BellSouth
New at&t

Old AT&T

Avaya/Lucent

Legislative

SIPP/ESIPP Information Package March 2005

COMMONLY ASKED SIPP/ESIPP QUESTIONS

 

SIPP/ESIPP OFFERS

Q1. If I accept a SIPP/ESIPP offer and am later declared surplus or permanently medically restricted (PMR) myself, will I be able to withdraw my acceptance and take termination pay instead?

A1. No. Employees may lock/unlock electronically from the 1^st day of the month to the last day of the month, before midnight, Eastern time, preceding the surplus quarter. After this time period, the SIPP acceptance may not be revoked. Surplus declarations are provided to CWA the 15^th of the month preceding the quarter, so if an employee locked into SIPP earlier in the month and later discover they have been surplused, they have until the last day of the month preceding the quarter to unlock. Employees who are declared to be permanently medically restricted (PMR) during a quarter in which they are locked into SIPP will not be able to withdraw the SIPP acceptance.

Q2. How long is my SIPP acceptance valid?

A2. SIPP acceptances are valid for one quarter only. Employees must lock in during the specified time period.

 

SIPP/ESIPP PAYMENTS

 

Q3. Are SIPP and ESIPP payments the same? How do I calculate my SIPP payments?

A3. Yes. The SIPP payment is based on completed years of service and your pension band. The SIPP payment table is located in Article 8.04A3a of the Working Agreement. The maximum SIPP payment is for 30 years of completed service. There is no additional compensation for more than 30 years of service.

Q4. How will my SIPP/ESIPP payment be paid?

A4. You may elect one of the following payment options:

One lump sum payment

Two lump sum payments, ½ within 30 days of your displacement date and the other ½ to be paid in February of the following calendar year

Bi-weekly payments over a 48 month period

 

Q5. When will I receive my SIPP/ESIPP payment if I elect to receive it in one of the lump sum options?

A5. You will receive your lump sum payment within 30 days from the date you leave the service of the Company.

 

Q6. When will I receive my SIPP/ESIPP payment if I elect to receive it over 48 months?

A6. You will start receiving your payment within one month from the date you leave the service of the Company. The SIPP/ESIPP payments are made bi-weekly and will be paid on your current pay type (clerical or plant) schedule. They will continue until 48 months of payments have been made.

 

Q7. Are SIPP/ESIPP payments taxable?

A7. Yes. The SIPP/ESIPP payments are subject to applicable Federal, FICA and State Taxes. Taxes will be withheld and reported to the federal and state agencies in the year in which the payment is received. Employees who separate in December cannot defer lump sum payments to the following year.

Q8. At what rate is my SIPP/ESIPP lump sum payment taxed for Federal tax?

A8. If the SIPP/ESIPP is paid in lump sum, it is considered supplemental wages, which will be taxed at a flat 25% rate for the Federal tax and 7.65% for FICA or social security tax.

Q9. At what rate is my SIPP/ESIPP lump sum taxed for State tax?

A9. Rates vary according to the state in which you’re located. Applicable withholding will be calculated at the highest marginal rate for your state of residence.

Q10. At what rate are my 48 SIPP/ESIPP payments taxed for Federal and State tax?

A10. If SIPP/ESIPP is paid bi-weekly for 48 months, it is considered as periodic wages, which will be taxed according to the W-4 withholdings specified by the employee.

 

Q11. Are my SIPP/ESIPP payments subject to any tax-favored treatment or are they considered ordinary income?

A11. The SIPP/ESIPP payments are considered ordinary income and are not subject to any tax-favored treatment.

 

Q12. Can I roll my SIPP/ESIPP lump sum into an IRA account in order to defer the taxes?

A12. No. SIPP/ESIPP is paid from the Company's operating expense and is not from a qualified plan; therefore, it cannot be rolled into an IRA.

Q13. Is interest paid if I elect to receive installments?

A13. No. There is no interest added to SIPP/ESIPP payments.

 

Q14. Are the SIPP/ESIPP payments used in determining Social Security?

A14. The payments on which FICA taxes are paid will be counted toward the recipient's earnings base in determining future social security benefit entitlement. These payments, however, are not included for determining "excess earnings" which would disqualify the recipient from Social Security benefits provided the person was eligible for pension benefits based on age and service.

If the person is service pension eligible and also receives SIPP/ESIPP payments, the SIPP/ESIPP payments will not be included when determining entitlement to Social Security. If the employee is not pension eligible, the SIPP/ESIPP payments are included in the earnings base in determining future benefit entitlement.

15. Can I direct deposit my SIPP/ESIPP payments?

A15. Yes, you can direct deposit your SIPP/ESIPP payments. If you are currently enrolled in direct deposit, your SIPP/ESIPP payments will continue to be direct deposited and no action is required. If you do not have direct deposit but want to enroll with a Telco credit union, contact Telco. If you do not have direct deposit and want to enroll with another type of financial institution, you will need to obtain an enrollment form from Payroll Services. To contact Payroll Services, please call 1-877-477-3665 or (404) 584-2272.

 

Q16. What happens if an employee elects the 48 monthly payments and dies before the full SIPP/ESIPP amount can be paid?

A16. The remaining payments will be made in a lump sum to the employee's estate.

Q17. How would my basic SIPP/ESIPP payment be determined if I am retiring and have been demoted within the past five years due to a surplus condition or a permanent medical restriction?

A17. As with your service pension, your basic SIPP/ESIPP payment would be calculated on the pension band of the higher rated job.

 

SIPP/ESIPP INFORMATION

 

Q18. How is my remaining vacation handled if I leave the payroll via SIPP/ESIPP?

A18. You are entitled to your remaining vacation for that year. If rescheduling of your vacation for that year is necessary, you will need to coordinate with your supervisor. If rescheduling is not feasible, you are entitled to be paid in lieu of the remaining vacation. Any remaining optional holidays and excused workdays must be taken prior to the employee leaving the payroll. Any Company designated excused work day occurring after the employee leaves the payroll would be lost.

Q19. Are employees who take SIPP/ESIPP entitled to termination pay or any other Article 7 rights?

A19. Employees who take SIPP/ESIPP are not entitled to termination pay or any rights under Article 7. SIPP is a payment made to employees who leave the payroll voluntarily.

Q20. Am I entitled to unemployment compensation if I take SIPP/ESIPP?

A20. Eligibility for unemployment compensation is a matter of state law. In most states, individuals who voluntarily terminate their employment do not qualify for benefits. Even where termination was involuntary, some states reduce unemployment compensation benefits if the individual claiming such benefits received a severance payment.

A21. If you are eligible for a Transitional Leave, whether you apply for the leave is entirely for you to decide. Transitional leave is available to regular full-time employees who will be eligible for a service pension within three years and who are affected by a surplus situation or a permanent medical restriction.

The leave period counts toward eligibility for a service pension but not towards calculation of the pension amount.

 

The employee's age at the end of the leave counts toward eligibility for a service pension and toward any applicable discount.

 

The leave may be granted for the period required to satisfy service pension eligibility requirements but cannot exceed 36 consecutive months.

 

If the employee took SIPP/ESIPP in conjunction with the leave, the SIPP/ESIPP payment would be made within one month after the leave begins.

 

Employees receive company-paid medical, dental, vision and group life benefits, and they may receive up to $3,000 in tuition aid.

 

Employees on transitional leave may work for another employer, subject to certain restrictions.

 

PENSION INFORMATION

 

 

Q22. Do I have to be service pension eligible to take SIPP/ESIPP?

A22. No. You can take SIPP/ESIPP even if you are not service pension eligible. SIPP/ESIPP eligibility (at least one year seniority) is not the same as service pension eligibility. You are service pension eligible and entitled to your pension immediately after retirement if you meet the basic eligibility requirements shown below:

NO RULE OF AGE AND SERVICE EQUALING 75 APPLIES FOR NON-MANAGEMENT SERVICE PENSION ELIGIBILITY

Non-Management Service Pension Eligibility

 

Age                                                        NCS

any age                                                  30 years

50                                                         with at least 25 years

55                                                         with at least 20 years

65                                                         with at least 10 years

NOTE: Please be aware that if you are under age 56 and have less than 30 years of service, your pre-’99 benefit amount will be reduced by 1/2% for each full or partial month (6% for each year) of retirement before age 56.

Q23. What if I accept SIPP/ESIPP but I’m not service pension eligible?

A23. You will begin receiving your SIPP/ESIPP payments within 30 days following your separation from the Company. If you terminate January 1, 2004 or later, and you are vested but not Service Pension eligible:

you will receive the Pre-99 portion of your benefit when you reach Normal Retirement Age (Age 65) unless you are eligible for early commencement. If you are eligible to elect to receive benefits earlier than Normal Retirement Age, and choose to do so, your Pre-99 Monthly pension benefit is reduced by a factor according to the number of months that your PCD precedes the Normal Retirement Age. See BSPP for reduction factors.

you may receive your "cash balance account", either as an annuity or lump sum immediately, or you may defer payment up to Normal Retirement Age.

Q24 If I am service pension eligible, how can I calculate what my estimated service pension will be?

A24 Contact the BellSouth Benefits Service Center at 1-800-528-1232 to ask pension related questions, including estimated pension calculations and/or payments, etc., or go online to the Benefits Web Site: https://www.bellsouthbenefits.com (from home), or Benefits@YourFingertips (from work) to obtain estimated pension calculations and/or payments, or review the BellSouth Pension Plan (BSPP) Summary Plan Description.

Q25 If I accept SIPP/ESIPP, will my pension payments begin automatically?

A25 Acceptance of SIPP/ESIPP does not initiate pension payments.

Q26. When are pension monthly annuities paid?

A26. Monthly pensions are paid, in arrears, the last week of each month.

Q27. May I receive a pension lump sum in lieu of monthly annuity payments?

A27. Yes. There is provision in the BellSouth Pension Plan (BSPP) to pay the entire service pension in a lump sum. You may receive your Pre-99 pension band benefit and your cash balance account as a lump sum.

Q28. What deductions are made from service pension payments?

A28. Currently, service pension deductions may include:

Federal Income Tax
State Income Tax (if applicable)
Universal Plus Life Insurance premiums
Retiree Medical and Retiree Dental Assistance Plans (RMAP and RDAP) premiums
Long Term Care (LTC) premiums
Supplemental Transplant Assistance Plan (STAP) premiums

Q29. May I elect a survivor annuity for my spouse?

A29. Yes. If you are service pension eligible, you have until your pension commencement date or until 30 days after you receive your BellSouth Pension Plan Notice of Rights (provided in your retirement kit), whichever date is later, to submit a signed election or declination of the joint and 50% survivor annuity to the BellSouth Pension Administrator. If you are married, you cannot decline the joint and 50% survivor annuity (which includes the option to receive a lump sum payment of your benefit) unless you have your spouse’s notarized written consent on the election/declination form.

If you elect the survivor annuity, your pension will be reduced by 10%. The survivor annuity is payable at your death to your surviving spouse to whom you are married on your pension commencement date and will be one-half of your reduced pension amount

Under law, if you are divorced or widowed, you must provide a copy of the divorce decree or death certificate to prove single status in order to decline the joint and survivor annuity. If you have never been married, proof of single status will be verified by the Payroll Office.

If your pension will be paid as a deferred vested pension, you can make the joint and 50% survivor annuity election at the time you become eligible for payment. You must be married to your spouse at least one year prior to the time your deferred vested pension is paid.

Q30. What happens to my account in the Savings and Security Plan (SSP) when I retire with a service pension?

A30. Upon retirement, the following options are available for SSP participants:

a. Lump-sum distribution paid:

(1) Directly to you

(2) Directly to the trustee of your Individual Retirement Account (IRA)

(3) Directly to a new employer’s plan

(4) A portion directly to you and a portion directly to the trustee of your IRA or a new employer’s plan

b. Automatic lump-sum distribution for balances of $5,000 or less (unless you elect a rollover option).

c. Deferral of a distribution if your account balance is greater than $5,000 until a future date but no later than April 1 of the year following the year in which you reach age 70-1/2.

                    If deferred, two withdrawals per year are allowed.

d. Annual installments for ten years, or 40 quarterly payments.

e. A series of annual payments for the rest of your life (life expectancy option), or over the expected lifetime of the first and last survivor based on IRS life expectancy tables.

You can initiate most transactions by using the Interactive Voice Response System at the BellSouth Participant Service Center (BPSC). You must have a PIN code and your Social Security Number to receive any information about your account or to initiate a transaction.

The telephone number is: 1-866-697-1006

Q31. Will I have medical coverage if I retire with a service pension?

A31. When you retire from the Company on service (or disability) pension, the Company currently provides medical coverage for you and your eligible dependents, in accordance with and subject to the terms and conditions of the BellSouth Retiree Medical Assistance Plan. Also, once you or any of your dependents meet the criteria for Medicare eligibility, benefits will be reduced by payments available from Medicare.

Q32. Will I have to pay for the medical coverage?

A32. There is currently no premium cost to you for medical coverage. Normally, if you retire with less than 30 years of service, you will pay 10%, 20%, or 30% of the premium based on your years of service. However, non-management employees who retire under a formal surplus force-reduction program, presently known as the Supplemental Income Protection Program (SIPP) or Expanded Supplemental Income Protection Program (ESIPP) will not be required to pay the prorated premium. Also, a non-management retiree is subject to a post retirement capped premium, and the earliest date a change in this amount could occur is January 1, 2010.

Q33. If I am service pension eligible and take termination pay in lieu of SIPP/ESIPP and have less than 30 years of service, will the RMAP prorated amount based on service (10%, 20%, or 30%) be waived?

A33. No. Only SIPP/ESIPP waives the RMAP prorated amount based on service.

Q34. Will I be covered under the Long Term Care Insurance Plan (LTC) if I retire with a service pension?

A34. If you are a participant in the LTC Plan, your coverage will transfer automatically at retirement to the pension payroll system. Premiums will be deducted from your pension check, or you can make payments directly to John Hancock

Q35. Will I be covered under the Supplemental Transplant Assistance Plan (STAP) if I retire with a service pension?

A35. If you enrolled as an active employee, you and your covered family members may continue under STAP after retirement until you reach age 65. If any dependents reach age 65 prior to the retiree, coverage ends for the dependent at the first of the month of the dependent’s 65th birthday. If you did not elect coverage as an active employee, you will not be eligible for coverage after retirement. If enrolled upon retirement, deductions will continue to be taken from your monthly pension check. (If the plan is on a premium holiday, no premiums will be collected during the premium holiday period.)

Q36. Will I have dental coverage if I retire with a service pension?

A36. When you retire on a service or disability pension, the Company currently provides coverage under the BellSouth Retiree Dental Assistance Plan for you and your eligible dependents during your retirement through the last day of the month in which you decease.

Q37. Will I have to pay for the dental coverage?

37. There is currently no premium cost to you for dental coverage. A non-management retiree is subject to a post retirement capped premium, and the earliest date a change in this amount could occur is January 1, 2010.

Q38. Will I be covered under the BellSouth Vision Assistance Plan (VAP) if I retire with a service pension?

A38. No. Your vision coverage ends on the last day of the month in which you retire. However, under the Consolidated Omnibus Reconciliation Act (COBRA), you may continue your VAP coverage for up to 18 months by paying 102% of the group premium. This coverage will be offered by the BellSouth Benefits Service Center.

Q39. Will I continue to have the Company-paid group life insurance if I retire with a service pension?

A39. When you retire on a service (or disability) pension, you are currently eligible for $15,000 in group life insurance coverage provided in accordance with and subject to the terms and conditions of the BellSouth Group Life Plan; however, your accidental death and dismemberment (AD&D) is discontinued. In addition, you are eligible to purchase up to $50,000 of life insurance through the Universal Plus Life Insurance Plan. This one time election must be made within 75 days of retirement. This coverage is in addition to any coverage you may already have through Universal Plus.

 

Q40. Will I continue to have the BellSouth Dependent Group Life Insurance if I retire with a service pension?

A40. No, coverage ceases at retirement.

Q41. Will I continue to have Universal Plus Life Insurance coverage if I retire with a service pension?

A41. Yes. If you are a participant, your employee paid coverage will transfer automatically at retirement. Premiums may be deducted from your pension check or you can make payments directly to the carrier. The retiree premium rates will go into effect at the time of retirement for retirees and their spouses over age 65. These rates are considerably higher than those for active employees. However, some retired employees and their spouses may be eligible for the Universal Plus premium rates for active employees and their spouses until age 65. Please check with Marsh@WorkSolutions to obtain these rates.

Retirees can reduce the amount of their coverage to one-half times their annual pay at retirement or $10,000, whichever is greater. This reduction may be requested at any time during retirement.

Q42. Who are the qualified beneficiaries for the pension death benefit?

A42. Please note that there are no death benefits payable from the pension plan to retired participants with less than 10 Years NCS as of 12/31/89. If eligible, mandatory beneficiaries for this benefit are:

      a. Your legal spouse if living with you at the time of your        death.

b. Your dependent children up to age 23 who have never married or age 23 and over if disabled and incapable of self-support prior to age 23.

c. A dependent parent living with you or in a separate household that you provide.

Discretionary beneficiaries for this benefit are:

a. Other relatives dependent on you for support at the time of your death. No benefits are payable to a discretionary beneficiary if there is a mandatory beneficiary.

Q43. How much is the pension death benefit?

      43. Pension deathDeath benefits payable to a mandatory beneficiary of a non-management
            retiree would be calculated as follows:

a. If you had 20 or more years of seniority on December 31, 1989, the pension death benefit would be equal to your annual salary as of December 31, 1989.

b. If you had 10 but less than 20 years of seniority on December 31, 1989, the pension death benefit would be 50% of the sum described in (a) above.

c. If your term of employment was less than ten years on December 31, 1989, no pension death benefit would be paid.

 

Q44. Will I continue to receive my telephone concession if I retire with a service pension?

A44. BellSouth currently intends to continue telephone concessions for retired employees but the policy is subject to future modifications.

Currently, a retiree receives 100% concession on one primary residential line, up to $50.00 for intraLATA toll calls, and 40% concession on certain other features.

Q45. May I work for another employer after I retire from BellSouth with a service pension?

A45. Yes, subject to any restrictions under the Transitional Leave Policy, if applicable.

Q46. What if I have a change of address after I retire?

A46. If you move or have a change of address, notify the BellSouth Benefits Service Center (Pensions Group) at 1-800-528-1232.

 

For detailed information, visit the BellSouth Benefits at Your Fingertips website at www.bellsouthbenefits.com, or contact the BellSouth Benefits Service Center at 1-800-528-1232

The Company reserves the right to modify any employee benefit plan, including reducing or eliminating any benefit.

This document is for general information only and is not a governing plan document. For more specific information on a benefit plan, please refer to the applicable summary plan description. In the event of a conflict or other ambiguity with respect to information contained herein and the applicable plan documents (including the summary plan description), then the plan document will govern in all cases. 

ATTACHMENT 1

RETIREE MEDICAL ASSISTANCE PLAN: Coverage continues with some exceptions:

PENSION DEATH BENEFITS: If the retiree has 20 or more years of net credited service as of 1/1/90, payment
will be the yearly salary as of 12/13/89. If the retiree has 10 years net credited service but less than 20 as of 1/1/90,
payment will be 50% of the yearly salary as of 12/31/89.

SAVINGS AND SECURITY PLAN/PAYSOP: If the individual's account is $5,000 or less, the total will be
distributed to the retiree following retirement. If the account is more than $5,000, the retiree may
withdraw the whole amount as a lump sum, or in installments, rollover the benefit to an IRA or another
employer’s plan, or defer payment. Prior to withdrawal of funds, consultation with a tax advisor or
financial counselor is strongly recommended.

January, 2005


ATTACHMENT 2

BENEFITS: NON-PENSION ELIGIBLE EMPLOYEES
(For Laid-Off Employees or Employees Who Terminate with SIPP/ESIPP)

For detailed information, visit the BellSouth Benefits at Your Fingertips website at www.bellsouthbenefits.com , or contact the BellSouth Benefits Service Center at 1-800-528-1232