 |
|
 |
 |
 |
 |
 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
 |
 |
|
|
|
|
|
|
|
|
|
|
Offered a Company Buyout? There’s a Lot to Think About First!  |
| |
 There was a time when a corporate buyout was a good thing, even welcomed. But in these uncertain economic times, a corporate buyout is a call to action for financial planning, not a reason to celebrate.
So who is and who isn’t a candidate for taking a buyout? Most experts agree that employees who are nearing retirement should consider looking at the buyout. Other employees include those who have other job opportunities and those who believe that they are likely to lose their jobs due to cutbacks. All of these employees should seriously look at the terms of the corporate buyout.
But before you agree to anything you need to speak to a professional financial planner. Here are some important questions to ask:
• Do you have a plan? In other words, is this about getting a sudden and unexpected vacation, or is there actually a next step here? A financial planner can look at your tax and spending situation to see if you can cover your expenses until you find a job. Obviously, if you are on line for a new job in the coming weeks, then you can turn your attention from covering expenses to investing the after-tax windfall. Of course, if your company wants you to sign a non-compete agreement, that’s going to affect your ability to take another job quickly in your field, so that’s another money issue.
• Is this the first buyout? By that, we mean, is this the first of what may be a series of buyouts? Generally, buyouts don’t get more attractive as cuts go on. On average, standard first-series buyouts may provide six months to a year of pay for non-managers or be tied to some other measurement, such as X number of weeks of pay for every year served. If your company has done buyouts in the past, make sure you know whether the packages stay the same or get worse.
• Can you negotiate? You have to lose any fear you have about talking about money. Talk to your colleagues about the packages they were able to get or what they have heard about previous packages. If you find out you’re getting worse terms than others, insist to your human resources department that you want to improve those numbers. Also, it might make sense to talk to an employment attorney not only for advice on what you should negotiate, but to review any agreement you reach.
• Will the company extend your insurance? What will your employer grant you as far as health, disability, life and any other insurance coverage you’re currently receiving from your employer now that you’re planning to leave the company?
• What about your retirement plans? Chances are you won’t be seguewaying into retirement immediately as you would if you could quit your current job on your own terms, so you really need to re-examine all aspects of your retirement picture to make sure you’ll still be on track if you take a buyout check and more important, if you might not be working for awhile. Keep in mind that you can also negotiate your pension levels – most employees can access their pension at age 55, but if you’re offered an earlier buyout, see if you can “bridge” payments so you can leave with payments into your pension that you would actually have if you stuck around until age 55.
• What about stock options and perks? If you have stock options that haven’t vested, ask if that can be done automatically at the time of your departure. Also, if you have a company car, club memberships or other perks as part of your regular employment incentives, see if you can keep them.
• Will the dollars throw you into another tax bracket? This is why it’s good to consult a planner and a tax expert who can find ways to blunt the impact. If your company is in good financial shape overall, see if you can take the money in installments or if you could push payments into next year.
• Do you have to leave immediately? Most companies like people out the door pretty quickly after they sign on the bottom line, but if you can accumulate more funds without putting more pressure on your tax situation, do it.
Information for this article provided by the Financial Planning Association (FPA). For more information about FPA, visit www.FPAnet.org or call 800.322.4237.
|
|
|
|
|
|
|
|
|
|
|
|
|