Retirement Accounts and Job Changes

Full Transcript:

Have you left or plan on leaving Shell? Make intentional, informed decisions with your retirement accounts.

There have been too many layoffs and divestments over the past couple of years. Changing jobs is a busy and stressful time. So likely, decisions with your 401(k) and pension have been pushed to the backburner. These decisions, or lack thereof, may have significant financial consequences. Let’s talk about some options.
First, let’s talk about your old Shell 401(k). You can leave it where it is. Cash it out. Roll it into an IRA. Or, if you’re reemployed, roll it into your new employer’s 401(k). The Shell plan is a really good plan. So leaving it invested as is, may be a good course of action. Generally, cashing it out is not a good option. When you cash out a 401(k), you not only have to pay taxes on the balance, but you may also incur a 10% penalty depending on your age. It is very common for people to roll 401(k)s into IRAs. One advantage of this is you get more control of the money. A disadvantage of it is that it may limit your ability to do future backdoor Roth IRAs. Now, if you’re reemployed, you’ll want to look at your new 401(k) and compare it to the Shell 401(k). If your new 401(k) is better, rolling your Shell 401(k) into your new 401(k) may be the best option for you.

Next, let’s look at the APF pension. With the APF pension, you can leave it where it is or take it out upon leaving. If you live it where it is, you will get the prior September’s 30-year Treasury rate. For this year, that’ll be about 2%. This may not be the best option. Similar to your 401(k), cashing it out will cause taxes and will incur a penalty, depending on your age. Also, similar to your 401(k), rolling into an IRA has many advantages and disadvantages. Similarly, if you do roll into an IRA, it will likely limit your ability to do backdoor Roth IRAs in the future. And similar with your 401(k), you’ll want to look at the new employer versus the Shell 401(k) to see which plan is better. If the new employer’s plan is better, you should roll it into your new 401(k). If the Shell Plan is better, after you leave Shell, you can roll your pension into your Shell 401(k).

Third, Let’s talk about the Benefit Restoration Plan. High earners will likely have a BRP 401(k) and a BRP pension. For the BRP, most people don’t have options once they leave Shell. For most people, it will automatically be cashed out approximately 90 days after leaving. Some people do actually have some options. So prior to leaving Shell, you want to understand if you have options for your BRP or if it will be forced to be cashed out.

These are all major decisions. These videos are meant to be educational, but they should not be considered financial advice. You should consult your financial advisor regarding your specific situation. This video is intended to be helpful, and if you find it helpful, please pass this video on to others who may be leaving or have left Shell.