New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Key Questions for Southwest Gas Holdings Employees to Explore When Evaluating an Early Retirement Package

Healthcare Provider Update: Healthcare Provider for Southwest Gas Holdings Southwest Gas Holdings provides healthcare benefits through a variety of insurers, primarily utilizing Aetna for their healthcare plans. This partnership enables employees to access a broad network of healthcare services. Expected Healthcare Cost Increases in 2026 As we approach 2026, healthcare costs are anticipated to soar, significantly impacting those affiliated with Southwest Gas Holdings. This expected surge stems from factors such as the expiration of enhanced federal subsidies for Affordable Care Act (ACA) plans, which could lead to a staggering increase of over 75% in out-of-pocket premiums for many enrollees. Moreover, aggressive rate hikes from major insurers, combined with rising medical costs, suggest that employees and retirees may face a challenging financial landscape in the coming year. Proactive management of health benefits and planning will be crucial for individuals navigating these increasing costs. Click here to learn more

With the economic downturn and recession looming, companies across various industries are facing an uncertain future. We have been planning with Southwest Gas Holdings client's retirement for decades, and when an offer comes along, you typically don’t much time to act on it. Many give only 2 weeks to 30 days to make a decision. Many organizations are being forced to cut expenses to stay afloat, and unfortunately, that means workforce cuts in the form of furloughs, payroll reductions and forced layoffs.

You have spent decades planning for retirement. Just when you think you have everything figured out and a concrete retirement plan in place, you’re thrown a curveball. Southwest Gas Holdings has offered you an early retirement or voluntary separation package.

You were planning on retiring in a few years. Now what?

If you’ve received an early retirement offer, accepting it doesn’t mean you must retire from the workforce altogether. It just means that you can no longer work for Southwest Gas Holdings. If you think you may be getting an early retirement package, here are questions to consider as you review your offer.

What is an early retirement offer?

Does it include health benefits?

How does it affect my retirement assets?

How does it impact social security benefits?

What if I don’t want to retire, or can’t afford to?

Can I negotiate my offer?

What if I don’t accept my early retirement offer?

What is An Early Retirement Offer?

Early retirement packages, also known as retirement buyouts, are generally offered to employees who may be approaching retirement age, usually in a company’s efforts to reduce its overall costs.

These packages may include perks in addition to standard severance benefits. For example, an employer may offer an extended salary continuation, a lump sum, payment of healthcare benefits or additional years of service to help employees reach the required time needed to collect a pension.

Some employers may even pay for career counseling or placement services to help you find your next job (if you want or need to keep working), but that benefit may be limited in the current environment.

Does my retirement offer include health benefits?

Health care has become one of the largest expenses for a retiree, even with good insurance. For many, a company’s contribution to your family’s health insurance premium is critical to keeping medical insurance and care affordable.

If you are lucky, your voluntary severance package will extend your health benefits. Companies may include health insurance benefits for a period of time in an early retirement package, but this varies by employer. If your offer from Southwest Gas Holdings includes medical coverage, make sure you understand how long you’re covered for and to what extent. If health benefits aren’t part of your initial offer, consider negotiating for any crucial coverage and premium benefits. Health insurance will be needed until you are age 65 and become eligible for Medicare. However, not all those offered an early retirement package are so lucky.

If you will be on your own paying for health insurance after accepting an early retirement offer from Southwest Gas Holdings, COBRA insurance is always available. COBRA may extend your family’s coverage for up to 18 months. But this coverage is expensive. You might be able to get added to your spouse's health plan if they are still working.

If you still want to work, look into a company that offers health benefits to get you to age 65 You also have the option of entering the open market for an insurance policy. If you don’t have healthcare benefits or don’t yet qualify for Medicare, you may want to consider purchasing a health insurance policy from the Health Insurance Marketplace.

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For example, a 60-year-old on a Silver-level plan may pay an average monthly premium of $1,216 in 2022, but this also does not include out-of-pocket expenses, such as deductibles, copays, or coinsurance.

Before making a decision about an early retirement offer from Southwest Gas Holdings, determine if your severance package includes any health care benefits. If not, price out other health care options, such as those available on Heathcare.gov . Can the added expenses be supported with your retirement savings?

How does an early retirement package affect my retirement assets?

Retirement accounts

If you have a Southwest Gas Holdings-sponsored 401(k) plan and are 100% vested, then that money is yours to keep. After leaving Southwest Gas Holdings, you can consider rolling your 401(k) over to a new or existing IRA.

Workers who are 55 or older that take an early retirement package may be eligible to withdraw money from their Southwest Gas Holdings-sponsored retirement plan, such as a 401(k) , without paying the 10% IRS penalty. This only applies if withdrawing from a current employer’s retirement plan, not any past employer. Just keep in mind that while you won’t have to pay the 10% penalty, you will have to pay income taxes on withdrawals from your 401(k).

Note: Rule of 55 works only if you leave money in your 401(K)

Another method to avoid the 10% penalty is to utilize 72t if you rolled you money into an IRA. You will need to take Substantially equal payments for 5 year or at age 59 1/2, whichever is later.

Accepting an early retirement offer or voluntary severance package from Southwest Gas Holdings may require you to begin withdrawals from your 401(k), IRA, or other retirement accounts sooner than you originally expected.

Extra years of retirement can take a toll on your retirement nest egg. In fact, retiring earlier than planned can result in hundreds of thousands of dollars in extra expenses that your retirement portfolio must now support. It may also limit the growth of your assets already invested since you have to spend instead of saving.

Can your retirement portfolio withstand fewer years of contributions and more years of withdrawals? This is the first question you need to answer when making your decision.

When we help Southwest Gas Holdings clients answer this question, we commonly use a cash flow analysis. This allows us to simulate different scenarios side-by-side, and quickly see the impact accepting – or declining – an early severance offer will have on your financial plan.

Pensions

Southwest Gas Holdings employees who have earned a pension may worry that taking early retirement will affect their monthly benefits. Many pension plans partly determine monthly benefits based on how long an employee has worked for the company, so leaving early could reduce that monthly figure.

To offset these concerns, Southwest Gas Holdings may increase the total number of years of service as part of the early retirement package. This can help bridge the gap for those who would receive a reduced pension as a result of retiring early.

Social Security benefits

An early retirement package from Southwest Gas Holdings can affect your Social Security benefits if you leave the workforce before working for a total of 35 years. The Social Security Administration averages your highest-earning 35 years of employment to decide your monthly benefits. For example, if you only worked for 32 years, then the government would add a $0 salary for three years to come up with your 35-year average. That means those three years of unemployment would technically count “against” you.

One potential consequence of accepting an early retirement offer is a reduction in Social Security benefits. Your future pension payments may also be reduced, depending on the language in your separation package.

If you accept an early retirement package, the benefits listed on your statement is not what you will receive. These estimated Social Security benefits assume that you continue to work for Southwest Gas Holdings and make your current salary. As a retiree who accepts an early voluntary severance package, your future income will likely be reduced. This means potentially lower future Social Security payments.

Likewise, your pension statement likely makes assumptions on years of service. If you accept an early retirement offer, your years of service may be less than what your pension statement assumes.

The first step is to determine what your Social Security or pension benefits will be if you accept the early retirement package. We use several different cash flow analyses to determine your future pension benefits and your optimal Social Security selection. Calculating your optimal Social Security and pension depends on the options you have available, your savings, and your spending needs.

Pensions, and particularly pension benefits for those who retire early, often have options for increased payments until the retiree reaches Social Security age. This is usually referred to as a ‘Social Security Offset’ option. This option adds more to your early benefits, but your lifetime benefits may be reduced.

You also will have to consider what portion of your pension would be left to your spouse if you were to pass away in retirement. For most, the peace of mind by ensuring their spouse will receive a sizeable pension, is best. However, this will leave you with lower monthly benefits.

You may know that your monthly Social Security benefit is increased the longer you delay beginning your benefit. But that requires you to likely draw down on your retirement savings more early on in retirement. Social Security increases its payouts by 6.7% to 8.3%, plus an additional increment for inflation, for every year a beneficiary between ages 62 and 70 refrains from collecting a check. Sometimes delaying collecting benefits for just one year could have a huge impact on a successful retirement for married couples. It may make sense for the lower-earning spouse to claim benefits early, while the higher-earning spouse delays.

Therefore, not only is it important to known which Social Security strategy gets you the most money in total, but also which options fits best with your retirement plan. If you are evaluating the early retirement offer on your own, you can start by using the Social Security Administration’s Benefits Estimator .

From there, you can enter estimated future income to arrive at an estimated correct Social Security benefit. Once you have this updated, compare your new estimate to your monthly expenses. What impact will this reduced benefit reduction will have on your retirement plan and anticipated retirement account withdrawals?

Accepting an early retirement offer may force you to tap into your retirement savings, such as your 401(k) or IRA earlier, or it may mean changing when you will need to begin receiving Social Security benefits.

Unemployment benefits

If you decide to take an early retirement package, you may still be eligible for unemployment in certain circumstances. Your state may have its own qualifications, such as a specific period of service with a company before you can claim unemployment after leaving Southwest Gas Holdings.

What if I don’t want to retire early, or I can’t afford to?

If you're unsure about your financial future, you might consider working with a financial advisor to go over your finances and how an early exit package may impact your retirement plans.

If you can’t retire just yet, try to determine if a part-time job will be enough to fill the gaps. If not, can you at least afford to take a pay cut with your next job? If so, how much? Try to map out these answers while also thinking about ways you can cut back on expenses and adjust your budget to accommodate your new income.

If you end up landing another job, your early retirement package won’t be impacted. However, you may want to check for a non-compete disclosure that could prevent you from working with one of Southwest Gas Holdings's competitor for a specified time.

Can I negotiate my early retirement offer?

Just as you would negotiate a salary for a job offer, consider negotiating an early retirement package, too. Some employers may be willing to offer more money in the form of extended salary coverage or a lump-sum, better healthcare benefits or an addition to your years of service. Of course, they may decline, but you won’t know if you don’t ask.

If You Accept a Voluntary Separation Package – Consider Roth Conversions

Roth conversions can be an incredibly valuable tool for those who accept an early retirement offer. They can increase asset longevity and reduce total taxes paid during their retirement.

For those with retirement account assets in tax deferred retirement savings accounts (like 401(k)s and IRAs), an early retirement offer opens up the potential to save significantly on future taxes . Those who accept an early retirement buyout offer from Southwest Gas Holdings will likely be facing a year or two of reduced income before Social Security benefits kick in. These years of reduced income can be the perfect time to convert some assets within your 401(k) or traditional IRA into a Roth IRA.

What if I don’t accept my early retirement offer?

Rejecting an Early Severance Offer

Of course, you have the option to say no to any voluntary severance package offered by Southwest Gas Holdings.

If you want to continue working, or are unable to retire early, this may be your best option. Working additional years can lead to pay raises, promotions, increased Social Security and pension payments, and increased financial stability. However, rejecting an early retirement offer has potential drawbacks, too.

First, there is no guarantee that Southwest Gas Holdings will repeat the early retirement offer in the future. Assuming that another offer will come later is not always a wise move. Second, and more importantly, realize that companies offers an early severance package to its employees to cut costs. If the company’s finances do not improve, there may be much worse outcomes in the future. Southwest Gas Holdings may make layoffs, reduce employee pay, or eliminate other benefits.

How does the Southwest Carpenters Pension Plan accommodate changes in benefits for employees who have been affected by the COVID-19 pandemic, and what specific provisions have been implemented to ensure continuity of pension credit during such interruptions? Employees of the Southwest Carpenters Pension Plan are particularly encouraged to review how these provisions may impact their retirement plans and benefits, especially given the unprecedented circumstances of the pandemic.

The Southwest Carpenters Pension Plan accommodated changes due to COVID-19 by extending various deadlines for participants, such as the 12-month deadline to apply for pension credit for periods of disability, and other deadlines regarding claims and appeals. These extensions were applied from March 1, 2020, to a period of up to one year after the original deadline or 60 days after the end of the COVID-19 national emergency, ensuring continuity of pension credit during the pandemic interruptions(Southwest Carpenters Pe…).

What enhancements to pension benefit calculations have been introduced for the years following January 1, 2021, under the Southwest Carpenters Pension Plan, and how do these changes affect participants working more than 1,800 hours? This question emphasizes the implications of increased benefit accrual rates and the actual processes employees must follow to calculate their pensions effectively.

Enhancements to pension benefit calculations effective January 1, 2021, under the Southwest Carpenters Pension Plan include an increase in the monthly benefit accrual rate for participants working 1,800 hours or more. The rate increased from $100 to $200, and for those working more than 1,800 hours, a maximum benefit accrual rate of $244.44 was introduced(Southwest Carpenters Pe…).

In the context of the Southwest Carpenters Pension Plan, could you explain the eligibility criteria for receiving a Service Pension and how employees can accumulate the necessary Pension Credits more quickly? This consideration is vital for members who wish to understand the retirement options available to them and the strategies they might employ in their careers to maximize their benefits under the Southwest Carpenters Pension Plan.

Employees of the Southwest Carpenters Pension Plan are eligible for a Service Pension after earning 30 years of Pension Credit. Additional Service Pension Eligibility Credit was introduced, allowing employees working over 1,800 hours annually to accumulate credits more quickly, up to a maximum of 2,200 hours(Southwest Carpenters Pe…).

How do temporary disability benefits interact with the accumulation of Pension Credits within the Southwest Carpenters Pension Plan? Specifically, employees may have questions about how their working history and service time might be affected should they take leave for health-related reasons, highlighting the intricate balance between pay and benefits during challenging times.

Temporary disability benefits under the Southwest Carpenters Pension Plan allow participants to accumulate Pension Credits during non-working periods if they are on short-term disability or receiving workers' compensation. Pension Credits can be granted for up to 1,200 hours annually, depending on the nature of the disability and employment history(Southwest Carpenters Pe…).

What are the implications of the revised definitions under the Required Beginning Date as specified by the Southwest Carpenters Pension Plan, particularly in compliance with the SECURE Act (Setting Every Community Up for Retirement Enhancement Act)? Employees should understand how these legislative changes affect their retirement strategies, especially in light of penalties for failing to comply with mandatory commencement dates.

The Required Beginning Date for the Southwest Carpenters Pension Plan was revised to comply with the SECURE Act. Participants born on or after July 1, 1949, must begin receiving benefits by April 1 of the calendar year following the year they turn 72. Failure to comply with this could result in a 50% excise tax(Southwest Carpenters Pe…).

How can employees of the Southwest Carpenters Pension Plan navigate the process for applying for pension credit during periods of Temporary Disability, and what specific documentation is required? This inquiry encourages a deeper understanding of protocol surrounding disability applications and the associated benefits that participants are entitled to under the Plan.

Employees applying for pension credit during periods of Temporary Disability must submit a written application within one year of the onset of the disability, and provide documentation such as state-approved short-term disability certification or workers' compensation benefits(Southwest Carpenters Pe…).

What are the implications of the retroactive increases to the Southwest Carpenters Pension Plan benefits aimed at participants who accrued credit during the years 2011 to 2020, and how can affected employees determine their eligibility for said increases? Employees often seek clarification on how historical contributions can manifest in current benefits.

Retroactive increases to the Southwest Carpenters Pension Plan benefits for the years 2011 to 2020 apply to participants who worked at least 1,000 hours in 2020 or under specific collective bargaining agreements. A 50% increase in benefit accrual rates was applied to these years, and eligible employees can determine their eligibility based on their hours worked(Southwest Carpenters Pe…).

What role does the Southwest Carpenters Administrative Office play in assisting employees who have questions regarding modifiability in their pension plans, and what are the best methods for contacting them for assistance? This question highlights the importance of communication within the organization concerning employee inquiries and issue resolution.

The Southwest Carpenters Administrative Office assists employees with questions regarding modifications to their pension plans. Participants can contact them at (213) 386-8590 or (800) 293-1370 for personalized assistance(Southwest Carpenters Pe…).

Can you detail the factors influencing the Benefit Accrual Rate for participants of the Southwest Carpenters Pension Plan for the calendar years after 2021, and how might employees calculate their expected pension benefits? Participants will want to understand the nuances of how their benefits are computed to make informed decisions regarding their retirement planning.

The Benefit Accrual Rate for participants of the Southwest Carpenters Pension Plan after 2021 increased to $200 for 1,800 hours worked, with higher accrual rates for additional hours. Employees can calculate their benefits by multiplying their benefit accrual rate by the applicable benefit factor(Southwest Carpenters Pe…).

In the event of legal actions regarding benefits under ERISA against the Southwest Carpenters Pension Plan, what venue restrictions apply, and what does this mean for participants seeking resolution in disputes? Employees need to be informed of the legal frameworks governing their benefits and understand their rights and the procedures that affect their claims within the Southwest Carpenters Pension Plan.

Legal actions regarding benefits under ERISA against the Southwest Carpenters Pension Plan must be filed in Federal District Court in Los Angeles County, California. This venue restriction defines the jurisdiction where participants must file claims(Southwest Carpenters Pe…).