Employees working for the National Rural Electric Coop Association have some unique retirement options. These opportunities are important to know BEFORE retirement. Listen in as Gabe and Ryan begin to guide NRECA employees into considerations that need to be made for themselves and their families.
Retiring Strategy for NRECA Employees
For the last several decades, we’ve gotten to work with dozens of retirees through NRECA, National Rural Electric Coop. What we’ve found is that there are some really unique opportunities within their plan. We are working with multiple clients right now to develop an “RS plan” with some unique opportunities that we help them discover.
NRECA: RS Plan
One of the best benefits that the NRECA plan offers is an RS plan, think of this as a traditional pension plan. The difference being that with traditional pension plans, you can’t access the pension until after you retire, meaning you aren’t working at the company anymore before you access your money. What’s unique about the Quasi retirement is that you get the opportunity to annuity the plan or lump sum the pension while you’re still working, so long as you’ve worked there for 30 years.
NRECA: 3 Major Options with the Pension Plan
If you work at NRECA and have a qualifying event, 30 years of service and still working, or you’re ready to retire, there are three major options you have with the pension plan. The first is to take a monthly annuity, which is a guaranteed payment. The second option is to roll the money to your 401k within the plan. They offer an actual 401k alongside the pension plan. The third option is to get the money to an externally held IRA.
The first option alone has around 10-12 different ways to go about the monthly annuity. We walk through the best plan with our clients based upon their unique needs. Several factors can impact what plan is best: for example- your spouse, your other assets, and how it impacts your beneficiaries. One thing we’ve seen is that if you are working when you pass away, your beneficiary will only get a 50% amount on that benefit. This is a big risk to take with the annuity plan which is why the Quasi can be very important.
NRECA: Problematic Factors to Consider with Pensions
We are having conversations with many retirees with pensions. One important thing to mention is that as interest rates rise right now the value of your lump sum is lowered. There are also no cost-of-living adjustments, as we’re seeing inflation right now it creates a few problems for pensions. With each client we want to walk through this to make sure you are deciding the best way to take your pension.
We want to help develop a plan to insure not only your RS pension plan is taken advantage of, but also that your 401k is taken care of, social security, medical insurance, etc. This is part of the holistic retirement planning process that we offer. There is a lot of factors that go into it. For decades, we’ve been working with folks like yourself to build strong financial plans. Reach out with any questions you may have at Strategic Retirement Plans.
Strategic Retirement Plans is neither endorsed by nor affiliated with NRECA.