AbbVie Retirement Planning Tips to Maximize Benefits

AbbVie Retirement Planning Tips to Maximize Benefits

Choosing the right path now will aid in a healthy retirement upholding lasting success. That’s why corporate executives should plan for a rewarding retirement by understanding benefit package options. AbbVie benefits may be on that list.

With various investments and income sources, it can be time and energy-consuming to maintain strategies to grow wealth. Thank goodness executives don’t have to comprehend the complexities alone. Maximizing AbbVie benefits upon retiring can be achieved through simple planning with which everyone eligible should become familiar. 

Discuss benefits with a Libertyville, IL, financial advisor specializing in executive retirement planning.

As with all wealth planning endeavors, strategies are as unique as every financial situation, and each financial goal—none are identical.

 

What is AbbVie Retirement Planning, and How Does it Work?

Who is eligible? Corporate executives who have worked at AbbVie for more than five years and are 21 or older within the U.S. are eligible. This understanding can also help those seeking employment.

AbbVie retirement plans include a pension, deferred compensation, savings, and health care, all designed to support the long-term financial needs of employees. Early retirement is possible but not recommended; read on to understand why.

 

The Different Types of AbbVie Retirement Plans 

Executives should have complete confidence in retirement planning benefits.

AbbVie Pension Plan (APP)

The pension formula: 1.1% x the avg. of the past five years’ earnings x years of working service = annual benefit

This calculation considers average employment earnings for the past five years, including base and overtime pay. Earnings not included are bonuses, awards, and deferred compensation payments. Benefits equate to 1.1% of an employee’s final average pay multiplied by years of working service, capping at 35 years.

AbbVie pays 100% of the pension plan with zero employee contributions required, in which participation begins upon hire (or at age 21). Employees need not opt-in for this.

Even though the average retirement age is 65, early retirement is an option at 55 with ten years of AbbVie service. 

AbbVie Savings Plan (ASP)

This retirement savings plan offers 401(k) features. It has many investment options/flexible features to help further an employee’s long-term financial goals. Benefits under this plan depend on an employee’s level of contribution and investment(s) performance. 

Employees can participate in this plan upon hire with a signature; contributions are made through payroll deduction. For employees that contribute at least 2% of eligible pay, AbbVie will contribute an additional 5%. 

Employees can contribute limited amounts: 

  • From 2% to 25% of eligible pay on a pretax and/or Roth 401(k) basis, subject to the IRS annual pre tax contribution limit
  • From 2% to 10% on an after-tax basis
  • A combined total that cannot exceed 25% of eligible pay

After two years, company contributions are vested. The plan offers multiple investment selections, including AbbVie target-date funds, common stock, incentive plans, or cash profit sharing plans. 

The ASP allows rollovers of pretax distributions from conduit IRAs and other qualified plans (a significant benefit). 

Deferred Compensation Plan (DCP)

This voluntary plan allows eligible senior managers or key executives to defer eligible compensation into a tax-deferred program. The DCP supports their unique financial goals. This plan does not serve as 401(k) and adheres to different risks and rules.

AbbVie Health Care

Coverage is available to retirees with a minimum of three years of AbbVie service who are eligible to receive retirement benefits from the pension plan.

 

How to Choose the Right Retirement Plan For Executives

Saving strategies should start with an earners’ income level. Those earning too much money may be impacted by limited (IRS) matching contributions within AbbVie. Professional guidance can help participants decide to invest in the 401(k) or allocate funds elsewhere (once limits are reached).

Executives could potentially use the target retirement funds, which allows them to choose a tentative retirement date and rely on that nest egg. Of course, they will need to pivot investments when retirement rolls around. 

Employees aiming to craft a diversified portfolio, supporting multiple nest eggs, require comprehensive financial planning services from an experienced firm. 

In Illinois, Prism Planning Partners specializes in wealth management for executives. 

Diversification Matters

As a rule of thumb, investors should not hold more than 10% of their investments in a single stock. If investing in the company’s stock for which they work, 5% is recommended. 

For executives who have maxed out their contributions, diversifying their portfolios could be in their best interests. Revisiting their financial goals with a fiduciary financial advisor ensures that all efforts are in the highest interests of each client.

 

What if Executives are Not Happy with Their Current Retirement Plan?

It can pay to plan with a professional who knows the ropes of retirement planning, especially when it comes to retirement benefits. When investors feel uncertain about their retirement plan, getting a second opinion from a trusted advisory firm is wise. Now is the time for those who have yet to work with a professional.

A CERTIFIED FINANCIAL PLANNER™ will ensure clients are living well within their income, make recommendations, and forecast retirement budgets. The best retirement plan develops a working budget that starts now. Goals-based investing should be included.  

 

How Executives Can Make the Most of Their AbbVie Retirement Plan

Executives and pre-retirees can use these quick tips to assess their current retirement plans. 

Maximizing retirement benefits through AbbVie Pension Plan.

  1. Try to defer income above $275,000, max out the 401(k), HSA, and put money into AbbVie’s DCP if it applies.
  2. Make as much money as possible in the last five working years (those under $275,000). The previous five years of earnings are considered for the pension benefit.
  3. Don’t work longer than necessary (the Years of Service portion maxes out at 35 years). Don’t retire too soon, cutting into a pension early (there are penalties). 
  4. For those who must retire before 62, don’t start your pension immediately. Use other income (like deferred compensation payouts or 401(k) to maintain pension benefits until age 62 and beyond.
  5. Be careful when choosing the survivor benefit. Discuss payout options intentionally. 
  6. Lump-sum payout options will depend on interest rates. 

Maximizing retirement benefits through AbbVie Savings Plan.

  1. Anything purchased in a 401(k) as an investment grows tax-deferred. But when that investment is withdrawn from the account, the amount withdrawn is taxed as current income.
  2. Company stocks inside tax-deferred accounts have a special rule: Net Unrealized Appreciation (NUA) which can mitigate substantial tax payments.
  3. Convert after-tax contributions to a Roth 401(k) upon eligibility to make a withdrawal from the plan (no penalties or taxes are assessed). 

When was the last time you assessed your retirement plan? Strategies call for professional assistance. Talk to Prism Planning Partners today!

 

Executives Should Consider Working With Prism for Their Retirement Planning

At Prism Planning Partners, we are CERTIFIED FINANCIAL PLANNERS™️ committed to asking important questions to help executives, individuals, and families explore their opportunities. As financial advisors in Libertyville, we offer financial planning and consulting services, including retirement, investment, and estate planning. 

Contact us and let us illuminate your retirement outlook!

Find out how much you should save for retirement. Call us at Prism today!

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