their income deducted from their paychecks, but can change the amount or opt out if they prefer. The employers — typically small businesses and nonprofits — provide access to payroll deductions to ease worker contributions, but don’t oversee the plan or pay fees.Auto-I.R.A.s are now available in 10 states, including New Jersey and Delaware, which started plans this summer, and soon will be in seven more, according to the Georgetown University Center for Retirement Initiatives. At the end of October, there were more than 930,000 accounts with $1.7 billion in savings for the eight plans for which data was available, according to the Georgetown center.Workers can, of course, open an I.R.A. on their own at a bank or brokerage. But few workers do so, perhaps because of inertia or because they are intimidated about making investment choices.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 125 Shares99 Views

      in Elections

      Older Workers to Get ‘Super’ 401(k) Catch-Up Contributions in 2025

      by

      Workers who are 60 to 63 will be able to put in up to $11,250 in extra contributions, if they can afford it.Will you be age 60 to 63 next year? Lucky you! You have the option to contribute several thousand dollars more to your workplace retirement plan.That’s if you can afford it, and many workers will find it’s a stretch.Federal tax law already allows people 50 and older to make extra contributions, above the annual deferral limit, to a 401(k) or similar employer retirement plan. This year and next, that standard “catch-up” contribution is $7,500.But starting next year, the catch-up contribution limit will be higher for people in their early 60s, as part of the federal Secure 2.0 tax law passed in 2022. They can contribute up to $11,250 next year — an additional $3,750 in catch-up contributions — beyond the general 2025 deferral limit of $23,500, the Internal Revenue Service said. That means they can potentially contribute up to $34,750 in total to a workplace retirement account.This additional contribution — sometimes called an “enhanced” or “super” catch-up option — is available to workers ages 60, 61, 62 and 63. You’re eligible if you reach that age during the calendar year, said Dan Snyder, director of personal financial planning for the American Institute of Certified Public Accountants. (Once savers turn 64, they’re no longer eligible for the extra savings but can contribute the standard catch-up amount.)The idea is to give people who are nearing retirement age, but are behind in savings, the chance to accumulate more money for their post-work lives. “This is an opportunity to make up for mistakes from the past,” said David John, senior strategic policy adviser at the AARP Public Policy Institute, which focuses on issues relevant to older Americans.Getting Americans to save more for retirement is a concern as the population ages, especially as the number of companies offering pensions dwindles. The typical household headed by people ages 55 to 64 has just $10,000 saved in a retirement account, according to an analysis of federal data by the Economic Policy Institute and the Schwartz Center for Economic Policy Analysis.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 125 Shares119 Views

      in Elections

      Boeing Will Sell $19 Billion in Stock Amid Costly Strike

      by

      The aerospace company, locked in a standoff with striking workers, is seeking to shore up its balance sheet and avoid a credit rating downgrade.Boeing on Monday began to raise roughly $19 billion by selling stock, an attempt to shore up its finances as a costly and disruptive worker strike weighs on the plane maker’s balance sheet.The sale comes shortly after the aerospace giant reported a $6.1 billion loss in the last quarter and said it was cutting about 17,000 jobs. A weekslong strike by Boeing machinists is costing the company tens of millions of dollars each day, according to analyst estimates, adding to the financial strain created by long-running production and quality issues.The fund-raising aims to stave off a potential credit rating downgrade, which could make it more expensive for the company to borrow money. Boeing has about $58 billion in debt. S&P Global Ratings said this month that it was considering lowering Boeing’s credit rating to “junk” status, depending on how long the strike continues.Boeing’s shares fell about 1 percent Monday morning. The company’s stock has fallen more than 40 percent this year.Last week, Boeing’s largest union, which represents about 33,000 workers, rejected a tentative labor contract, extending a strike that began last month and has halted airplane production at crucial plants in the Seattle area. The proposed agreement did not address a frozen pension plan that workers were seeking to restore.Boeing indicated in regulatory filings this month that it planned to raise as much as $25 billion by selling stock or debt over the next three years, and the company entered into a $10 billion credit agreement with a group of banks. It described the plans as “two prudent steps to support the company’s access to liquidity.”The plane maker hasn’t reported an annual profit since 2018. Before the machinists’ strike started to weigh on the company, two fatal crashes of Boeing’s 737 Max in 2018 and 2019 cost it billions of dollars and severely damaged its reputation. Concerns about the safety of Boeing’s commercial planes resurfaced in January, when a door panel on a 737 Max 9 jet blew open during an Alaska Airlines flight.The stock sale on Monday covers only the company’s near-term needs, “without an extended strike or further production disruptions,” analysts at Wells Fargo said in a research note. More

    • 63 Shares169 Views

      in Elections

      Boeing Union Workers Reject Contract

      by

      The vote, hours after Boeing reported a $6.1 billion loss, will extend a monthlong strike at factories where the company makes its best-selling commercial plane.Boeing’s largest union rejected a tentative labor contract on Wednesday, a blow to the aerospace manufacturer and the Biden administration, which had intervened in the hopes of ending an economically damaging strike that began more than five weeks ago.The contract, the second that workers have voted down, was defeated by a wide margin, with 64 percent of those voting opposing the deal, according to the union, the International Association of Machinists and Aerospace Workers. The union represents about 33,000 workers, but it did not disclose how many voted on Wednesday.“This wasn’t enough for our members,” said Jon Holden, president of District 751 of the union, which represents the vast majority of the workers. “They’ve spoken loudly and we’re going to go back to the table.”The vote is a setback for Boeing’s new chief executive, Kelly Ortberg, who is trying to restore Boeing’s reputation and business, which he described in detail earlier on Wednesday. In remarks to workers and investors, Mr. Ortberg said Boeing needed to undergo “fundamental culture change” to stabilize the business and to improve execution.“Our leaders, from me on down, need to be closely integrated with our business and the people who are doing the design and production of our products,” he said. “We need to be on the factory floors, in the back shops and in our engineering labs. We need to know what’s going on, not only with our products, but with our people.”Mr. Ortberg delivered that message alongside the company’s quarterly financial results, which included a loss of more than $6.1 billion. This month, Boeing also announced plans to cut its work force by about 10 percent, which amounts to 17,000 jobs. Boeing also recently disclosed plans to raise as much as $25 billion by selling debt or stock over the next three years as it tries to avoid a damaging downgrade to its credit rating.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 113 Shares109 Views

      in Elections

      Ending the Boeing Strike Won’t Be Easy. Here’s Why.

      by

      The vehemence of workers over wages and other issues caught the company and union leaders off guard.When thousands of Boeing employees rejected a new labor contract, precipitating a strike that began on Friday, they were at odds not just with management but also with the leaders of their union, who backed the proposed deal.Now, any attempt to reach an agreement must take account of the demands of the rank and file of the International Association of Machinists and Aerospace Workers. What they want — significantly larger pay raises and far more lucrative retirement benefits than their leaders and Boeing agreed to — may be too much for management. But labor experts said the strength of the strike vote — 96 percent in favor — should help the union get a better deal.“Those overwhelming numbers are kind of embarrassing, certainly from a public relations standpoint for the union,” said Jake Rosenfeld, a sociologist who studies labor at Washington University in St. Louis. “But they also simultaneously present the union with leverage when it does resume negotiations.”And Boeing is in a difficult spot after a slowdown in commercial jet production — required by regulators after a panel blew out of a passenger jet fuselage in January — led to big financial losses. A long strike at Boeing’s main production base in the Seattle area would add significantly to the losses and possibly tip its credit rating into junk territory, a chilling development for a company with nearly $60 billion in debt.The federal mediation service said on Friday that the union and Boeing management would resume talks in the coming days.“We’re going to go back to the bargaining table, and bargain for what our members deserve,” Jon Holden, the president of District 751, the part of the machinists’ union that represents most of the workers on strike, said in an interview. “We’ll push this company farther than they ever thought they’d go.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 75 Shares129 Views

      in Elections

      What to Do With an Inheritance

      by

      A sudden windfall while grieving can be an emotional minefield, particularly for younger adults. Experts share ways to handle it wisely.Michael Hay knew his mother was financially secure, but he didn’t fully know her situation until she was admitted to a hospital in August and he was granted her power of attorney. Even then, it wasn’t until his mother’s unexpected death, about a month later, that Mr. Hay understood that he and his two sisters were about to inherit a sum that would make a real difference in their lives.Nine months later, Mr. Hay, 47, says he’s still processing the shock of suddenly losing his 78-year-old mother while gaining an inheritance he wasn’t prepared to receive.“I still call it ‘my mom’s money’ even though it’s legally in my name,” said Mr. Hay, who works at a tech start-up and lives in Madison County, N.Y.Mr. Hay’s reaction to his sudden wealth is not unusual. “It is a big shock both emotionally and financially, and I don’t know that anyone is ever prepared,” said Kathryn Kubiak-Rizzone, founder of About Time Financial Planning in Rochester, N.Y. She recommends that beneficiaries not make any financial decisions for the first six months because they’re likely to still be grieving.Research shows that more adult children may find themselves unexpectedly inheriting wealth over the next two decades. The silent generation, or people born roughly between 1928 and 1945, and its successors, the baby boomers, are expected to transfer significant wealth to members of Generation X and millennials over the next 20 years, according to the Wealth Report, a publication from Knight Frank, a London global property consultant.Federal Reserve figures show that half of all inheritances are less than $50,000, but with boomers reaching 80 and beyond, members of their family may begin to inherit more wealth. More than half of millennials who are anticipating an inheritance from their parents or another relative expect to gain at least $350,000, according to a survey by Alliant Credit Union in Chicago. (Whether they actually receive that much is another question.)We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 125 Shares149 Views

      in Elections

      IBM Reopens Its Frozen Pension Plan, Saving the Company Millions

      by

      The company has stopped making contributions to 401(k) accounts, and instead giving workers cash credits in a new version of its old pension plan.Traditional pension plans haven’t come back. But the news from IBM might lead you to think so.Last month, IBM thawed out a defined benefit pension plan that it had froze more than 15 years ago. The company has also stopped making contributions into employee 401(k) accounts.These moves are startling, because, on the surface, at least, IBM seems to be reversing a decades-long trend of corporations moving away from traditional pension plans. With the old plans, companies promised to pay employees retirement income that rewarded them for long years of service. But these plans were expensive, and IBM and hundreds of other firms instead began to emphasize 401(k)s that moved the primary responsibility for saving and investing to workers. IBM’s new approach is significant because the company has been a leader in employee benefit policymaking. What it is doing now is no simple return to the classic cradle-to-grave benefits system. In fact, IBM’s new pension plan isn’t nearly as generous to long-tenured employees compared with its predecessor.The move has real advantages for some people who work at IBM, particularly those who put little or no money of their own into 401(k)s and who stay at the company for a relatively short while.Crucially, IBM’s maneuver is likely to be wonderful for its shareholders. The company is saving hundreds of millions of dollars a year by stopping contributions to employee 401(k) accounts. And it doesn’t need to put any money into the pension plan this year — and, probably, for the next few years — because it has plenty of money already in it. On a purely financial standpoint, IBM is improving its cash flow and bottom line.For a small but important subset of companies — those with fully funded, closed or frozen pension plans — IBM’s move could be a harbinger of things to come, pension consultants say. IBM is using a surplus in its pension fund to simultaneously change its employee benefits package and help the company’s finances.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 125 Shares119 Views

      in Elections

      Employers Can Now Enroll Workers in Some Emergency Savings Accounts

      by

      But many companies are spurning the “clunky” legal requirements for accounts linked to retirement plans. Instead, some have stand-alone rainy day offerings.Starting this year, a federal law allows employers to enroll workers in emergency savings accounts that are linked to their retirement accounts. But some companies, put off by the law’s complex rules, have begun offering rainy day benefits outside workplace retirement plans.“I do think there is tremendous interest in emergency savings programs,” said Matt Bahl, vice president and head of workplace financial health at the Financial Health Network, a nonprofit that promotes financial well-being. “Having access to liquid cash can greatly reduce levels of financial stress.”The Employee Benefit Research Institute, a nonprofit, found that about three-fourths of large employers (those with 500 or more workers) offered or planned to offer hardship or emergency assistance programs to workers last year. Of those, about a third said they offered an emergency savings account feature and another third planned to do so in the next year or two.But while the law, known as Secure 2.0, has helped draw attention to the need for rainy day savings, its rules for setting up emergency accounts within retirement plans are “clunky,” Mr. Bahl said. For instance, only workers making under a certain income limit ($155,000 for 2024) may participate, and their emergency savings are limited to $2,500, though employers can set lower ceilings. And though employers can help with contributions, they must deposit any match into the worker’s retirement account — not the emergency savings account.While employers may eventually choose to offer such “sidecar” savings accounts, stand-alone emergency savings programs are already available from financial technology start-ups and established retirement plan administrators. With emergency savings offerings, “it’s really important to be broadly available and simple to use,” said Emily Kolle, a vice president who oversees the emergency savings offering from Fidelity Investments, one of the largest retirement plan administrators.Emergency savings — a cash cushion available in the event of a job loss or surprise expenses like car repairs or medical bills — are a concern for many Americans. In a recent survey by the financial site Bankrate, about a third said they would have to borrow to cover a $1,000 unexpected expense. And almost a quarter of consumers have no savings set aside for emergencies, according to the Consumer Financial Protection Bureau.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More