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Crafting Your Legacy: Essential Estate Planning Tips for Vistra Employees

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Benefits of a will:

Distributes property according to your wishes
Names an executor to settle your estate
Names a guardian for minor children
Can create a trust

You've worked hard with Vistra over the years to accumulate wealth, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends, and the causes that are important to you. However, we'd like to remind our clients from Vistra that to ensure your legacy reaches your heirs as you intend, you must make the proper arrangements now. There are four basic ways to leave a legacy: (1) by will, (2) by trust, (3) by beneficiary designation, and (4) by joint ownership arrangements.

Wills

A will is the cornerstone of any estate plan. We suggest that our Vistra clients have a will no matter how much their estate is worth, even if they've implemented other estate planning strategies. You can leave the property by will in two ways: making specific bequests and making general bequests. A specific bequest directs a particular piece of property to a particular person ('I leave Aunt Martha's diamond broach to my niece, Jen'). A general bequest is typically a percentage of property or property that is left over after all specific bequests have been made.

Typically, principal heirs receive general bequests ('I leave all the rest of my property to my wife, Jane'). With a will, you can generally leave any type of property to whomever you wish, with some exceptions, including:

Property will pass according to a beneficiary designation even if you name a different beneficiary for the same property in your will
Property owned jointly with rights of survivorship passes directly to the joint owner
Property in a trust passes according to the terms of the trust
Your surviving spouse has a right to a statutory share (e.g., 50%) of your property, regardless of what you leave him or her in your will
Children may have inheritance rights in certain states

Caution: Leaving property outright to minor children is problematic. You should name a custodian or property guardian, or use a trust.

Trusts

Another option we'd like to point out to our Vistra employees is to leave property to their heirs using a trust. Trust property passes directly to the trust beneficiaries according to the trust terms. There are two basic types of trusts: (1) living or revocable, and (2) irrevocable. Living trusts are very flexible because you can change the terms of the trust (e.g., rename beneficiaries) and the property in the trust at any time. You can even change your mind by taking your property back and ending the trust.

An irrevocable trust, on the other hand, can only be changed or ended by its terms. This can be useful for our Vistra clients who want to minimize estate taxes or protect their property from potential creditors. You create a trust by executing a document called a trust agreement (we suggest these Vistra clients have an attorney draft any type of trust to be sure it accomplishes what they want).

A trust can't distribute property it does not own, so you must also transfer ownership of your property to the name of the trust. Properties without ownership documentation (e.g., jewelry, tools, furniture) are transferred to a trust by listing the items on a trust schedule. Property with ownership documents must be re-titled or re-registered. You must also name a trustee to administer the trust and manage the trust property. With a living trust, you can name yourself trustee, but you'll need to name a successor trustee who'll transfer the property to your heirs after your death.

Tip: A living trust is also a good way to protect your property in case you become incapacitated.

While property that passes by will is subject

to probate, property that passes by a trust,

beneficiary designation, or joint ownership

arrangement bypasses probate.

Beneficiary Designations

Property that is contractual in nature, such as life insurance, annuities, and retirement accounts, passes to heirs by beneficiary designation. Typically, all you have to do is fill out a form and sign it. Beneficiaries can be persons or entities, such as a charity or a trust, and you can name multiple beneficiaries to share the proceeds. You should name primary and contingent beneficiaries.

Caution: You shouldn't name minor children as beneficiaries. You can, however, name a guardian to receive the proceeds for the benefit of the minor child.

We suggest that these Vistra clients consider the income and estate tax ramifications for their heirs and their estate when naming a beneficiary. For example, proceeds your beneficiaries receive from life insurance are generally not subject to income tax, while your beneficiaries will have to pay income tax on proceeds received from tax-deferred retirement plans (e.g., traditional IRAs).

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These Vistra clients should check with a financial planning professional to determine whether their beneficiary designations will have the desired results. Be sure to re-evaluate your beneficiary designations when your circumstances change (e.g., marriage, divorce, death of beneficiary). You can't change the beneficiary with your will or a trust. You must fill out and sign a new beneficiary designation form.

Caution: Some beneficiaries can't be changed. For example, a divorce decree may stipulate that an ex-spouse will receive the proceeds.

Tip: Certain bank accounts and investments also allow you to name someone to receive the asset at your death.

Joint Ownership Arrangements

Two (or more) persons can own property equally, and at the death of one, the other becomes the sole owner. This type of ownership is called joint tenancy with rights of survivorship (JTWRS). A JTWRS arrangement between spouses is known as tenancy by the entirety in certain states, and a handful of states have a form of joint ownership known as community property.

Caution: There is another type of joint ownership called tenancy in common where there is no right of survivorship. Property held as tenancy in common will not pass to a joint owner automatically, although you can leave your interest in the property to your heirs in your will.

You may find joint ownership arrangements are useful and convenient with some types of property, but may not be desirable with all of your property. For example, having a joint checking account ensures that, upon your death, an heir will have immediate access to needed cash. And owning an out-of-state residence jointly (e.g., a vacation home) can avoid an ancillary probate process in that state. But it may not be practical to own property jointly where frequent transactions are involved (e.g., your investment portfolio or business assets) because you may need the joint owner's approval and signature for each transaction.

There are some other disadvantages to joint ownership arrangements, including: (1) your co-owner has immediate access to your property, (2) naming someone who is not your spouse as co-owner may trigger gift tax consequences, and (3) if the co-owner has debt problems, creditors may go after the co-owner's share.

Caution: Unlike with most other types of property, a co-owner of your checking or savings account can withdraw the entire balance without your knowledge or consent.

How does the eligibility criteria for participation in the Vistra Operations Company pension plan differ for represented and non-represented employees? Specifically, what factors should an employee of Vistra Operations Company consider in understanding whether they qualify for the PRB Structure of the Plan based on their employment agreements and status?

Eligibility Criteria for Represented and Non-Represented Employees: The Vistra Operations Company pension plan has distinct eligibility criteria for represented and non-represented employees. Non-represented employees hired or rehired on or after January 1, 2019, are not eligible to participate in the plan, as their benefits were frozen effective December 31, 2018. Represented employees are subject to their collective bargaining agreements, and their participation may vary depending on the terms of those agreements(Vistra_Operations_Compa…).

What steps should an employee at Vistra Operations Company take if they wish to contest a denial of benefits they believe they are entitled to under the plan? Please outline the procedures outlined in the document that the employees must follow to ensure their rights under the Employee Retirement Income Security Act are upheld.

Contesting a Denial of Benefits: Employees must file a written claim for benefits if they believe they were denied benefits under the plan. The plan administrator reviews the claim, and if it is denied, the employee has the right to request a review of the denial within 60 days. Employees can provide additional documentation and will receive a final decision within 60 to 120 days depending on circumstances. If the claim is denied after review, the employee has the right to file a civil action under ERISA(Vistra_Operations_Compa…)(Vistra_Operations_Compa…).

For employees of Vistra Operations Company who are nearing retirement age, what options do they have concerning their pension benefits, and how can they make the most informed decision regarding the form of payment they choose? What factors specific to their circumstances and relation to the plan should they consider, such as marital status or previous employment benefits?

Options for Employees Nearing Retirement: Employees nearing retirement have several options for receiving their pension benefits, including single life annuity or joint and survivor annuity payments. Factors such as marital status, existing benefits, and personal financial circumstances will affect their decision. For instance, married employees may elect a joint and survivor annuity, which provides reduced monthly payments during their lifetime and continues to pay a portion to their spouse after their death(Vistra_Operations_Compa…)(Vistra_Operations_Compa…).

In what ways does the Vistra Operations Company pension plan accommodate employees transitioning from another employer's retirement plan, particularly with frozen benefits under an acquired plan? Employees should consider how these changes could impact their retirement outcomes and what steps are needed to integrate these benefits.

Transitioning from Another Employer’s Retirement Plan: Employees who transition from another employer’s retirement plan, especially those whose benefits have been frozen under an acquired plan, may still be eligible for interest credits on their account balances. The plan allows these employees to continue receiving interest credits while their account remains in the plan, preserving the value of their retirement savings(Vistra_Operations_Compa…)(Vistra_Operations_Compa…).

How can employees of Vistra Operations Company name a beneficiary in relation to their retirement benefits, and what specific requirements must be met to ensure that the designation is legally valid? Discuss the implications for both the employees and their chosen beneficiaries, including any necessary consents or notarizations.

Naming a Beneficiary: Employees can designate a beneficiary for their pension benefits, and if they are married, their spouse must provide notarized consent if they choose someone else as their beneficiary. It is important to update this information following life changes, such as marriage or divorce, to ensure benefits are distributed according to their wishes(Vistra_Operations_Compa…).

What provisions are in place within the Vistra Operations Company pension plan for employees who become disabled before reaching retirement age? Employees should understand how disability benefits interact with their retirement benefits and what criteria they must meet to access these provisions.

Provisions for Disabled Employees: Employees who become disabled before reaching retirement age may still be eligible for 100% vesting in their pension benefits. The plan recognizes disability as a qualifying event for full vesting if the employee receives Social Security disability benefits(Vistra_Operations_Compa…).

How does the annual interest crediting rate for defined benefit plans apply to employees of Vistra Operations Company, and what recent adjustments have been implemented that might affect their retirement savings? Review the specifics in relation to current economic indicators affecting these plans.

Annual Interest Crediting Rate: For defined benefit plans, the interest crediting rate is based on the 30-year Treasury securities rate, which can affect employees’ retirement savings. Represented employees may be subject to minimum interest credit rates depending on their collective bargaining agreements, while non-represented employees' interest credits continue even after benefits were frozen(Vistra_Operations_Compa…).

What are the implications of being classified as a non-represented employee under the Viesta Operations Company pension plan, especially considering the plan was frozen for them starting January 1, 2019? Employees should evaluate how this classification impacts their retirement planning and options moving forward.

Impact of Being a Non-Represented Employee: Non-represented employees had their benefits frozen as of December 31, 2018. This freeze means they no longer accrue new benefits, but they may still receive interest credits on their existing frozen benefit. Employees in this classification should evaluate alternative retirement savings options moving forward(Vistra_Operations_Compa…).

Could you explain the importance of the â€œnormal retirement ageâ€ and how it affects the pension benefits for participants in the Vistra Operations Company pension plan? Illustrate how this age plays a significant role in defining eligibility and benefit calculations.

Importance of "Normal Retirement Age": The normal retirement age under the plan is 65. This age is critical because it affects when employees become eligible for their full pension benefits without reduction, which plays a significant role in the calculation and payment of benefits(Vistra_Operations_Compa…).

What are the best ways for employees of Vistra Operations Company to contact the Plan Administrator to obtain additional information about their pension benefits and claims? Provide details on the resources available and the recommended channels for reaching out effectively, particularly regarding any changes in address or personal details affecting their benefits. These questions are designed to guide employees through the retirement process and help them navigate the specifics of their pension plan under Vistra Operations Company.

Contacting the Plan Administrator: Employees can contact the Vistra Pension Center for information regarding their pension benefits. They can reach the center at 1-855-568-4146 or online at http://ypr.aon.com/Vistra for assistance with questions or changes to their personal details(Vistra_Operations_Compa…)(Vistra_Operations_Compa…).