Confused about alphabet soup that is your retirement plan? Want to know what it all means? Kendra Grob, Manager of Retirement Plans, at Consumers Energy breaks it down for us.
Confused about alphabet soup that is your retirement plan? Want to know what it all means? Kendra Grob, Manager of Retirement Plans, at Consumers Energy breaks it down for us.
Description
Confused about alphabet soup the is your retirement plan? Want to know what is all means? Kendra Grob, Manager of Retirement Plans, at Consumers Energy breaks it down for us.
William Krieger
The views and opinions of the guests of the Me You Us podcast do not represent the views and opinions of Consumers Energy. Hello, everyone and welcome to Me You Us a wellbeing podcast. It's another wellbeing Wednesday here at Consumers Energy and I'm your host Bill Krieger. Today my guest is Kendra Grob. She is the manager of retirement plans here at Consumers Energy and no stranger to the Me You Us podcast. So Kendra, if you'd introduce yourself, we'll get the conversation started.
Kendra Grob
Good morning bill. As you mentioned, my name is Kendra Grob, I am the retirement plans manager for consumers. And for retirement plans I am talking pension 401k, and our DCCP plan. So I've been consumers, I can't believe it's been a year and a half already. I hired in during the pandemic. So you know, a little bit different environment, but I love it. Before I came to consumers, I was a senior Benefits Specialist for a large plastics company. And I have always pretty much focused around retirement as far as resources and benefits go. So I have an extensive background there. Part of my day-to-day work here, you know, day to day changes all the time. But a lot of what I do is just keep us in compliance with the government. So whether that's rewriting plan documents, or summary plan descriptions or filing filings with the government, you know, our 5500s, all of that falls under my responsibility.
William Krieger
So, as we went through the introduction, you had talked about a couple of things, pension, 401k, and DCCP, which I think stands for defined contribution company plan. But could you, like, pull those apart? Give us a little context around what each one of those means.
Kendra Grob
And you're correct DCCP plan does stand for defined company or defined contribution custom plan. So the first I want to say, there's, there's different plans for employees based on things like are your salary, are you union, you know, based on your date of hire, so it gets a little confusing for the employee base to figure out which benefit plan is mine. So the first thing that I always recommend for them to do, if I don't know off the top of my head, is to go out to Fidelity, and then go into your Fidelity net benefits site. They are the record keeper for all of our retirement plans, and they receive current information from us on what plants employees are in. So they'll be able to access their own site on there, and it will show which plans they're eligible for. So it'll tell them if they're in the DCC, sorry, the DCCP plan, that’s a tongue twister, or if their pension plan, and everybody is eligible for the 401 K, so I'm going to break it down. So first and foremost, there's the 401k plan. And that's offered to every active employee upon hire, regardless upon date of hire, or job type. That why thing, the difference between the job type meaning union versus non-union is there may be a different match, beginning 2022, because we did do an adjustment to the salary match union employees, we match 100% of the first 3% and 50% on the next 2%. That's what our employee base is used to. And that's what was negotiated. salaried employees have changed their match in January this year, up to 100% of the first 6%. So 401k being available to all of our employees and knowing what your matches. I think that's crucial, because I really want people to get out there and take advantage of their 401k and their match, max out what you can, what's comfortable for you for your contribution, so you get the full match percentage
William Krieger
So for the folks who might not understand what a 401k is, because it took me a little while to figure it out myself, that is where I contribute a certain percentage of my gross income, each pay period. And then the company matches it based on what we talked about here. So this is a plan where I'm actually putting money into the plan and it gets into mutual funds and stocks and all of those different things.
Kendra Grob
Exactly. And if you think about okay, well the salary to employees, where we match 100% up to the first 6%. Put in 6% folks put in more of that, of that if you can, that way you're getting 6% that you contributed but you're also getting 6% that the company is contributing for you. So it's like 6% free money and that goes into your paycheck every week?
William Krieger
So it's almost like getting 12% For my 6% If I'm doing the math, right, exactly. Okay, so I understand that. And again, for the folks out there who don't work for Consumers Energy, certainly check with your benefits teams to see what is offered through your plan, because the 401k plans are specific to the employer. And there's all kinds of different matching programs for those. And then you talked a little bit about a pension. And so some people still receive a pension like I hired in in 1994. So almost 28 years ago. And so some of us still get that pension plan, and how does that work? And how do I know if I'm in the pension plan.
Kendra Grob
So again, if you go into the Fidelity net benefits, you'll see a section that says pension plans, you'll be able to click on it. But there were two different pension plans based on higher dates. And that's what people need to know if for the first one, you needed to be a salaried employee prior to 7/1/2003. If you were a union employee, you needed to be an employee prior to September 1, 2005. Pension plans were frozen at that point. And that's a term that you don't hear very often, but the plans are frozen to new entrants, is what that means. So anyone hired after those dates, would no longer be in the pension plan. So you can go back and look at your hire date. And if you were hired after those dates, you know, you're not part of the pension plan, you're actually going to be part of the plan that we're going to talk about next.
William Krieger
Okay, so I understand that. So, folks take a look at when you were hired, but also, I can't stress enough, go out to that Fidelity, either the website or the app, I use them both. And all the information that you need is out there as well as a number you can call if you have questions that you can't get answered. So let's talk about this third plan, the DCCP.
Kendra Grob
The DCCP is a plan that is becoming more common with employers, because very rarely do you find an open pension plan any longer. So what they did is when the plans were frozen, they developed a new plan, and we call it the DCCP. But other employers may call it something else. And what that is, is to kind of make up for newer people coming into the company, the fact that you don't have a pension. So it's an extra contribution that goes into your 401k every pay period provided by the company. And it's based on years of service or whether you're a union employer, nonunion employee. The plan was actually instituted in September 2005. So right after that last pension plan froze, this plan began. The years of service that's going to act as far as how much you're going to get. So typically, a new hire going to hire in like myself, I hired him a year and a half ago, I can add additional 5%, put into my 401k. it goes right into Fidelity, and it shows up as DCCP. So now let's take a look at our prior math, I put in, say 6%, I get a 6% match. Now I'm also getting an additional 5%. So you know, you have your 12%, then additional 5%. Now we're up to 17%. Going into my 401k plan, every pay period.
William Krieger
And for the DCCP plan that is regardless of what your contribution is, into the 401k. This is something that happens simply based on years of service then?
Kendra Grob
Right, it is a separate standalone and in Fidelity. They call it buckets. I don't know why, but they call buckets. So if you get our statements into your home, you will see on your statement 401k, match, DCCP. They'll all be broken into different buckets. So you can tell how much one to each one. And if you want to check the percentage is being contributed to you based on your years of service. You can again when you go into your Fidelity net benefits, click on that retirement savings tab this time instead of the pension and click summary. It'll show you under contributions, what your automatic contribution is going into your plan for you.
William Krieger
Okay all good information to have and so that really kind of breaks out the three different plans that exist at Consumers Energy, I suspect that the pension plan as we get further into the years will no longer exist at all because all of those folks will have retired.
Kendra Grob
Yeah, that's my heavy work base right now it seems like is everybody in the pension plan is either gearing up for retirement or is actually retiring right now. So I'm getting a lot of common questions from pension plan population. So that maybe we could go around a couple of those if you like.
William Krieger
Yeah, I think that's a great segue. Actually, Kendra, what are some of the questions you get? You've been here for a whole year and a half. But you've been doing this kind of work for quite some time. So what are some of some of the common questions you get?
Kendra Grob
Well, the first one I get most common and so does my counterpart in my department is related to the pension plan. They want to know what day of the month is best to retire on, because say I want to retire February 15, that may not be the best date for the actual pension plan, because our pension plan states that you must retire on the first day of a month. Now, to get you to that point, you're supposed to work up to the last day, or being an active employee to the last day prior to your retirement date. So if I wanted to retire February 15, I would recommend somebody actually retire either February 1 or March 1, and then be an active employee into the last day of the prior month. So January 31, you know, February 28, as either an active employee working, or you could take vacation time that you may have accrued and that used or if you're on an active of sick leave code, because that will take you up to your actual retirement date with no gap and pay.
William Krieger
Well, and that that brings up a question that we didn't really, it just kind of popped in my head here. And that is, if I am retiring, and I do have vacation left, what happens with that?
Kendra Grob
It depends on if you're union or non-union. So the first thing I say is, when someone asked me about vacation, go back to your HR manager, or your People and Culture contact and find out what are you eligible for how much have you accrued and that used? Alright, so
William Krieger
Alright, so the answer to the question is check with your People and Culture representative in your local area, and they can certainly get that answer for you.
Kendra Grob
I still really need to learn to say People and Cultuer instead of HR, so that's my bad.
William Krieger
Well, if for people listening who might not work for Consumers Energy you about a year ago, right, and right around the time Kendra came on board, we took a look at our human resources. And what we realized was that the term human resources might not really encompass all the work that we do. And so we landed on People and Culture and not just a change of names, but a change of philosophy and how we do business. So, you know if you work for here at consumers, check it out. Talk to your People and Culture representative, if you don't work here, you may call it anything from human resources to who knows what names. So be interesting on a survey to hear maybe what your company calls your human resources or People and Culture department. But let's not get too far off track. We were talking about common retirement questions. So what's another question that you get frequently?
Kendra Grob
So another one is, okay, I'm not part of the pension plan. Are there guidelines around when I can retire there? Or can I retire anytime? Well, the guideline is, if you're not in the pension plan, and all you have is the machine sale you have this are great benefits. If you have the 401k and the DCCP plan, you can retire anytime we want. We'll code it as a retirement, but you're really just terminated from the company, which means your 401k funds, now are yours, it's not part of the company plan any longer. So you have access to your funds at that point in time. So whether you want to do a rollover to an IRA or god forbid a disbursement, but you know how I feel about disbursements, you can retire at any point under the 401k and DCCP plan.
William Krieger
So Kendra, I do have a question for you though. I know that when I started here at consumers, there you had to be here for so many years before you were fully vested in your 401k. So is there still a time period where that exists?
Kendra Grob
Yes, the 401k obviously best immediately because that's your money, but the 401k match has a six-year vesting period. So someone who's been here 26 years, I think you said for 28 years, you are vested in your 401k match.
William Krieger
Okay, that's good to know not that I'm planning on going anywhere anytime soon, but good, good information to have now what about the that the DCCP.
Kendra Grob
So the DCCP plan has no vesting period to it. So that again, you see it on your paycheck every pay period, and it goes into your account, but that's vested immediately.
William Krieger
Okay, so the dollars that I put in, in the DCCP dollars, if I'm not in the pension plan, are all immediately vested in then any company match outside of that has that six-year vesting period. Exactly. Okay. And you know, you didn't mention that you can retire really at any date in in a 401k plan simply because that's your money and there aren't a lot of restrictions from the company, that because it's not a pension plan. But I've always been told that it's probably a good idea to talk with someone before I do that right. Talk to a financial advisor, or an expert or someone that I trust, just to make sure that I'm going to be okay, if I decide to retire.
Kendra Grob
I would recommend you or anyone speak with a financial advisor, or even a tax accountant, just make sure the taxing on issues will work for you. I do know Fidelity; you could call them anytime on their one 800 Number. They can't tell you what to do. But they can answer a lot of your questions they might have going into it. And I think I know where you're going. Are we talking about age 59? and a half question there?
William Krieger
Yes, yes. Because there's, you know, I've talked to my advisor, and I'm not going to talk about that advice. But just because you can retire doesn't necessarily mean that you should retire. So yeah, 59 and a half seems to be a magic age.
Kendra Grob
It does. And the reason being is if you took your funds out of your account, prior to age 59 and a half, you're going to get a penalty on it. So the government, anytime you take a disbursement out of your 401k, they're going to want their 20%. There are no ifs, ands, or buts about that one. However, if you wait until age 59 and a half, you're not going to accrue a 10% penalty. So that's one thing I want people to keep in mind is just that 59 and a half number, you can save yourself from getting a 10% penalty, just wait past that point.
William Krieger
And that's good information to have. Because I know that sometimes people are 55 or 58. And they get that bug, and they want to retire and start doing other things. And so it's good to know that there's reasons why maybe you should not do that. And also that you should definitely talk to a professional, again, whether it's your financial advisor, your tax advisor, or again, someone that you trust, certainly want to make sure the audience knows that none of what we're talking about today should be construed as financial advice. We're just giving out information that's available. So we're talking about retirement, and we talked about that magic age of 59 and a half. So someone reaches the age, they've everything's in line, and they're like, I want to retire, what should they do?
Kendra Grob
This is one of the most common questions we get too. They want to know how far in advance they need to let their supervisor know, or they need to begin any sort of form process. So we recommend between 30 and 180 days now 180 days seems like pretty far off. But if you know what you want to do, then fine. My sweet point I would say is 60 days. So at that point, you begin notifying your supervisor, unless you're comfortable notifying them ahead of time, and reaching out and contacting Fidelity that's going to allow Fidelity to actually begin the process of putting together a retirement package for you. If you have the pension plan. You may not need as much time if you're just in the 401k and DCCP plan. But the paperwork and the process involved for pension plan ahead at least 60 days. And with the pension plan, I just want to remind us re they'll need to request a kit from Fidelity. And all you do is go online and there is a section in there in your net benefits to say, request pension, whether you're going to do a pension estimate, or if you're going to actually request a kit, and then they will send you the forms that you actually need to complete. We also have an internal form called a 221c and this is a 221WC sorry. Even if you are not part of the pension plan, we request that you complete that form because we use that form internally to notify the departments of who is leaving so we can begin the process.
William Krieger
Okay, good information to have you know something interesting when you said 180 days seems like a long time out. I retired from the National Guard and while I am retired, I don't collect my benefit until I turned 60 But you actually have to start your paperwork at age 58 to have everything be done by age 60. So you can collect your pension seamlessly. So for any of you what we call gray area, retirees In the military, be sure and read your information packet because there's a lot of great information in there. You know, I'm a planner. So 30 to 180 days doesn't seem like too far out to me. But if you're not in that situation, just try and think of how to have the things that you need to get done. So, you know, we talked about what needs to happen and some timing and things like that. But do we have some new resources for people who are thinking about retirement?
Kendra Grob
We have a great new tool that we created at the end of 2021. There is a team from the benefit side and me. So there was four of us working on this and it is called a retirement readiness guide. This is what we want employees to go to for any common questions that they might have for the retirement process. Think of it as a checklist, it's going to tell you how far out you should do something, what forms you need to complete who to contact. Great tool, we actually have that out there on our new Share Connect site, which to me is I'm loving this new Share Connect site, because I have my own retirement page in it. To get to retirement, all they need to do is actually click retirement in the search bar, and it'll take you out there and you can either just pull up a form, or you can go into the retirement page, where I'll be supplying additional information as time goes on kind of like a blog.
William Krieger
So that's good to know that you have this site here internally, that not only just has information on it, but that you're updating it regularly. So for those of us who work here at consumers, check that out on our internal site. And check it out frequently, because it sounds like there will be new and updated information on a regular basis.
Kendra Grob
I'll be posting news articles, but also anytime Fidelity has, you know, free webcasts somebody might want to join. But they're not sure how to access them, I'm going to post them out there underneath my calendar on this site, it'll populate up to the company's calendar, make it easier access for our employees to get this information. But the retirement readiness guide is out there, the 221 forms are out there. And then I will keep adding information as I get it.
William Krieger
Well, it sounds like for our consumers, energy coworkers are going to be a great resource. So be sure to check it out. If you don't work at Consumers Energy, talk to your benefits department to find out what they have available to you. It's always in your best interest to know what you can and can't do and what's available and all those things. So just remember that whether you work here, and we've given you the information right here, or do you work elsewhere, be sure and check all those things out.
Kendra Grob
I would say in summary, because Bill, you know me, I can talk about retirement all day long. But I'll put a lot of people to sleep if I do. I just want to recommend that our employees dig into some of these tools, including Fidelity site. Here at consumers, one of our big words that we are using is empower, empower yourself, guys, get out there, find out what you're eligible for educate yourself, it's out there. And if it's not out there, we'll get it out there for you.
William Krieger
I can vouch for that I use the Fidelity site quite frequently. My wife is getting actually getting ready to change jobs here in the near future. And I wanted to find out about some benefits. I had some questions. I found most of my answers right on the app. But I had a couple of questions that I couldn't quite get an answer to. I just picked up the phone and talk to a representative it was so very easy. I've been able to change my percentage of contribution to my 401k I've been able to take a look at retirement projections, all kinds of great stuff. So the tools are there for us to use. And then if you have questions, because for me, it's tending it tends to generate other questions. Again, you can either find them in the frequently asked questions or if it's not a so frequently asked question, you can call the answer right away. They have great folks that work there. They're very helpful. So I just can't say enough about this Kendr. This Fidelity website has been amazing, at least for me and my family, throughout my career here at Consumers Energy. So and again, if you don't work for consumers, find out what's available to you, and make sure that you're accessing every available resource.
Kendra Grob
Exactly. And you know, just a quick summary of what we've gone over. Know your plans. Get out there. Find out like you're saying ask questions, contact Fidelity, know what you're eligible for. Match for 401k we want to make sure that you Max enough to match contribute as much as you're comfortable. This is money on the table for you guys for retirement later. And then know your resources. Use our share Connect site if you work for consumers. or contact a financial adviser, or whoever your retirement plan administrator is, you know, reach out, ask the questions until you get the comfortable answers that you're looking for.
William Krieger
Well, you know, we talk about resources to the Social Security Administration, I am a veteran. And I just found out that when I retire, and I'm when I'm eligible for my Social Security benefit, that there's actually some benefits that are offered to veterans for time in service. And we don't have time to go through this whole document. But if you go out to the ssa.gov, that's the Social Security administration.gov. All this information is out there. So if you fall into any particular certain category, like I'm a veteran, I looked up what some of the benefits are there. So there are just tons of resources available. And you're absolutely right. It's incumbent upon us to make sure that we do all we can to be successful in our retirement.
Kendra Grob
As you and I mentioned before, if you have that type of information available, I'm happy to post it on share from that, you know, just makes it one step easier for our employee base to get to it.
William Krieger
Yes, and Kendra will actually be posting this information out there. We talked before the show on it. So Kendra, we are getting close to the end of the program. But I just wanted to give you the opportunity is there anything else that you would like our listeners to take away from this conversation?
Kendra Grob
Just know your plans, know what you're eligible for. Ask about key dates. Go to the retirement readiness guide for your first answers. It really is a useful tool. It's an easy tool, reach out contact Fidelity, just don't be shy, let us help you.
William Krieger
Well, you know, I do have one last question for you. So as you know, many companies are getting away from pensions now that we're going to 401k and some of these other plans, which help us manage our own retirements in a way that we want along with good advice from experts. But how long have pensions been around? And where did they come from?
Kendra Grob
I had to dig deep into this one. Because I know with military going way back, there were some forms of pensions. But the first private pension plan was set up in 1875. So if you think about over 100 years, we've had pension plans. And it was put in place by the American Express Company. They were one of the only ones to have had it because they were one of the largest companies at the time. And the only guideline that they had on their pension, I'm not sure if guidelines even the right word is you had to work for the company for 20 years and reach the age of 60. And the funny part is at that time, you could receive half your annual salary, which was in maximum whopping $500 a year. Now that sounds like nothing but back in 1875 that was probably a very good salary.
William Krieger
I was going to say my how things have changed since 1875. Well, thanks again, Kenrda for coming on. I think this is maybe our third time getting together and the information is always so useful and powerful for our coworkers. I hope folks listen and take advantage of the resources that are out there. And I know that sometime in the future you and I will be sitting down and talking about other topics as well. So thanks again, Kendra.
Kendra Grob
Thanks. I look forward to it.
William Krieger
Thank you to the audience for listening in today. The Me You Us podcast is proudly sponsored by Consumers Energy leaving Michigan better than we found it. Remember, you can find the Me You Us podcast on all major podcasting platforms. So be sure to go out find us and subscribe. If you or someone you know is in crisis, please contact the Suicide Prevention Lifeline at 1-800-273-8255. That's 1-800-273-8255 If you are a veteran or know a Veteran who is in crisis, you can call 1-800-273-8255 in press one for the Veterans Crisis Line. And remember to tune in every Wednesday as we talk about the things that impact your personal wellbeing.