Wait, I thought we were able to walk away from this job and the "B" fund was a pot of money that was mine to do with as I choose. You're saying I don't get this money, but instead get "an annuity with that money when you retire unless you take some very specific steps with it with in a very short amount of time when you retire". What specific steps are you referring to? What is this time limit as well? I obviously need to educate myself on the available options for my B fund.

 

Looks like a small bid for the 767 coming soon.

MSG on PFC….

Thought the next bid wasn't until Mar..

 

all the edumication you need is in the PBB. Many disbursement options exist and you will "select" one at retirement.

 

I have been retired for 16 months and have not "selected" an option for my B fund yet. I have left it with Vanguard and just let it ride with FedEx covering all of the expenses. I may start a small disbursement this year to keep the age 70 1/2 RMDs to a lower level for tax purposes, but there is no time limit on when you have to start the payout (other than age 70 1/2).

 

Here's a link to some great info on that minimum required distribution (MRD) which needs to happen no later than age 70 & 1/2. As you'll see, if you've got more than one IRA, you can make the total MRD from any one IRA, or more than one IRA, your choice, as long as you meet the IRS requirements for minimum distribution.

The Motley Fool: Managing Your Retirement -- 70 1/2: Ya Gotta Take It Sometime

 

How would the expenses differ if you rolled it into an IRA with Vanguard in the same funds?

Any reduction in expenses if you combined it with other Vanguard funds in order to qualify for less expensive Investor or Admiral shares?

 

I'm still a long way from retirement, but no reason to confuse ourselves so I included the actual text. PBB pages R93-94 PMPPP.

I never implied you couldn't get a lump sum, just that you have to jump through some different hoops. If I was a betting man, I'd predict that the scenario is setting you up to pick the annuity unless you are informed. A lot of money to be made by those folks with this stuff... Meaning there is a normal way the distributions are handled (Typically an Annuity - guys don't generally know this) if your wife doesn't agree to another method, you're getting an annuity... The other distribution methods have to be specifically addressed. Once you have picked a method you are basically locked. Once annuity distributions commence you are SOL if you wanted the lump sum. I was told by a Union guy who negotiated this thing about a time frame of some sort, but the exact conversation is a blur... There's probably a reason that the info packet will be sent "No sooner than 45 days from retirement..." wouldn't it make more sense to have a no later than clause. Please educate me on that one...

Retirement or Termination of Employment:

If you retire from the Controlled Group on or after your normal retirement date (age 60) or your early retirement date (age 55) or you terminate employment from the Controlled Group before either of those dates, the following distribution rules apply:

• If your account balance is $5,000 or less and you do not elect a direct rollover within the election period, you will receive a one-time distribution of your entire account balance.

• If your balance is greater than $5,000, you may choose to defer your distribution to April 1 after attaining age 70 1⁄2 or you may choose to immediately commence your benefit under one of the forms of benefit payment described in the “Forms of Benefit Payment” section below.
No earlier than 45 days following your termination or retirement date, as reflected in PRISM, you will be sent information and forms to apply for your benefits.

You will not be eligible to receive a distribution from the PMPPP if you transfer from Federal Express Corporation to any other Controlled Group Member. Anyone know that this means?

If your account balance is greater than $5,000, you may choose to have your account paid in one of several forms. You should carefully choose the payment option that you believe best serves your needs, since you will not be able to change it once payment(s) commence or an annuity has been purchased for you.

However, if you elect an annuity option, you may change to any of the other available annuity forms of payment any time prior to your Benefit Commencement Date.

Normal Form of Payment:

The IRS requires that your pension be paid in the following forms unless another option is specifically elected.

If you are unmarried, payment is normally a monthly benefit paid to you for the rest of your life. This is called a Single Life Annuity.

If you are married, payment is normally a monthly benefit paid to you for the rest of your life. When you die, 50% of that amount is payable to your spouse, if surviving, for his or her lifetime. This is called a 50% Joint and Survivor Annuity.

If you are married, you may not choose a form of payment other than the Joint and Survivor Annuity with 50%, 75% or 100% continued to your spouse, unless your spouse consents to your payment choice and your designated beneficiary. Your spouse’s written consent must be witnessed by a notary public and on file at Vanguard. The retirement packet will include a spousal waiver of the Joint and Survivor Annuity form of payment, as well as a form for your spouse’s consent to a non-spouse beneficiary.
In the case of either the Single Life Annuity or the 50%, 75% or 100% Joint and Survivor Annuity, the amount of your benefit will be determined by the purchase of an appropriate annuity contract.

Optional Forms of Payment:

You may want to receive benefits in some other way. If you do, you can select one of the following payment options:

• Lump Sum – Provides a one-time payment of your entire account balance. The IRS requires an automatic withholding of 20% of your taxable distribution on amounts paid directly to you. To avoid the 20% withholding, you may request a direct rollover distribution to be made to a qualified rollover IRA or another qualified retirement plan. If you receive a distribution prior to age 55 and do not roll it over, any taxable portion of your distribution may be subject to a 10% penalty tax in addition to federal, state and local income tax.

• Direct Rollover – Provides a payment of your account balance to a rollover IRA or another qualified plan. You are permitted to roll over to more than one institution. By selecting this payment option, you can avoid income and excise taxes.

• Optional Joint and Survivor Annuity – You receive a level monthly pension and, upon your death, your beneficiary continues to receive a percentage of these payments for his or her lifetime. You may choose the percentage your beneficiary receives: 50%, 75% or 100% of your benefit amount. The amount of your benefit will be determined by the purchase of the appropriate annuity contract. If you choose the Annuity option, you will be responsible for any fees involved with the purchase.

• Straight Life Annuity – You receive a level monthly benefit for life. The amount of your benefit will be determined by the purchase of the appropriate annuity contract. If you choose the Annuity option, you will be responsible for any fees involved with the purchase.

• Installments-You receive monthly, quarterly, semi-annual or annual payments. You may choose the payment period, up to 20 years or your life expectancy, if less.

 

The Vanguard expenses are some of the lowest in the industry but if I converted my 401 and B fund combined they would take a considerable sum every year. The advantage to an IRA conversion is a larger selection of funds and easier withdrawals. I have started the paperwork to begin an annual distribution. I chose a set amount rather than a percentage. Vanguard moves the funds (after taxes are withheld) into one of my nonqualified Vanguard funds in January and then they will transfer a set amount every month to our local checking account. The people I talked with implied that if I reaccomplish the paperwork. I can change the amount. Guess we will see how that works out.

 

I'm still confused --- can't you roll over your B fund and 401K into another qualified plan, like an IRA at Vanguard at no cost?

I know I did this with my Military Thtift Savings Plan (TSP) after retirement

Who's going to take this considerable sum --- the IRS?

What costs savings are there in a Fedex sponsored Vanguard B plan or 401K account vs the exact same qualified Vanguard IRA account?

If the funds are the same, aren't the underlying fund costs the same...or even less?

I've actually found that holding
Vanguard Funds within other tax deferred programs, like state based 529 College Savings Plans often lead to slightly higher fees because they must cover the administrative/overhead costs of that plan, in addition to the normal Vanguard fund costs

Also, Vanguard will allow you to convert normal shares to lower cost Investor shares, and then to even lower cost Admiral
shares, when your fund balances and/or total account balances reach certain levels --- $100K, $500K & $1M

You also get Free annual Financial reviews at certain account levels. The highest level is a review/plan that would otherwise cost $500 per yr

 

The way I understand it is FedEx picks up the expenses as long as you leave the funds in the PMPP (B Fund). If you roll them to an IRA you will pay the expenses. The average for the 7 funds I am enrolled in is about 1.2 percent. I have opted (for now) to leave the funds in the PMPP rather than roll them over so I can avoid the expense fee.