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. However, it’s up to you to best utilize each one to secure a comfortable retirement.
For more than 30 years, Advance Capital Management helped thousands of AT&T employees plan for retirement. We know that it can be overwhelming to manage your benefits as you prepare for life after AT&T. What often helps is a little guidance. When you clearly understand your choices, you can feel more confident in your decisions and less worried about your future.
A great place to start is with a look at your AT&T retirement benefits.
This article provides a general overview of AT&T’s retirement benefits, including:
- Pension plan
- 401(k) plan
- Health insurance
- Life insurance
AT&T Pension Plan
The most important AT&T retirement benefit for most employees is their pension. It will provide substantial funds for creating an investment portfolio or a monthly paycheck throughout retirement.
When are you eligible?
You are eligible for a vested pension benefit after five years of service, but your benefit will be negatively affected if you do not reach the age and service breakpoints for your employment position. Additionally, you may receive a reduced pension benefit if you take your benefit prior to age 55, unless you are a union employee with 30 or more years of service.
How is your pension calculated?
There are three factors that help determine the size of your pension benefit: (1) years of service, (2) pension band (for union employees only) and (3) income level. The higher each of these factors, the greater your pension benefit.
Learn how to use the AT&T Pension Calculator to get your pension estimate.
How do you receive your pension?
Upon retirement, you can elect to receive a monthly payout like a traditional pension. Or, both union and management employees can convert all (union) or a portion (management) of their pension into a one-time lump-sum benefit, which can be subsequently rolled over into an Individual Retirement Account (IRA) and then controlled by the retiree.
There are pros and cons to each payout option. For example, a monthly pension offers income for life but without a cost-of-living adjustment. Meanwhile, a lump-sum pension gives you more control over the funds but with the risk of investing it in the market.
The AT&T pension also offers survivor benefits. If an employee passes away before retiring, a spouse automatically receives 50% of the monthly annuity or can choose the lump sum equivalent. (This option is only available to spouses.)
Not sure what options are right for you? Take advantage of our retirement planning services to get help from an AT&T retirement benefits expert.
AT&T 401(k) Plan
While you’re working, AT&T allows you to save a portion of each paycheck into a 401(k) account, where it has the ability to grow tax-deferred for future use.
What is the AT&T 401(k) match?
After one year with the company, AT&T matches 80% of your Basic contribution. For managers, your Basic contribution is the first 6% of your salary. For most non-managers, it’s a dollar amount based on your banded pay. It’s a very good idea to make the full Basic contribution to maximize the employer match.
How much can you save?
If you make the full Basic contribution and are able to save more, you can make a Supplementary contribution. Your Basic plus Supplementary contributions cannot exceed the annual IRS limit ($22,500 in 2023). For most non-managers, you are also limited to a total contribution of no more than 30% of your pay.
Managers and some non-managers who are age 50 or older may also make catch-up contributions (up to $7,500 in 2023) beyond the annual IRS limit.
What can you do with your 401(k) when you leave AT&T?
Upon leaving 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 AT&T in the year in which you turn age 55 or older, you can take out funds without having to pay early withdrawal penalties.
For non-managers, the most common withdrawal is to take a Partial Distribution. Four times per year you can contact the administrator and request a withdrawal from your account. Managers may elect scheduled monthly withdrawals and/or up to eight Partial Distributions. The election of monthly withdrawals counts as one of your eight Partial Distributions.
AT&T Health Insurance
One of the biggest expenses for most people in retirement is health care. What benefits are available to you depends on your eligibility for Medicare, which kicks in at age 65.
Pre-Medicare benefits
Employees who satisfy the Modified Rule of 75 may be eligible for retiree medical, dental, vision and life insurance benefits. Plans available to you will depend on your service date, retirement date, Medicare eligibility and other factors. Learn more about the Modified Rule of 75 here.
At retirement, you have the ability to keep your plan but the cost to you may increase. You can instead switch to a different plan during a special enrollment window. At the end of each year, you will have the opportunity to change plans during general open enrollment. Since 2022, AT&T no longer offers a subsidy to help cover your monthly premiums.
Medicare-eligible benefits
Once you turn age 65 you are Medicare-eligible, and will have to transition out of AT&T’s retiree health care plan and into Medicare.
You may continue to receive health care benefits from AT&T, but you and your Medicare- eligible dependents are required to enroll in Medicare Part A (hospital benefits) and Part B (doctor benefits). These two parts cover about 80% of health care benefits for individuals, so it’s important to consider your supplemental coverage options.
Through Aon Hewitt, you will select a plan that provides supplemental insurance to fill in the areas where Medicare does not cover you, such as prescription drugs.
AT&T Life Insurance
While employed by AT&T, you may be eligible for a life insurance benefit. There are two types available.
Basic life insurance
Basic life insurance is coverage paid by AT&T. For most employees, it is equal to one year of your compensation. If you meet the Modified Rule of 75, you are eligible for a basic life insurance benefit after retirement. As a retiree, the amount of your basic life insurance benefit depends on your age, employment classification and compensation.
Supplemental life insurance
If you need additional coverage, you may purchase supplemental life insurance to meet your needs. The supplemental life insurance plan may also be available to you in retirement.
Buying supplemental coverage through AT&T’s group plan is a cost-effective way to get access to additional coverage. The cost and amount of coverage you are eligible for under the supplemental plan will vary based on your employment classification, compensation and years of service, among other factors. In retirement, your age will also affect your cost and eligibility.
Hopefully, you now have a better understanding of what AT&T retirement benefits are available to you. The truth though is that you likely need more information to see how they apply to your personal situation and to take full advantage of them.
For that, you should work on a retirement plan with a financial adviser. An AT&T-experienced adviser at Advance Capital Management would be happy to help you get started. Schedule a no-cost, no obligation consultation today!
BTW - This article is based on all the jam-packed retirement planning information found in our free ebook: The AT&T Employee’s Guide to Retirement. Find more helpful tips to help you build a comfortable retirement by downloading your free copy right now:
