My brother is planning to retire in October of this year and take a lump sum payment. However he has heard that House Bill H.R. 1776, if passed, could have a major negative impact on the amount he would receive. Would anyone have any idea if this bill is expected to pass and if so when?
My Googling has confirmed that his suspicions are correct, but not whether or when the bill would become law. Anyone know the straight dope?
Unless you really have the inside dope about federal legislation, there is no answer to your question.
According to the bill’s status on Thomas, is currently in the Subcommittee on Employer-Employee Relations, after having bounched among three major committees.
I assume he’s rolling it into an IRA of some sort. He would be doing this with the aid of a financial institution of some nature and would have access to financial advice from them. Those people should have newsletters that discuss pending legislation.
If he’s not using an institution, he’ll likely have his retirement taxed away. Happily, in this case, he will qualify for unemployment benefits.
Thank you for your responses. He called his congressman and was told the bill probably wouldn’t become law until sometime after October, but he wasn’t given any guarantees.
Anyone who is anywhere close to retirement and plans on taking a lump sum should complain to their congressman as this legislation will reduce lump sum amounts by over 25%.
Would you explain why it would reduce lump sum amounts?
I see NCPERS seem to think it is OK.
Here’s how my brother explained it to me and I Googled some site or another that agreed with his explanation.
The lump sum amount is inversely proportional to the interest rate used to compute it. H.R. 1776 proposes to change the interest rate from the 30 year Treasury bill, which is at an historic low, to a mix of long term corporate bonds.
Long-term bonds have from 1.5% to 2% higher rates and a 2% higher rate translates to a 25% reduction in the lump sum amount.
Other than this he seems to think it’s a pretty good bill.
Wow! That would be bad.
I retired several years ago with my 401K being all in company stock. I had to roll over to at the current stock price which was low at the time but not as low as it is now.
I wonder why NCPERS has backed this bill if it actually reduces folks retirement’s?