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Re: Ford offers retirees a lump sum buyout today

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  • chz_whiz
    There s been a lot of discussion on Socks Bouchard and the Ford lump sum pension offer lately. Here s a link tying them together from Socks resume prior to
    Message 1 of 35 , Apr 30 12:44 PM
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      There's been a lot of discussion on Socks Bouchard and the Ford lump sum pension offer lately. Here's a link tying them together from Socks' resume prior to his joining IBM. Shows why Lou hired Socks, and provided Socks with a desk, phone, and "IBM Internal Use Only" hatchet.

      http://caselaw.findlaw.com/us-9th-circuit/1198828.html

      The case also points out a VERY interesting aspect on a lump sum pension payment which I haven't seen mentioned in any of the media coverage about Ford. I'm not an expert on anything, let alone tax matters, but I think under current tax law, any lump sum retirement payment NOT rolled into an IRA would be immediately taxed.

      Obviously, the tax rate on a 1/2 $million lump sum is going to be much higher than the rate on an annuity income stream.

      Yet another tax consideration could be that the retiree could have been planning to move from a high tax area (e.g., Michigan for Ford, or New York if implemented by IBM) to a low tax area (Florida or Texas) for their retirement. Now the lump would be taxable where earned at the highest state & local rate. Not sure what it takes to establish residency, and I'm not going to worry about, but I don't think I'd want to be trying to sell a house around Detroit right now. Point is there will be very significant income taxes due on the lump sum NOT rolled into an IRA. Rolling the lump sum into an IRA would lower and extend the income tax, but preclude uses for which the retiree might want the lump sum in the first place, such as mortgage payoff, healthcare/LTC, Powerball investments, or yacht purchases.


      --- In ibmpension@yahoogroups.com, willbefree25 <no_reply@...> wrote:
      >
      > Bingo.
      >
      > What he said.
      >
      > Hmmmm, I wonder how Socks Bouchard is doing? Bet he ain't worried about HIS financial future.
      >
      > Oh, wait, get this, how funny. Profiting off the backs of those fired:
      >
      > "J. Thomas Bouchard has been a member of the Board of Directors of the temporary staffing company Manpower Inc. since 2001. He serves as Chairman of the Executive Compensation Committee and is also a member of the Nominating and Governance Committee."
      >
      >
      > http://tinyurl.com/8a6clhs
      >
      > http://tinyurl.com/8a9y65v
      >
      >
      >
      >
      > --- In ibmpension@yahoogroups.com, "workforlife" <biker1mike@> wrote:
      > >
      > > Don
      > >
      > > The IBMers still jumping into their socks fall into 3 groups
      > >
      > > 1. Those that still have their eyes and ears closed. They will be working at Wal-Mart after IBM and will have to work to the day they die.
      > > 2. Those that have seen the writing on the wall and are putting 401k and roth money away until it hurts.
      > > 3. Relative new hires that do not plan on being here very long anyways. Most of them understand that they are on their own for a retirement plan.
      > >
      > > The average IBMer will not look out for his/her co-worker.
      > >
      > > --- In ibmpension@yahoogroups.com, "donwshuper50" <donwshuper50@> wrote:
      > > >
      > > > perhaps the current crop of IBMers near the financial cliff who " jump into their socks every day . . . could get organized . . . ;-PPP
      > > >
      > > > --- In ibmpension@yahoogroups.com, fhawontcutit <no_reply@> wrote:
      > > > >
      > > > > --- In ibmpension@yahoogroups.com, "Ian" <ianandrew@> wrote:
      > > > > >
      > > > > > We pensioners got organised and created a lobbying body that IBM initially refused to recognise. We hired lawyers and fought IBM in court on this and WON!
      > > > > >
      > > > >
      > > > > You got ORGANIZED and CREATED A LOBBYING BODY.
      > > > >
      > > > > What a novel idea!
      > > > >
      > > >
      > >
      >
    • Kevin W
      Wow, sounds good. Thanks for the clarification on what the scenario was.
      Message 35 of 35 , Apr 30 6:30 PM
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        Wow, sounds good. Thanks for the clarification on what the scenario was.

        --- In ibmpension@yahoogroups.com, "Ian" <ianandrew@...> wrote:
        >
        >
        >
        >
        >
        >
        > --- In ibmpension@yahoogroups.com, "Kevin W" <nowwicked@> wrote:
        > >
        > > Ian, a question would be. Looking at what the pension "would have been" worth over an expected life of say dying at 80 and what you got. How does it compare? The reason I ask is that those of us who are at retirement age, can start to take a pension now and it could be worth 800-1.2 million if we live to be 80.
        > > What is the lump sum worth? Does it provide pension like income for 25 years or so?
        >
        >
        > Kevin,
        >
        > You must realise that this offer was made, in the main, to existing pensioners, not employee's. In my case I was 71 at the time. So life expectancy is less.
        >
        > Some years earlier, about 1994, IBM SA offered all employee's a 'sweetener' to move from the pension fund to a 'provident fund'. From what I read on this list our 'provident fund' is very similar to the US 401k plan.
        >
        > The 'sweetener' was offered to many older employee's if they took an 'Early Retirement' offer.
        >
        > This left the existing pensioners, deferred pensioners and a very small number of employee's as members of the pension fund.
        >
        > The pension fund was fully funded and in surplus!
        >
        > By law, 50% of the pension fund Board of Trustee's have to be member elected. When this law was passed, but before it was implemented, IBM changed the rules of the pension fund, giving IBM in Armonk a veto over all decisions made by the SA Board of Trustees.
        >
        > Also by law, if a pension fund can afford to give a cost of living increase, it must. Although our fund was well in surplus and could afford to give larger increases, IBM made it clear that they would veto any proposed increase higher than they were legally bound to pay.
        >
        > We pensioners got organised and created a lobbying body that IBM initially refused to recognise. We hired lawyers and fought IBM in court on this and WON!
        >
        > At one point we had to remove 2 of our member elected Trustee's as they were willing to accept an IBM proposed move that we didn't like.
        >
        > IBM wanted to get their hands on the fund surplus, so did we pensioners.
        >
        > It took about six years of hard negotiating before the 'split' of the surplus was agreed.
        >
        > The size of the pensioners allotment of the surplus made the capital allocation to each members 'Insurance Policy' a number that is worthwhile.
        >
        > With any scheme like this, the size of the individual pot makes all the difference.
        >
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