General Electric’s recent announcement that they are freezing worker pensions raises the question of what to do if your employer alters the terms of your retirement plan. One option GE is offering is to take a one-time lump sum payment. This is something that should be discussed with a financial advisor. If a lump-sum is accepted, it could be rolled into an IRA. Employees should also strive to increase their savings, maxing out their 401K contributions if possible. Health savings accounts are another tax-friendly way to increase savings for those who qualify.
Key Takeaways:
- Since the introduction of the 401K, most private companies have moved away from pension plans as a retirement option for their employees.
- Employees should talk with financial advisers about whether they should make incremental payments or take one large sum.
- If your company seems to be in financial trouble, it may be best to take the money out of their retirement fund.
“General Electric is pulling the plug on its pension plan, and that’s a surefire way to derail workers’ retirement planning.”
