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FAQs on RMDs: What Avaya Holdings Employees Need to Know

Healthcare Provider Update: Avaya Holdings offers health insurance coverage to its U.S. employees through Aetna-administered plans. Benefits include medical, dental, vision, and life insurance, along with access to Health Savings Accounts (HSAs), disability coverage, and preventive care services. Avaya Holdings Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average. Click here to learn more

'RMDs may feel restrictive, but for Avaya Holdings employees they also create structured opportunities to rebalance portfolios, manage taxable income, and strengthen long-term planning.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.

'By treating RMDs as a planning tool rather than just a tax requirement, Avaya Holdings employees can use them to create flexibility in withdrawals and align retirement income with broader financial goals.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

Which retirement accounts are subject to RMDs and recent legislative changes.
Strategies that Avaya Holdings employees can use to manage the tax impact of RMDs.
How market conditions and long-term planning interact with RMD requirements.

By Wealth Enhancement Group's Brent Wolf

RMDs, or required minimum distributions, are a critical consideration for retirement income planning. Because they are required, they are sometimes seen as burdensome, but they also offer opportunities for careful money management. For Avaya Holdings employees, understanding how RMDs work and incorporating them into a broader strategy can help improve portfolio efficiency and mitigate long-term tax impacts.

Accounts Subject to RMDs

Traditional tax-deferred retirement accounts, which are funded with pre-tax contributions and grow tax-deferred, fall under RMD rules. These include SEP IRAs, 403(b) plans, 401(k) plans, 457 plans, and traditional IRAs. Once individuals reach a certain age, withdrawals are mandatory. Roth accounts stand out as exceptions. Roth IRAs remain permanently free of RMDs, while Roth 401(k) plans are also exempt under recent legislation. For Avaya Holdings workers nearing retirement, this exemption may enhance the role that Roth accounts can play as long-term planning tools, since assets can continue growing without taxable withdrawals.

Changing Ages for RMDs

The age at which retirees must begin taking RMDs has shifted in recent years. For decades, it was 70½. It later increased to 72, and then to the current age of 73. Beginning in 2033, the starting age will move again to 75. For Avaya Holdings retirees, these adjustments provide more flexibility and open a wider window to implement strategies such as Roth conversions, systematic withdrawals, or portfolio rebalancing before RMDs take effect.

Why RMDs Are Often Disliked

RMDs are unpopular among retirees who don't require the funds for their current living expenses because they trigger taxable income. This added income can push retirees into higher tax brackets, raising their overall tax burden. For Avaya Holdings employees with substantial retirement savings, RMDs can also affect Medicare costs through higher income-related monthly adjustment amount (IRMAA) surcharges. In many cases, RMDs represent a significant annual tax consideration for households.

Techniques to Manage RMDs

Although RMDs for traditional accounts cannot be fully eliminated, several approaches can help reduce their taxable impact:

Pre-Retirement Diversification: Spreading savings across Roth accounts, taxable brokerage accounts, and traditional retirement plans may lower future RMD obligations.
The Early Retirement Window: For those who stop working before 73, the years between retirement and the first RMD are often lower-income years—ideal for Roth conversions or accelerated withdrawals at more favorable tax rates.
Qualified Charitable Distributions (QCDs): Starting at 70½, IRA owners can direct RMD distributions directly to qualified charities, rather than taking them themselves, reducing taxable income while meeting RMD requirements and achieving charitable goals.
Still Working Past 73: Employees still working at Avaya Holdings after age 73 may be able to delay RMDs on their active employer plan.
Legacy Planning: Roth conversions, even after RMDs start, can lower the taxable inheritance left to beneficiaries, aiding in estate planning.

Market Conditions and RMDs

A common question is whether market downturns affect RMD amounts. The answer is no—RMDs are based on account balances as of December 31 of the prior year. Short-term fluctuations do not alter the required withdrawal. While Congress has occasionally suspended RMDs during crises, such as in the pandemic, these suspensions remain rare.

Turning RMDs Into Opportunities

Although RMDs are mandatory, they can be reframed as tools for portfolio management. By selling from overweighted positions, retirees can meet their RMD while also rebalancing. For Avaya Holdings retirees with large equity allocations, this may mean using withdrawals to trim stock-heavy portfolios in favor of diversification.

Additionally, funds withdrawn through RMDs need not sit idle. If not required for daily expenses, they can be reinvested into a Roth IRA (subject to eligibility) or taxable brokerage account. This reinvestment can help maintain long-term portfolio growth.

Conclusion

While RMDs are often viewed as mandatory tax obligations, Avaya Holdings employees can approach them strategically. Diversifying account types before retirement, making use of early retirement years, using QCDs, and considering Roth conversions all provide ways to manage the impact. When integrated into a broader financial plan, RMDs can serve as both compliance and opportunity—helping retirees sustain portfolio health, mitigate taxes, and extend financial growth into the future.

Custodians typically calculate RMD amounts and provide reminders, but the responsibility to take the correct distribution rests with the account holder. By anticipating these requirements and using them to rebalance or reinvest, Avaya Holdings retirees can approach RMDs as part of a proactive retirement strategy.

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Sources:

Internal Revenue Service. Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs). U.S. Department of the Treasury, Mar. 19, 2025. pp. 6–7, 37. https://www.irs.gov/publications/p590b

Myers, Elizabeth A. Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts. Congressional Research Service, 29 Aug. 2024. p. 1. https://crsreports.congress.gov/product/pdf/IF/IF12750

Centers for Medicare & Medicaid Services. Medicare Costs 2025. CMS Product No. 11579, Dec. 2024. pp. 2–3. https://www.cms.gov/newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles

Social Security Administration. Form SSA-44: Medicare Income-Related Monthly Adjustment Amount — Life-Changing Event. SSA, Dec. 2024. pp. 1, 5–7. https://www.ssa.gov/forms/ssa-44.pdf

Financial Industry Regulatory Authority. Thinking About Rolling Over Funds From Your Thrift Savings Plan? Consider This. FINRA, Nov. 2024. p. 2. https://www.finra.org/investors/military/retirement/roll-over-tsp

How can employees at Avaya Inc. ensure they are adequately prepared for retirement, considering the various types of pensions available under the Avaya Inc. Pension Plan? What steps should be taken to understand the key features of the pension plan, and how can they assess their individual needs relative to the benefits offered by Avaya Inc.?

Preparation for Retirement at Avaya Inc.: Employees at Avaya Inc. should first review the company’s Summary Plan Description for the pension plan details, which outline the types of pensions available and the processes for claiming them. It's crucial to understand the different pension types—service, deferred vested, and disability pensions—each with specific eligibility criteria and benefits. To prepare adequately, employees should estimate their pension benefits using tools provided by Avaya Inc., attend financial planning seminars offered by the company, and consider consulting with a financial advisor to assess how the pension fits into their broader retirement strategy.

Can you elaborate on the service pension eligibility criteria set by Avaya Inc.? How does age and credited service interact with this criterion, and what unique circumstances should employees at Avaya Inc. be aware of that may affect their eligibility for a service pension?

Service Pension Eligibility Criteria at Avaya Inc.: Eligibility for a service pension at Avaya Inc. is determined by age and credited service. Employees qualify at any age with 30 years of service, at age 50 with 25 years, at 55 with 20 years, and at 65 with 10 years. It’s essential for employees to understand that these criteria are strict; for instance, an employee aged 51 with 24 years of service does not qualify. Employees should plan their retirement age accordingly and consult with HR to confirm their credited service years.

What are the implications of early retirement under the Avaya Inc. Pension Plan? Employees at Avaya Inc. who are considering early retirement should understand both the benefits and potential losses associated with taking retirement benefits before the age of 55.

Implications of Early Retirement: Opting for early retirement at Avaya Inc. can lead to reduced pension benefits, especially if retirement occurs before age 55 with less than 30 years of service. The plan applies an early commencement discount, reducing the pension by 1/2% for each month before age 55. Employees considering early retirement should carefully evaluate how the reduction impacts their financial stability and may want to strategize with HR or a financial advisor to mitigate the reduction's effect.

What is the process for employees at Avaya Inc. to claim a deferred vested pension, and what specific conditions must be met for them to initiate this process? Employees must be informed about the timeline required for claims as well as the potential impact of their age and service duration on their pension amounts.

Claiming a Deferred Vested Pension: To claim a deferred vested pension at Avaya Inc., employees must meet certain conditions, such as being vested and having terminated employment. The pension commencement generally aligns with reaching age 65 or upon earlier termination. Employees must contact the Avaya Pension Service Center to initiate the process, providing necessary documentation and adhering to specified timelines, ensuring they understand the impact of early commencement on their pension amounts.

In what ways does Avaya Inc. support employees returning to work after retirement? Specifically, how does reemployment affect the pension benefits that retirees receive? Employees should consider how their decisions to return to work may minimize or suspend their pension benefits.

Returning to Work Post-Retirement: If an employee at Avaya Inc. returns to work after retirement, their pension benefits might be suspended or reduced, depending on the terms outlined in the pension plan. This policy is intended to adjust benefits when retirees re-enter the workforce, potentially affecting their financial planning. Employees should verify the specific rules with the pension service center and consider the financial implications before deciding to return to work.

How does the Mandatory Portability Agreement (MPA) influence the retirement benefits of Avaya Inc. employees transitioning between positions in affiliated companies? Employees should understand how service credit is recognized and transferred under the MPA and its impact on their retirement planning.

Impact of the Mandatory Portability Agreement (MPA): The MPA affects Avaya Inc. employees transitioning between positions within affiliated companies, allowing for the transfer of service credits. This agreement is crucial for employees moving within the company structure, as it ensures that their pension benefits are maintained and accurately calculated based on cumulative service, fostering seamless transitions and sustained benefit accrual.

What key information should employees at Avaya Inc. know regarding their rights under the Employee Retirement Income Security Act (ERISA) as they navigate the pension benefit process? Understanding ERISA rights is crucial for employees to effectively advocate for their benefits and understand their protections.

Understanding ERISA Rights at Avaya Inc.: Employees at Avaya Inc. should be aware of their rights under the Employee Retirement Income Security Act (ERISA), which safeguards employees' benefits. Understanding these rights is essential for effectively managing their pension plans and ensuring they receive all entitled benefits. Employees should familiarize themselves with the claim and appeal procedures provided in the plan documents to advocate effectively for their rights.

How do survivor benefits work under the Avaya Inc. Pension Plan? Employees and their beneficiaries should be aware of the conditions under which these benefits are paid and how they can designate beneficiaries to ensure compliance with Avaya Inc. policies.

Survivor Benefits under Avaya Inc. Pension Plan: Avaya Inc.'s pension plan provides survivor benefits, which are crucial for employees to arrange financial security for their beneficiaries. Understanding the conditions under which these benefits are paid and how to designate beneficiaries properly ensures that the employees' families are protected in case of the employee's death.

Can you explain the significance of the Pension Benefit Guaranty Corporation (PBGC) in relation to the retirement benefits that employees of Avaya Inc. may expect? Understanding the role of the PBGC could help clarify what protections are in place for employees in the case of plan termination.

Role of the Pension Benefit Guaranty Corporation (PBGC): The PBGC plays a protective role for Avaya Inc. employees by ensuring that pension benefits are secure even if the plan faces financial difficulties. Employees should understand how the PBGC's coverage affects them, particularly in scenarios where the company’s pension plan might be terminated or underfunded.

If Avaya Inc. employees want to learn more about their pension benefits or have specific questions about the retirement process, who should they contact and what resources are available to them? This question prompts employees to engage with the Avaya Inc. Pension Service Center and access information crucial for their retirement planning.

Accessing Pension Information and Assistance: Employees seeking more information about their pension benefits or needing specific help regarding their retirement process should contact the Avaya Pension Service Center. This center provides detailed guidance, handles claims and appeals, and offers comprehensive support to ensure employees understand and can effectively manage their pension benefits.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Avaya Holdings has announced a major restructuring plan involving significant layoffs and changes to their benefits and retirement plans. The company is focusing on streamlining operations to improve profitability, which includes reducing its workforce and altering pension and 401(k) contributions for current employees.

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For more information you can reach the plan administrator for Avaya Holdings at 350 Mt Kemble Ave Morristown, NJ 7960; or by calling them at +1 908-953-6000.