What is Retirement Planning all About?

Here are questions to help you think about retirement and take charge of your financial future:

Do you work for an employer that offers a pension plan?

If your employer offers a pension or retirement savings plan, join it as soon as you can and contribute as much as the plan allows. Most employers providing a 401(k) plan also match a percentage of the employee contribution.

Have you worked at the job long enough to earn a pension?

In many companies, you may have to work for few years to become eligible to receive pension benefits. Some workplaces have a shorter vesting period. (Vesting simply means that you have worked long enough to earn the right to benefits from a saving or pension plan.)  Too often employees, especially women, quit work, transfer to another job or interrupt their work lives just short of the time required to become vested. Ask the personnel office, pension plan administrator or union representative about the vesting period and other details of your company pension plan.

Do you keep copies of the documents that define the provisions of your pension plan?

In addition to asking questions of company or pension plan officials, you should keep copies of the summary plan description and any amendments.

What happens to your pension if you change jobs?

You may lose the pension benefits you have earned if you leave your job before you have worked long enough to be "vested." However, once vested you have the right to receive benefits even when you leave your job. In such cases, the company may allow, or in certain cases may insist, that you take your pension money in a lump sum when you leave. However, some companies may not permit you to receive your pension money until retirement.

Are you entitled to a portion of your spouse pension benefit if you and your husband divorce?

As part of a divorce or legal separation, you may be able to obtain rights to a portion of your spouse’s pension benefit (or he may be able to obtain a portion of yours). You or your attorney should consult your spouse’s pension plan administrator to determine what requirements the QDRO must meet.

Are you aware of the rules that govern your pension plan and the pension plan of your spouse if either of you dies?

The rules are different for defined contribution and defined benefit plans. If you or your spouse belong to a defined benefit plan, the surviving spouse may be entitled to receive a survivor benefit when the enrolled employee dies. This survivor benefit is automatic unless both spouses agree, in writing, to forfeit the benefit. You will need to check the SPD or consult with the plan administrator regarding survivor annuities or other death benefits. 

 

Posted by Ardent Editor on Jan 19 2007 in Retirement 101

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