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Navigating Terminal Illness: Essential Planning Tips for CITGO Employees

What Is It?

When you find out that you are terminally ill, you may want to start planning immediately for your current needs and for the future needs of your survivors. In particular, you'll want to provide enough money, insurance, and assets to ensure that you will be comfortable during your final months and that you will leave your survivors with adequate income.

By communicating your wishes to your family now and by executing certain legal documents (e.g., health-care proxy, living will, durable power of attorney), you can make decisions now about your medical care and plan for the possibility that you may become incapacitated. To our clients from CITGO who may be dealing with this or a situation similar, you'll also want to make sure that your estate will be passed on to your survivors according to your wishes.

Meeting Your Current Financial Needs

Make sure that you have adequate liquidity to meet your current needs--Find out if the amount of cash you have in a savings account, money market fund, or other liquid account is enough to cover your expenses during your final months. If not, consider withdrawing funds from your retirement account, applying for insurance benefits that you may be entitled to, or selling your life insurance policy to a viatical settlement company.
Consider withdrawing funds from your retirement account--You may ask that funds be distributed to you from a defined contribution plan to pay your medical expenses. This is called a hardship distribution and it can't exceed the amount of money necessary to meet your immediate financial need. To qualify for a hardship distribution, you must not have access to other resources that could meet this need.

Caution: A hardship distribution from a defined contribution plan is subject to income tax. However, if you are disabled, or if the distribution is used to pay qualified medical expenses, the 10 percent early withdrawal penalty won't apply.

Apply for Disability Benefits That You Are Entitled to

You may be eligible for disability benefits from an individual or group disability income insurance policy once you have satisfied the elimination (waiting) period. Check your policy, or ask CITGO if you don't know whether you are covered by a disability policy.

Review Your Life Insurance Policy for Ways to Raise Cash

You may be able to borrow against your life insurance policy or obtain accelerated death benefits from your policy. Your policy may also contain a waiver of premium, so that once you've been disabled for a certain time period (typically six months), your insurance premiums will be paid by the insurance company, which will save you a bit of money.

Caution: Borrowing against your life insurance or taking accelerated death benefits will reduce the benefit paid to your survivors.

Consider Viatical Settlements

A viatical settlement is the sale of a life insurance policy to a third party. Usually, this third party is a company or a group of investors that specialize in such sales. When you sell your policy, you will generally receive between 45 percent and 85 percent of the face value of your policy. You can use this lump-sum cash payment any way you want, and if you have a life expectancy of 24 months or less, this distribution will generally be tax-free. However, it's important for our clients from CITGO to note that there are drawbacks. For instance, your survivors will no longer be the beneficiaries of your life insurance policy, and receipt of viatical settlement proceeds may make you ineligible for Medicaid.

Providing Financially for Your Survivors

Buy More Life Insurance

If you believe the amount of benefit your survivors will receive from your life insurance policy won't adequately meet their needs and you have a life insurance policy through CITGO, find out if you can buy additional coverage during the open enrollment period without proving insurability. Also, review your current life insurance policy to see if you are entitled to buy more coverage without proving insurability. If you are taking out a loan to purchase consumer goods, you may be able to purchase credit life insurance to pay off your loan after you die.

Caution: Proceeds from a life insurance policy are generally nontaxable to your beneficiaries. However, those proceeds are includable in your gross estate for estate tax purposes if they are payable to your estate, your executor, or an individual or trust legally obligated to pay estate debts.

Make Sure That Your Survivors Will Have Access to Needed Funds

Your survivors may need money to pay for their daily living expenses, as well as expenses associated with your death. Although you can provide for them with life insurance, you may also want to ensure they have access to liquid property (cash you have in CDs, savings, and checking accounts, for instance). If necessary, add your spouse, child, or another survivor to your account so they can access funds as joint owners after you die.

Tip: Consider adding your spouse as a joint owner on your credit card account if you want to make sure that he or she has access to the credit line after your death, particularly if your spouse currently has no credit established in his or her own name.

Find Out What Benefits Your Survivors Will Be Eligible For

Your survivors may be eligible for Social Security survivor benefits, benefits from the U.S. military (if you are an active-duty or retired service member), or survivor's benefits from your qualified retirement plan. If you are already retired from CITGO and you elected to provide a survivor's annuity for your spouse, then he or she may have continued income from your retirement annuity after your death.

However, even if you are not yet retired from CITGO, your spouse or another beneficiary may receive a lump-sum payment from your qualified plan at your death.

Tip: Continuing payments made to your estate (if named as beneficiary) or to a family member may be includable in your gross estate for estate tax purposes.

Make Use of Appropriate Planning Opportunities to Minimize Potential Federal Estate Taxes

If your estate is less than the applicable exclusion amount, it will be exempt from federal gift and estate tax. However, if your estate exceeds the applicable exclusion amount, you should consider implementing strategies to minimize potential estate taxes, such as making gifts in the amount of the annual gift tax exclusion each year to any number of recipients (this figure is indexed for inflation, so it may change in future years), transferring property to a spouse, or making charitable contributions.

Estate Planning Concerns and Opportunities

Review Your Will or Make One

To our clients from CITGO who have a will, you should review it and make any necessary changes. If you don't have a will, you should execute one now with the help of an attorney. In your will, you'll want to nominate a guardian for your minor children (if any), name an executor for your estate, and determine how your assets will be distributed after your death.

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Ensure That Your Estate Is Liquid

Now is the time for these CITGO clients to ensure that their estate is liquid enough to pay the costs associated with settling the estate. If your survivors are forced to sell assets to meet the obligations, they may lose income or assets that you intended for them. There are many ways to ensure estate liquidity, such as distributing non-liquid assets to your heirs in your will, selling estate assets before your death, and establishing a buy-sell agreement if you are a business owner.

Planning for Incapacity

When you're terminally ill, you must plan for the day you won't be able to handle your own affairs. A durable power of attorney will give a person of your choice the right to act on your behalf if you become incapacitated and can no longer manage your finances or sign legal documents. If you want that person to have the power to make healthcare-related decisions only, consider executing a healthcare proxy.

If you want to make sure that no procedures are used to prolong your life, you may want to execute a living will. A living will can also protect your family from having to make traumatic decisions on your behalf by making your wishes clear while you are still competent.

Tip: To protect yourself from people who may think you are incapacitated when you aren't, ask your doctor to sign a physician's certificate certifying that you are able to sign and execute legal documents.

Income Tax Planning Concerns

If you can no longer work at CITGO, you may have to liquidate your investment, retirement, or insurance assets to cover your expenses. By controlling when you recognize income or gain, you can control taxation. In addition, these CITGO clients should keep track of their medical expenses in case they qualify as allowable deductions to reduce their taxable income.

Making Decisions About The Future

Planning for Medical Care

Maintaining health insurance coverage is crucial when you're terminally ill. If you drop your coverage, you probably won't be able to purchase more. If you lose your coverage because you lose your job with CITGO, plan to purchase follow-on COBRA insurance to maintain coverage. In addition, these CITGO clients should review the limits of their healthcare insurance to determine whether their healthcare policy will pay for in-home care, including hospice care, if they don't need or want care in a hospital.

Planning Your Funeral

Many people may prefer planning their own funeral because they can make sure the funeral and final arrangements are what they want. It may be helpful to your family as well because they won't need to make stressful decisions while they are grieving.

Tip: If you are a veteran of the U.S. Armed Forces, find out what death benefits you are entitled to. For instance, you may be eligible for burial in a national cemetery, final honors, a headstone, a flag, or other benefits.

Making an Organ Donation

For our clients from CITGO who would like to be an organ donor, make arrangements now. Talk over the matter with your family because they may be upset by your wish to be an organ donor. Be sure they understand your decision before you proceed. For information on organ-donor programs, check with your local department of motor vehicles or ask your doctor for a referral.

What are the eligibility criteria for employees to participate in the Retirement Plan of CITGO Petroleum Corporation, and how do these criteria affect the benefits that employees accrue? Employees of CITGO Petroleum Corporation must meet specific criteria to qualify for the Retirement Plan, which is designed to provide a stable income during retirement. Understanding these eligibility requirements is crucial for employees, as it impacts their expected benefits and retirement strategy.

Eligibility for the CITGO Petroleum Corporation Retirement Plan: Employees must be at least 21 years old and have completed 12 months of employment with at least 1,000 hours of service to be eligible. Hourly employees covered by a collective bargaining agreement are typically included after meeting these requirements. Eligibility significantly affects benefits accrual, as being a participant allows employees to begin accruing service and vesting credits, which directly influence retirement benefit calculations(CITGO_Petroleum_Corpora…).

How does the Cash Balance Benefit structure work within the Retirement Plan of CITGO Petroleum Corporation, particularly regarding the accumulation of Compensation Credits and Interest Credits? The Cash Balance Benefits offer a valuable retirement savings mechanism for CITGO employees, impacted by their Basic Earnings and years of service. As interest rates fluctuate, the manner in which these credits accumulate can significantly influence the overall retirement benefit.

Cash Balance Benefit Structure: The Cash Balance Benefit under the Retirement Plan includes Compensation Credits and Interest Credits. Compensation Credits are based on a percentage of Basic Earnings, determined by the employee's age and years of service. Interest Credits are applied annually and are calculated based on the higher of the 30-year Treasury securities rate or 1.5%. These credits are added to the employee's notional account balance each year, with the total balance used to determine the retirement benefit(CITGO_Petroleum_Corpora…).

In what ways can employees of CITGO Petroleum Corporation manage their Frozen Accrued Benefit upon retirement, and what considerations must they take into account? Employees nearing retirement should know how to optimize their Frozen Accrued Benefit for their individual retirement planning. Factors such as timing, potential changes in personal circumstances, and regulatory aspects play a critical role in this planning process.

Managing Frozen Accrued Benefits: Upon retirement, employees can manage their Frozen Accrued Benefit by selecting different payout options such as a single-life annuity or joint and survivor annuities. The timing of retirement also plays a key role, as early retirement may reduce the benefits based on age reduction factors. Employees need to consider their financial circumstances and retirement goals to optimize this benefit(CITGO_Petroleum_Corpora…).

What are the implications of transferring employment status (from hourly to salaried) on participation in the Retirement Plan of CITGO Petroleum Corporation? Understanding how a transition from hourly to salaried employment affects fund accumulation and credit service under the Retirement Plan is vital for employees planning their careers. Such transitions need to be handled carefully to ensure that benefits remain maximized.

Effect of Employment Status Transfer: A transfer from hourly to salaried employment will freeze Benefit Credit Service under the Plan, but Vesting Credit Service continues. Compensation and Transition Credits cease for hourly employees transitioning to salaried roles. However, Interest Credits continue until the Cash Balance Benefit is distributed. These changes can affect the overall retirement fund accumulation(CITGO_Petroleum_Corpora…).

How do various retirement benefit options, including lump-sum payments and annuities, function within the CITGO Petroleum Corporation Retirement Plan? Employees face various choices regarding the disbursement of retirement benefits, each carrying unique financial implications. Evaluating these options requires a keen understanding of how they interact with overarching financial goals.

Retirement Benefit Options: CITGO Petroleum employees can choose between receiving their retirement benefits as a lump sum or through an annuity. Each option has different financial implications. Lump-sum payments offer immediate access to funds, but annuities provide a steady income stream over the retiree's lifetime. The choice between these options depends on the employee’s personal financial strategy(CITGO_Petroleum_Corpora…).

What is the role of the Plan Administrator in resolving benefits-related issues for employees at CITGO Petroleum Corporation, and how can employees effectively interact with this office? Employees must understand the administrative structure governing their retirement benefits. Effective communication with the Plan Administrator can significantly enhance an employee's ability to navigate complex issues regarding their retirement.

Role of Plan Administrator: The Plan Administrator is responsible for managing and resolving any issues related to retirement benefits. Employees can contact the Benefits HelpLine for inquiries or disputes regarding their benefits. Effective communication with the Plan Administrator ensures that employees can navigate and resolve issues related to their retirement plan(CITGO_Petroleum_Corpora…).

How does the vesting schedule impact the retirement benefits of employees at CITGO Petroleum Corporation, and what strategies can employees employ to ensure full vesting? The vesting schedule is a critical component influencing when employees become entitled to their benefits. Employees should be aware of what actions can enhance their vesting status prior to retirement.

Impact of the Vesting Schedule: CITGO’s vesting schedule requires employees to have at least three years of service to become 100% vested. Vesting entitles employees to receive full benefits under the Plan. Employees nearing retirement should ensure they meet the vesting requirements to maximize their entitled benefits(CITGO_Petroleum_Corpora…).

What are the special provisions that exist for employees returning to work after receiving retirement benefits within the CITGO Petroleum Corporation Retirement Plan? Employees considering retirement must appreciate how returning to work can alter their benefits under the Retirement Plan. The potential effects on benefit payments, roles, and rights are crucial discussions for retiring employees.

Returning to Work Post-Retirement: Employees who return to work after receiving retirement benefits will have their benefit payments suspended. Upon re-retirement, their benefits are recalculated to reflect any additional service accrued during reemployment. Employees must understand these provisions to avoid potential disruptions to their retirement income(CITGO_Petroleum_Corpora…).

How is the funding status of the Retirement Plan of CITGO Petroleum Corporation determined, and what implications does it have for current and future benefits? The viability of the Retirement Plan is heavily influenced by its funding status, impacting all participants. Employees should stay informed about what underpins this status and how it may affect their own long-term retirement planning.

Plan Funding Status: The funding status of the Retirement Plan is essential, as it affects the availability of lump-sum payments and may influence future benefits. Employees should monitor the Plan’s funding status to understand how it impacts their options and the security of their retirement benefits(CITGO_Petroleum_Corpora…).

How can employees of CITGO Petroleum Corporation obtain further information about their retirement benefits, and what specific resources are available to assist them? Employees seeking additional guidance must know the channels available for inquiries. By reaching out to the Benefits HelpLine, employees can access crucial information that aids in managing their retirement planning effectively. For more information, employees can contact the Benefits HelpLine at CITGO Petroluem Corporation by emailing Benefits@CITGO.comã€4:18â€ sourceã€‘.

Accessing Further Information: Employees can obtain further details on their retirement benefits by contacting the Benefits HelpLine or the Plan Administrator. These resources provide necessary guidance on managing retirement benefits and addressing any issues or questions that arise(CITGO_Petroleum_Corpora…).