Borrowing From Your Att Retirement Insurance: Is It Possible?

As an AT&T employee, you have access to a range of retirement benefits, including a pension plan, a 401(k) account, and health and life insurance. While you are working for the company, you may be eligible for basic life insurance coverage through AT&T, which is usually equal to one year of your compensation. You can also purchase supplemental life insurance to meet your needs.

Life insurance policies can be permanent or term. Permanent life insurance policies, such as whole life, universal life, and final expense insurance, offer the opportunity to borrow money against the cash value of the policy. Term life insurance policies, on the other hand, do not have a cash value component and therefore cannot be borrowed against.

It is important to note that borrowing against your life insurance policy can have both pros and cons. While it can provide quick access to cash, it can also reduce the death benefit and increase the risk of the policy lapsing if the loan is not repaid. Therefore, it is essential to carefully consider your options before making any decisions regarding your AT&T retirement life insurance.

Pension benefits

As an AT&T employee, you have access to a variety of pension benefits to help you prepare for life after retirement. Here are some key details about these benefits:

Eligibility

To be eligible for a vested pension benefit, you need to complete at least five years of service. However, your benefit amount may be impacted if you don't meet the age and service breakpoints for your specific employment position. Additionally, if you choose to take your pension benefit before turning 55, it may be reduced unless you are a union employee with 30 or more years of service.

Calculating Your Pension Benefit

The amount of your pension benefit is determined by three main factors:

• Years of Service: The longer you work, the higher your pension benefit will be.
• Pension Band: This factor applies only to union employees and can impact the size of their benefit.
• Income Level: Typically, the higher your income, the greater your pension benefit.

Receiving Your Pension

Upon retirement, you have a choice between two main options for receiving your pension:

• Monthly Payout: You can choose to receive a traditional monthly pension payment, which provides a steady income stream throughout your retirement. However, this option usually doesn't include a cost-of-living adjustment.
• Lump-Sum Payout: Both union and management employees can opt to receive their pension as a one-time lump-sum payment. This option gives you more control over your funds but carries the risk of investing in the market. This lump sum can also be rolled over into an Individual Retirement Account (IRA), providing more flexibility in managing your retirement funds.

Survivor Benefits

AT&T pension benefits also include survivor benefits, ensuring financial support for your spouse in the unfortunate event of your death before retirement. If this occurs, your spouse is eligible to receive 50% of the monthly annuity or choose the lump-sum equivalent. It's important to note that this option is exclusively available to spouses.

Beneficiary Designations

It's crucial to keep your beneficiary information up to date, especially if your life circumstances change. You can designate as many beneficiaries as you want, as long as the allocated percentages add up to 100%. AT&T is required to honour the written designations upon your death, regardless of the age of the information. Failing to name any beneficiaries can result in a time-consuming and costly probate court process for your family.

Life Insurance Benefits

In addition to pension benefits, AT&T offers life insurance benefits that can provide additional financial security for your loved ones. While employed, you may be eligible for basic life insurance coverage, typically equal to one year of your compensation. If you meet certain requirements, such as the Modified Rule of 75, you may also qualify for basic life insurance benefits after retirement. The amount of this benefit depends on factors like age, employment classification, and compensation.

Supplemental life insurance is also available for purchase if you require additional coverage. Buying this coverage through AT&T's group plan can be cost-effective. The cost and eligibility for supplemental coverage are influenced by factors such as employment classification, compensation, years of service, and age.

401(k) account

As an AT&T employee, you have access to a 401(k) account as part of your retirement benefits. While working at AT&T, you can save a portion of each paycheck into this account, where it can grow tax-deferred for future use. After one year with the company, AT&T will match 80% of your Basic contribution, which is the first 6% of your salary if you're a manager, or a dollar amount based on your banded pay if you're a non-manager.

There are contribution limits to be aware of. Your Basic plus Supplementary contributions cannot exceed the annual IRS limit, which was $22,500 in 2023. Non-managers are also limited to a total contribution of no more than 30% of their pay. Additionally, managers and some non-managers who are 50 or older may make catch-up contributions of up to $7,500 beyond the annual IRS limit.

When you leave AT&T, it's common to roll over your 401(k) to an IRA, but you may leave some or all of your savings in your AT&T 401(k) account. If you retire from the company in the year you turn 55 or older, you can take out funds without having to pay early withdrawal penalties.

If you're still working at AT&T and need to borrow money, you can usually borrow up to $50,000 or 50% of your 401(k) account balance, whichever is less. This type of loan is not a true loan, as it doesn't require a credit check, but it does need to be repaid. You can borrow the greater amount of either $10,000 or 50% of your vested account balance, or $50,000, whichever is less. You must then repay the money under rules designed to restore your 401(k) plan to its original state as if the transaction hadn't occurred.

There are pros and cons to taking out a 401(k) loan. On the positive side, it can be a quick, simple, and low-cost way to get the cash you need. It's also flexible, as you can usually repay the loan faster with no prepayment penalty, and it won't impact your credit rating. Additionally, any interest charged on the loan is repaid into your 401(k) account, so it's like transferring money from one of your pockets to another.

On the negative side, there is the obvious downside of depleting the money you are saving and investing for your future. There is also the risk of slowing down the growth of your account, as you will miss out on the potential growth of the funds you borrow. Plus, if you leave your job, you'll need to repay the loan immediately, or it will be treated as an early withdrawal, meaning you'll need to pay income taxes and a 10% penalty on the funds if you're under 59 and a half.

Health insurance

As an AT&T employee, you have access to a variety of retirement benefits, including health insurance. One of the biggest expenses for most people in retirement is health care, so it's important to understand what benefits are available to you.

AT&T offers its employees a health plan that provides eligible employees, certain retired eligible employees, and their dependents with supplemental medical, dental, and vision benefits. This plan is known as the AT&T Health Plan ("Plan").

The Plan has specific eligibility requirements. To be eligible, employees must be officers designated at the officer level for compensation purposes on AT&T's records. Additionally, employees of companies acquired by AT&T are not considered eligible unless designated as such by the CEO.

The Plan covers various medical services, including hospital stays in connection with childbirth, mastectomies, and mental health benefits. It also provides for the continuation of coverage during family or medical leave, as well as military leave.

It's important to note that participation in the Plan requires enrollment in the Basic Plans, which include AT&T's group managed care medical, dental, and vision care plans. Participants must also enrol in all parts of Medicare for which they are eligible.

The cost of participation in the Plan may vary. For eligible employees electing to participate, there is a contribution that may change annually. Retired eligible employees who elect to participate will also have a contribution that may change annually and is based on a percentage of the Plan's actual costs.

In summary, AT&T offers its employees and retirees a comprehensive health insurance plan that covers a range of medical, dental, and vision services. The Plan has specific eligibility requirements and participants must also enrol in the Basic Plans and Medicare. The cost of participation may vary depending on factors such as age and years of service.

Life insurance

There are several types of life insurance policies available, and the two main categories are term life insurance and permanent life insurance. Term life insurance is typically cheaper and more suitable for most people, as it covers a limited period, usually ranging from one to 30 years. On the other hand, permanent life insurance, which includes whole life and universal life insurance, is more expensive but offers coverage for the insured's entire lifetime.

One key difference between term and permanent life insurance is that permanent life insurance builds up a cash value over time. This means that the policy has a savings component, allowing the insured to borrow against this cash value. However, it's important to note that term life insurance policies do not have a cash value, so borrowing against them is not possible.

The process of borrowing against a life insurance policy with a cash value is known as a "policy loan." This type of loan can be useful if you need quick access to cash, as it typically has a simpler approval process since you are essentially borrowing from yourself. The loan amount is secured by the death benefit and cash value of the policy. While policy loans can provide much-needed funds, it's important to consider the potential drawbacks, such as reduced death benefits for your beneficiaries and the risk of policy lapse if the loan isn't repaid.

In the context of AT&T retirement benefits, employees may be eligible for life insurance coverage during their employment. Additionally, retirees may be eligible for basic life insurance or supplemental life insurance coverage, depending on their specific circumstances. However, it's important to carefully review the terms and conditions of your AT&T retirement plan to understand the specifics of your life insurance coverage and any limitations or changes that may have occurred over time.

Survivor benefits

As an AT&T employee, you have access to a variety of retirement benefits, including a pension plan, a 401(k) account, and health and life insurance. Here is a detailed overview of the survivor benefits associated with these plans:

AT&T Pension Survivor Benefits

In the unfortunate event of your death, your spouse is eligible for an AT&T pension survivor benefit. Here's how it works: if you pass away before retiring, your spouse will automatically receive 50% of the monthly annuity or they can choose to receive a lump-sum equivalent. This option is exclusively available to spouses. It's important to note that there are multiple survivor options for the monthly pension, but they are only available for a qualified spouse. Additionally, union employees can opt for a full lump-sum pension payout, while management employees typically choose to take a partial lump-sum pension along with a residual monthly pension.

AT&T 401(k) Plan Beneficiaries

Your accumulated AT&T benefits, such as life insurance and your 401(k), can be passed on to a beneficiary upon your death. Usually, if you're married, your spouse is the listed beneficiary on your AT&T 401(k) account. However, it's important to keep your beneficiary information updated, especially after major life changes. You can name as many beneficiaries as you want and modify them as needed, as long as the allocated percentages total 100%. If you don't name any beneficiaries, your assets will go through probate court, which can be a challenging process for your family. You can view and manage your current beneficiary designations on the Fidelity Benefits Center website: www.netbenefits.com.

AT&T Life Insurance Benefits

Your AT&T life insurance benefits can also have designated beneficiaries. While employed by AT&T, you may be eligible for basic life insurance coverage, which is typically equal to one year of your compensation. If you meet the Modified Rule of 75, you can receive this basic life insurance benefit after retirement, with the amount depending on your age, employment classification, and compensation. If you require additional coverage, you have the option to purchase supplemental life insurance. The supplemental plan may also be available in retirement, and buying it through AT&T's group plan can be cost-effective. Remember to periodically review and update your beneficiary information to ensure it aligns with your current wishes.

Frequently asked questions