Basics of Thomson Reuters Pension (Part 2)
To continue our discussion from part 1, we will first focus on the different payment options available. The payment option you elect impacts the amount you receive on a periodic basis. Once elected, the payment method cannot be changed, so determining the appropriate payment method is dependent on each person’s financial and marital or domestic partnership status. The normal method of payment for the Thomson Reuters plan is based on your marital or domestic partnership status.
If you are single, your normal payment method will be a Single Life Annuity, while married employees or employees with domestic partners will have a payment method of 50% Joint and Survivor Annuity. Please note that you will need to attest to your domestic partnership if you would like your domestic partner to be eligible for survivorship benefits. Please contact the Thomson Reuters HR Services Center with any questions you may have on the status of your domestic partnership.
- Single Life Annuity
- Pays you the full benefit at retirement in monthly installments for your life. On your death, benefits are not payable to anyone else.
- 50% Joint and Survivor Annuity
- This method pays you a reduced benefit so that after your death, 50% of your reduced benefit will continue to be paid to your surviving spouse or domestic partner for his/her life.
- If your spouse or domestic partner passes away after you begin receiving reduced benefits, but before your death, you will still receive the reduced benefit for your life.
- The reduction in your benefit depends on your age, your spouse’s or domestic partner’s age, and when your pension begins. Questions regarding the reduction of your benefit, should be directed to the Thomson Reuters HR Service Center.
Along with the normal payment methods described above, there are other optional payment methods you can elect. Please note that if you are married or have a domestic partner, you must provide written consent witnessed by a notary public to elect any option other than the Joint and Survivor Annuity Option.
- Joint and Survivor Annuity Option
- Similar to the normal payment method, you do have the option to change the percentage from 50% to either 75% or 100% of your reduced benefit. With this option, the benefit does continue to your spouse or domestic partner for their lifetime, following your death.
- Contingent Annuitant Option
- This option is similar to the Joint and Survivor Annuity Option, however this option allows you to elect; 50%, 75% or 100% of your reduced benefit, to be paid to a person you choose that is not your spouse or domestic partner. The payment would continue for their lifetime following your death.
- Ten-Year Certain and Life Annuity
- This option pays you a reduced benefit for life, but guarantees payments for 10 years. If you die before receiving benefits for 10 years, your beneficiary will receive your reduced benefit for the balance of 10 years.
- Single Life Annuity
- This is similar to the normal payment method however this option is for married or those with a domestic partner.
- Immediate Payment
- This election is for you to receive the present value of your normal retirement benefit in a lump sum.
- If you elect this option, once you receive the lump sum amount, you are no longer a participant in the pension plan and you will not receive future benefits.
Prior to electing your payment method, you should consider your financial situation and consult your tax or financial professional to ensure you are making the selection which most benefits you.
Taxes and your Pension Benefit
Per federal law, taxes must be withheld from your pension benefit unless otherwise directed. A discussion with your tax advisor will help determine the best option for your situation.
If you Die before Retirement
If you die prior to retirement and you are fully vested in the pension plan, your spouse or domestic partner will receive one-half of the amount of your benefit using the 50% Joint and Survivor Annuity payment method. The IRS does make a distinction between spousal and non-spousal benefits.
- Spouses are eligible for the pre-retirement survivor benefit on your normal retirement date. They would also be eligible for the early retirement benefit, however the benefit would be reduced based on the factors mentioned in part one of this series.
- Domestic Partner
- Domestic partners must receive their survivor benefit in the form of a single life annuity. They must also commence the benefit within one year of your death. If you pass away one year prior to your early retirement date, the benefit will be equivalent to the early retirement date value.
It should also be noted, that surviving spouses and domestic partners can elect to receive the benefit in the form of a lump sum payment. One last note, if you die after you are vested and you do not have a surviving spouse or domestic partner, no death benefits are paid from the plan.In closing, pension plans offer a great benefit, a steady income for your life, however choosing the option which is the best for you needs to be carefully considered. If you have questions, please feel free to contact me at (612) 416-5997 or email me at email@example.com