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  • fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1196
    Joined: 01/26/2017
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    Wally World, you have once again solidified your standing as the definitive source on TPMG benefits and the pension. I have learned much from reading your posts. The TPMG pension plan especially with regard to ages 60-65, and “full early” retirement is quite confusing. Do you think this is well understood by the physicians in the group? I have seen physicians with plenty of years of service work well past 60 therefore missing out on full early payments, I of course would not be presumptuous to tell them that the math may in fact favor leaving but it appears that it does. BTW your plan seems very solid.

    #217012 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2055
    Joined: 01/15/2017

    As we know all too well – Most docs are NOT financially savvy.   Yes 60 is the magic number.  My extended family all are Kaiser docs and they parachuted to — yep VA — after reaching full early retirement.   Some as full time, others as 1099 occasional depending an whether their timeline as 5 years or more (2nd pension).

    Point is though, most Kaiser docs who make it to 60 don’t need to leave and only work further because they like their work and too comfortable to jump tracks.

    IMHO, unless you’re a reckless spender, Kaiser makes it very easy to be financially successful and healthy living during career and afterwards.   It’s just whether you can buy into their model or not.  If so — there’s little reason not to start after residency, work 20-30 years and retire at 60.

    #217019 Reply
    Avatar akatsuki 
    Participant
    Status: Physician
    Posts: 3
    Joined: 10/31/2017

    For SCPMG, the run-down for various “breakpoints” for possible retirement is as follows (corrections welcome):

    10 years of service – vesting in pension. This is the absolute minimum amount of time most people would want to stay to at least get a 20% pension at age 65.

    20 years of service – end of the 2% salary per year accrual of pension. Same as with TPMG; this is the most bang for your buck for pension accrual, as after year 20 you only accrue at 1%

    Age + years of service > 75 – healthcare coverage in retirement. For people who start right at Kaiser close to age 30, this will usually be in your early 50s.

    Age 55 – PELM eligibility (increase in base salary based on overtime with 15 years of service)

    Age 58-64 – Eligible for Early Separation with annuity payout in the amount of your pension, but not drawing from your pension.

    Age 65 – Forced retirement from regular full-time work. Pension payout with no actuarial adjustment starts here. No lump sum “adjustment” as with TPMG since our pension is non-qualified and there is no limit to the annuity payout. Trade-off is that the pension is not insured by the government (guarantee starts around $5600/month at age 65).

     

    If you want to leave Kaiser at the earliest opportunity, 10 years makes the most sense if you can stick it out.

    After that, it really makes the most sense to stick out to age 58 except in unusual circumstances. You can get the health care in retirement by around age 53 if you started at age 30, but leaving for any other job at that time means you’d be giving up >$1 million in early separation payments that start at age 58. So that other job had better be worth at least that much in salary surplus (unlikely since after year 12, Kaiser is usually at least MGMA 50th percentile)

    Definitely agree with WW that working past Early Separation has questionable financial benefit.

     

    #217080 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4447
    Joined: 01/08/2016

    Anyone else confused as to the lack of sass and disdain in FLP responses on this thread….

    #217082 Reply
    Wally World Wally World 
    Participant
    Status: Physician
    Posts: 37
    Joined: 01/08/2016

    The TPMG pension plan especially with regard to ages 60-65, and “full early” retirement is quite confusing. Do you think this is well understood by the physicians in the group?

    Click to expand…

    Based on the questions asked during any benefits related presentation/seminar that I’ve attended, it’s strikes me that our plans aren’t well understood by many docs. It seems really hard to get the group past the 401k pretax vs Roth contribution discussion, let alone the in-plan conversion of after tax $ (for the “mega backdoor”). Maybe the silent majority have a good grasp on things, but I’m not certain. I’d like our group to put on an advanced benefits seminar (to go over the finer points of the Plan 1 pension, the Plan 2 defined contribution money purchase plan, and the Deferred Compensation Plan among other things) but I’ve never seen that offered (even the mid career physician program they put on is pretty basic).

    I suspect it has to do with StarTrekDoc’s point that Kaiser sets you up to be successful in retirement as long as you get to 60 (with the necessary years of service). The finer points that we like to debate/discuss on this board may not matter that much given the combination of pensions, investments, deferred comp, health/life insurance coverage provided when you retire with full benefits. (as long as you avoid the reckless spending!) Enough vs [1.3 x enough] may not matter to a lot of folk who are planning to go that route.

    akatsuki, thanks for the info on the SCPMG situation. I knew there were differences compared to TPMG. I can’t decide if I’m jealous or not. 😉

    #217093 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1196
    Joined: 01/26/2017

    Wally World, I know this question is probably unanswerable, but how strong are the golden handcuffs for TPMG. Let’s say hypothetically you have accumulated enough assets to retire by say age 50 (with >20 yrs service). If at that point work is no longer enjoyable, do you separate, go part time, or stay in golden handcuffs until 60. Let’s assume investable assets in the range of 50-100x annual spending.

    #217156 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2055
    Joined: 01/15/2017

    Just in general –  most folk at x50-100 annual probably wouldn’t tolerate a situation that’s no longer enjoyable.

    #217163 Reply
    Avatar cocovaii 
    Participant
    Status: Physician
    Posts: 20
    Joined: 05/23/2019

    Really like everyone getting into the nitty-gritty details – thanks to everyone and especially Wally World, FLP and StarTrekDoc. I too have gone to several of the benefits seminars but have still left pretty confused. I think they should have doctors run the seminars instead. Maybe some of you could get some units to do that, instead of a non- medical financial planner!

    A lot of questions came up for me while reading the discussion:

    1) The after tax contribution of ~$15k getting converted via the Mega Backdoor Roth is IN ADDITION TO the regular Backdoor Roth of ~12k (personal and spousal) per year, correct?

    2) if I leave tpmg before turning 60, how many years do I have to work to get the lifetime medical? Or do I need to retire with tpmg in order to qualify?

    3) is there a minimum number of years of service to qualify for the pension? If I leave before 60, can I still have choice on how/when the pension is disbursed?

    4) why don’t more doctors retire at 55? Especially if they have > 20 years of service? I didn’t realize there was a retirement plan option like that. However I have not heard of anyone retiring earlier than 60.

    5) For part-time doctors, does working ATO contribute to years of service? For example, if currently at 8/10ths but end up working 10/10ths for a year due to scheduling, would that year be counted as 1 full year or only 0.8?

    6) For the Deferred Compensation plan, you can put in 100% of your income as pre-tax and it grows in a tax deferred manner, correct? If you elect to have the plan pay out in 5 years and not push back the payout and you are not 60 and retiring, will it be taxed normally or will there be a penalty? Why wouldn’t more people take advantage of this – it seems like a great way to protect a lot of money from the high tax brackets? This is especially if there is a lot of income coming in for a dual income high earner couple who also has significant side hustle income.

    Thanks for reading and replying.

    #217166 Reply
    Avatar cocovaii 
    Participant
    Status: Physician
    Posts: 20
    Joined: 05/23/2019

    Thought of another question:

    7) I have my money in a TPMG target date fund that is aggressive. Are the target date funds low cost index funds? Which funds are people using? I have heard the Frank Russell fund is low cost. Do people adjust the asset allocation annually as recommended or just pick one and leave it long term?

    #217167 Reply
    Wally World Wally World 
    Participant
    Status: Physician
    Posts: 37
    Joined: 01/08/2016

    Just in general –  most folk at x50-100 annual probably wouldn’t tolerate a situation that’s no longer enjoyable.

    Click to expand…

    Totally agree. At that level of accumulation, I think you’d be A-OK cutting back or finding something else to do that would provide more joy. Continuing to work full time for another decade wouldn’t be on my radar in that situation.

     

    1) The after tax contribution of ~$15k getting converted via the Mega Backdoor Roth is IN ADDITION TO the regular Backdoor Roth of ~12k (personal and spousal) per year, correct?

    Click to expand…

    Correct. The mega backdoor Roth is taking after tax contributions to 401k and doing conversion to Roth (either 401k or IRA). The regular backdoor Roth is taking a non-deductable traditional IRA contribution and converting to Roth IRA.

    2) if I leave tpmg before turning 60, how many years do I have to work to get the lifetime medical? Or do I need to retire with tpmg in order to qualify?

    Click to expand…

    I’m pretty sure you are not eligible for lifetime medical from TPMG unless you separate at 60 or older with >15 years of service (or >65 with >10 years). Exceptions exist for separation due to disability (though you need at least 10 years of service in this situation).

    3) is there a minimum number of years of service to qualify for the pension? If I leave before 60, can I still have choice on how/when the pension is disbursed?

    Click to expand…

    Yes, you need 5 years of credited service to qualify for the pension (cliff vesting) at TPMG. If you leave before 55 (with >5 years of service), then you can choose when and how the pension is paid out but no earlier than full retirement age (65). If you take early retirement (between 55 and 60, with >15 years of service), you can start getting your pension at that point with an actuarial reduction. Keep in mind there are no health care benefits ever provided in early retirement. You can model each of these situations on the NetBenefits site. Just go under pensions and click “Plan 1.”

    4) why don’t more doctors retire at 55? Especially if they have > 20 years of service? I didn’t realize there was a retirement plan option like that. However I have not heard of anyone retiring earlier than 60.

    Click to expand…

    Because of the aforementioned actuarial reduction in the pension payout and no health care benefits.

    5) For part-time doctors, does working ATO contribute to years of service? For example, if currently at 8/10ths but end up working 10/10ths for a year due to scheduling, would that year be counted as 1 full year or only 0.8?

    Click to expand…

    I’m pretty sure that if you get paid for the ATO worked, it will contribute to the years of service calculation. If you choose to accumulate that time instead (and then use it for time off later or put it in the time bank), then it may not count. The formula is number of hours worked/paid out divided by 2000 in any given year to figure out the amount of credited service.

    6) For the Deferred Compensation plan, you can put in 100% of your income as pre-tax and it grows in a tax deferred manner, correct? If you elect to have the plan pay out in 5 years and not push back the payout and you are not 60 and retiring, will it be taxed normally or will there be a penalty?

    Click to expand…

    Correct. Taxed as regular income. No penalties.

    Why wouldn’t more people take advantage of this – it seems like a great way to protect a lot of money from the high tax brackets? This is especially if there is a lot of income coming in for a dual income high earner couple who also has significant side hustle income.

    Click to expand…

    It’s a non-qualified plan with a lot of restrictions. I agree that dual income families would likely find it very attractive from a taxation perspective. If you haven’t read through this thread from FLP on this issue, I’d check it out regarding pros and cons. https://www.whitecoatinvestor.com/forums/topic/flps-analysis-of-457-non-qualified-deferred-comp-plans/

    I’ll leave the investment/allocation questions for others. (I’ve already exceeded my forum time allocation for the day 🙂 )
    WW out.
    #217204 Reply
    Avatar cocovaii 
    Participant
    Status: Physician
    Posts: 20
    Joined: 05/23/2019

    Wally World, you’re awesome! 😊

    #217210 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2055
    Joined: 01/15/2017

    What @WW said 🙂

    -to add: Once vested 5years service – your next step (minus disability) really is 55+20years as a career person.  We you take early pension out.  between 55-65: it’s 4.6% reduction per year (to compare –  for VA (FERS)-   its’ 5% reduction per year early, so Kaiser again wins on that too).

    -IIRC – for part time service conversion to service years, it’s hours worked to a denominator (forgot the denominator) to get to 1 full year.  Working past that denominator doesn’t get you extra.    eg 0.6 time , but if you worked on the clock 0.7;  you get 0.7 credit that year.  if you are 0.9 and worked 1.1 — you get 1.0 service year credit.

    -We were dual income during our Kaiser years, yet declined to participate in the non-qualified plan.  25years horizon on a nonqulified IOU was simply too much eggs in the basket for us.

    #217213 Reply
    Avatar Tri2Fly 
    Participant
    Status: Physician
    Posts: 25
    Joined: 03/25/2017

    Wally World, I know this question is probably unanswerable, but how strong are the golden handcuffs for TPMG. Let’s say hypothetically you have accumulated enough assets to retire by say age 50 (with >20 yrs service). If at that point work is no longer enjoyable, do you separate, go part time, or stay in golden handcuffs until 60. Let’s assume investable assets in the range of 50-100x annual spending.

    Click to expand…

    My understanding is if you separate before age 60, you are not eligible for the supplemental full retirement at 60.  You have to wait until age 65 to start taking pension payments.  Is that everyone else’s understanding as well?

    #217369 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1196
    Joined: 01/26/2017

    Wally World, I know this question is probably unanswerable, but how strong are the golden handcuffs for TPMG. Let’s say hypothetically you have accumulated enough assets to retire by say age 50 (with >20 yrs service). If at that point work is no longer enjoyable, do you separate, go part time, or stay in golden handcuffs until 60. Let’s assume investable assets in the range of 50-100x annual spending.

    Click to expand…

    My understanding is if you separate before age 60, you are not eligible for the supplemental full retirement at 60.  You have to wait until age 65 to start taking pension payments.  Is that everyone else’s understanding as well?

    Click to expand…

    You are not eligible for “full early retirement” at age 60. I think you may be still eligible for pension payments at age 60 but actuarily reduced. Regardless of whether to stay until 60 you still receive the supplemental retirement payment at 65. Wally World would of course know for sure.

    #217376 Reply
    Wally World Wally World 
    Participant
    Status: Physician
    Posts: 37
    Joined: 01/08/2016
    My understanding is if you separate before age 60, you are not eligible for the supplemental full retirement at 60. You have to wait until age 65 to start taking pension payments. Is that everyone else’s understanding as well?

    Click to expand…

    I’m not 100% sure what you mean by “supplemental full retirement.” Maybe Full Early (retirement with full benefits and no actuarial reduction in payments)? As far as I understand things, there are 4 different situations with regards to the start of TPMG Pension payments:

    1. Payments start @ Normal retirement (65 years): this would be for anyone who retires/separates from TPMG before the age of 55 with >5 years of service. Amount is based on years of service and the lower of the federal compensation limit or the average of your 3 highest years of compensation. This is Plan 1.

    2. @ Early retirement (generally starting between 55 and 59 years of age for anyone with >15 years of service): for anyone who retires/separates from TPMG after 55 years of age but before qualifying for Full Early retirement. There is an actuarial reduction in the payment and there are no healthcare benefits. This is also Plan 1. Age 55 years with 15+ years of service is the earliest you can start to receive pension payments.

    3. @ Full early retirement (no earlier than age 60 years with >15 years of service):  As I mentioned in a previous post in this thread, Full Early only lasts from separation until you turn 65 years (so if you take Full Early at 64, you will only get one year of payments). Full early payments do not face actuarial reduction (and neither will subsequent pension payments after 65 years) and they are based on the average of your 3 highest years of compensation. (as opposed to the Normal retirement, where your payment is based on the lower of the federal compensation limit or the average of your 3 highest years of compensation). This is not Plan 1 but is a supplemental plan (and is not covered by the PBGC, by the way). Healthcare insurance for life included. After you turn 65, you will switch over to Plan 1 payments and start collecting the (possibly) lower payments under #1 (above) or…

    4. @ age over normal retirement age (>65 years): For anyone with >5 years of service, you can postpone getting your pension at 65 and you can receive an actuarial increase for the time you defer. As mentioned previously in this thread, you can see an 8% increase in the pension amount for each year deferred past 65. (also plan 1).

    Hopefully this helps!

    WW

    #217701 Reply

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