Benefits - Local 813 & 1034 Severance and Retirement Trust Fund

To: All Participants in the Local 813/1034 Severance Plan

Re: Payment Options

Did you know that your Severance Benefit can be paid out in monthly installments for the rest of your life?

Did you know that those installments can often provide more than the value of the lump sum, depending upon the option you choose and how long you live?

For example, a participant has a lump sum benefit due him from the Severance Fund and collects it at age 60 when he retires. The lump sum is worth $58,684.44. If paid monthly, it is worth $452.98 each month for the rest of the participant's life. If that participant lives an average lifespan of 21 more years that $452.98 monthly payment is worth $114,150.96! To have the same amount of money the lump sum would have to earn 3.43% in each of the next 21 years, not be taxed as a lump sum and not be spent. With interest rates so low, and the stock market so risky you may have difficulty earning that rate after taxes and expenses. Because the Severance Fund is a Pension Plan, your payments are guaranteed as long as you live. If you want to, you can have your monthly benefit reduced slightly, so that when you die, your spouse will get 50% of whatever you got for the rest of his or her life.

While that may not seem like much money each month, added to a pension of $1,600 or $1,700 per month or more, this all adds up to a generous addition to your retirement benefits. Because it's paid in installments, the tax burden will likely be lower as well.

This option may not be right for everyone. Depending on your specific circumstances, you may be better off rolling over your severance benefits into an IRA. But for many of you who depend on all of your retirement, to provide a monthly income this could be a very valuable option that deserves renewed attention.

Seek financial advice. Know what's best for your situation. But remember all of the options available to you.

Please feel free to contact the Fund Office with any questions you may have.

We want your retirement to be as free from financial hardship as possible. You earned it.