By now you may have heard the news from CHEVRON concerning the company-wide downsizing being rolled out through the end of the year.
This newest reduction in workforce is expected to impact up to 15% of the company’s workforce. It’s the largest cut by the company yet, adding to the deep cuts in the San Joaquin Valley Business Unit over the past several years.
While the details of these cutbacks are expected to affect management, how far into the hourly workforce it could reach is unclear at this time. The company has already sent out the Expression of Interest form for those employees who wish to be considered for an early-termination package. You will have until July 26, 2020 to sign and return the document to labor relations if you’re interested in participating.
If the company does not receive an adequate number of responses, then it’s presumed that mandatory cuts will be implemented to arrive at their ultimate objective. Some employees have been here before: they have been hired, laid off, rehired, and now face the possibility of being laid off again.
But even if you have no desire to accept CHEVRON’s offer or you believe your position is safe, it is still a good reminder to not only plan for retirement but have a contingency plan in place should you face an unexpected termination.
Here are five things to think about before you leave CHEVRON:
Health and Welfare Benefits
One of the largest expenses you might experience after leaving the company is the cost of healthcare. While employed, CHEVRON generally provides a generous offset to the high price of health insurance. After you leave the company, you will likely be responsible for the entire cost. We recommend contacting an insurance broker who can provide you with a quote. Or you can fill out the form below and we’ll be happy to point you in the right direction.
Employee Savings and Investment Plan (ESIP)
It’s usually not a good idea to withdraw money from your retirement funds prior to retirement. But let’s face it: sometimes it is the only choice.
The Employee Savings and Investment Plan (ESIP) is the company’s 401(k) plan, administered by Fidelity. The good news is the ESIP plan is portable – that is you can take it with you when you leave your job.
But that’s not always the best choice.
If you are under 59 1/2, and you roll-over your 401(k) into an IRA and then later decide to withdraw from it, you will not only be taxed on the distribution, but you will also pay a 10% early withdrawal penalty. We don’t have to tell you – that can add up quickly.
But there are exceptions:
Substantially Equal Periodic Payments (SEPP)
The SEPP is a method by which individuals can withdraw funds prior to age 59 1/2 without an IRS penalty. The amount you can withdraw every year is based on a calculation that conforms with a formula set by the IRS. The details of this exception include intricate rules that must be followed – or you may have to repay all penalties since you began the program.
If you’d like to learn how much you could potentially draw from your ESIP under a SEPP exception, please complete the form below and we’ll send you a calculation – without cost or obligation
The Rule of 55
If you leave your job at age 55 or older, the Rule of 55 allows you to draw from your 401(k) penalty-free. It does not matter if you were laid off or if you accept the offer. But in order to qualify for this exception, you must keep your 401(k) with the company. There are some additional rules you’ll need to follow. We can help take the mystery out of your options. Complete the form below and we’ll discuss them based on your particular circumstances.
Another component of your CHEVRON retirement plan is your pension. This plan was funded by your company over the course of your employment. The pension provides you with several distribution options after you leave the company that includes guaranteed monthly payment options to you and your spouse, or a lump sum that allows you to invest the funds at your discretion.
Your choice is generally irrevocable, so you’ll need to consider your options carefully before making your ultimate selection.
Note: If you are a former GETTY employee, there are some special considerations you’ll need to keep in mind. Click here for more information.
Net Unrealized Appreciation (NUA)
During your career with the company, it’s likely that you accumulated CHEVRON stock in the form of an Employee Stock Option Program (ESOP) or by investing in the 401(k)’s stock fund. By utilizing an NUA tax strategy, you could carve your shares of CHEVRON stock away from your 401(k) and pay ordinary income taxes on only the cost basis, not the full value of the stock. Later, when you decide to sell your stock, you would pay taxes on the lower capital gains rate, compared to the ordinary income tax rate.
Social Security is a benefit that impacts almost every American worker. Your Social Security benefits are generally based on the 35 years that you earned the most. So it’s important to make sure The Social Security Administration (SSA) is basing their calculations on accurate information.
Mistakes do happen.
It is important that you verify the information in your Social Security report to determine accuracy since the statute of limitations on correcting your record is generally three years, three months, and 15 days after the year your wages were paid, although exceptions may exist.1
You can easily verify your Social Security record by establishing an online account with the SSA. For instructions on doing so, please see this page.
If you’d like a FREE Social Security Timing Report, please complete the form below.
Our firm has assisted over 600 of your CHEVRON friends and colleagues retire from the company. Since 1987, we’ve assisted CHEVRON employees navigate numerous company downsizings including the reorganization of the Southern California Production Department and the closures of the La Habra Research Center, Fuel Terminals, and Transportation Departments.
We’ve been there along the way – supporting the hard men and women of CHEVRON – explaining company retirement packages and other options when faced with a retirement decision.
If you would like to learn more about how we can help you prepare for retirement or an unexpected job loss, please call us at (800) 236-9549, visit our Chevron Retiree’s website at www.PetroPensions.com, or fill out the form below with your questions.