AT&T Retirement Plan Update
To: All employees and former employees who currently have a benefit in either the Nonbargained (Legacy SBC) Program or the AT&T Legacy Management Program (U.S and Puerto Rico) of the AT&T Pension Benefit Plan and who meet the eligibility criteria described below
New payment option
As of June 1, 2018, AT&T is adding a full lump-sum payment option as a permanent feature to the Nonbargained and AT&T Legacy Management (U.S. and Puerto Rico) Programs (the Programs). Adding a full lump-sum payment option allows you to receive the full value of your Program benefit as a one-time payment. This lump-sum distribution option is in addition to the current distribution payment options. Adding a full lump-sum payment option provides the flexibility to choose how you receive your benefit depending on your personal situation.
Who is eligible
To be eligible for this new payment option, you must:
- Terminate employment with the Company and have your last day on payroll as an AT&T employee on or after May 31, 2018,
- Elect a Benefit Commencement Date on or after June 1, 2018, and
- Have not started your pension benefit from these Programs.
The pension plan recordkeeper, Fidelity, will be prepared to administer this full lump-sum payment option starting October 1, 2018. Refer to the FAQ for additional details about selecting your commencement dates and payment dates.
To help you understand what this change may mean to you, Fidelity will generate an estimate of your full lump-sum amount, assuming a last day on payroll of May 31, 2018 with a Benefit Commencement Date of June 1, 2018. You will be able to view this saved pension estimate beginning on June 15, 2018 by going to Fidelity’s website www.netbenefits.com/att and selecting the “Estimate” tab from the Pension Summary page. Once on the “Estimate” tab, you will find your pension estimate under the “Review Saved Calculations” tab.
The importance of interest rates in calculating lump sum payments
Please be aware that these Programs use interest rates set by the Internal Revenue Service (IRS) from November of the year before your commencement date to determine the amount of your lump sum.
- It is important to understand that these interest rates fluctuate over time. If IRS interest rates increase, lump-sum amounts generally decrease and vice versa.
- The IRS interest rates used to calculate lump sums with Benefit Commencement Dates in 2019 will be based on November 2018 rates and will not be known until December 2018.
- Lump-sum payments in 2019 could be higher or lower based on the November 2018 interest rates. However, using the most recently published IRS rates (April 2018) implies lower lump sums by approximately 4%-8% in 2019.
What you need to do
- Review your full lump-sum pension estimate online at www.netbenefits.com/att as described above, on or after June 15.
- If your last day as an AT&T employee is on or after May 31, 2018 and you are not interested in a full lump-sum payment, you can elect to take other available distribution options after your employment terminates (including before October).
- If considering the full lump-sum payment, you can use the estimate tool starting in October to consider other benefit start dates and your full range of distribution options. Please note that the amounts calculated in the estimate tool will be based on the November 2017 interest rates until the November 2018 interest rates are available in mid-December.
- Consider reviewing your benefits with your financial advisor to determine the best form of payment for you.
You can also:
- Refer to the Summary Plan Description for your pension program on Fidelity NetBenefits atwww.netbenefits.com/att for a description of your available pension forms of payment other than the full lump sum.
- Review the AT&T Management Post-Employment Guide or the AT&T Bargained Post-Employment Guide (as applicable).
- Review the Full Lump-sum Form of Payment for Eligible Participants Q&A.
In the meantime, if you have questions, call the Fidelity Service Center at 1-800-416-2363. Representatives are available Monday through Friday (excluding most New York Stock Exchange holidays) between 8:30 a.m. and midnight ET. Note that representatives would not be able to provide you with your lump sum value until after the pension modeler is updated in October 2018.
Your choice to take advantage of this new payment option is entirely voluntary. Whether you decide to retire in 2018 or at a later date, AT&T is pleased to offer this new option.