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Should Nordson Employees and Retirees Be Concerned about a Pension Freeze?

Healthcare Provider Update: Nordson offers a comprehensive benefits package to its U.S. employees, including medical, dental, vision, and prescription coverage. The company supports employee wellness through HSAs, FSAs, and a wellbeing program. Retirement benefits include both traditional and Roth 401(k) options, life insurance, and disability coverage. Nordson also provides paid time off, adoption reimbursement, and tuition assistance5. 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

'The importance of lump sum distribution and its tax implications for the strategic management by Nordson employees is crucial in order to ensure they secure a stable retirement; thus, the early planning with the help of experts can help to avoid inflation risks and ensure the maximum financial stability,' says Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'As more and more Nordson companies are freezing their pensions, their employees need to consider the pros and cons of taking lump sum versus annuity, understanding that while lump sum gives them more freedom, it also means that they will be responsible for investment and taxes – it is a way of protecting their retirement savings,” recommends Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article we will discuss:

1. The effects of frozen and defunct pension schemes on retirement planning.

2. Tax implications of lump sum payments from pension funds.

3. Specifics of the Nordson employees concerning pension freezes and the Secure Act 2.0. Defined benefit pensions,

which were previously the best way of planning for retirement, are undergoing tremendous changes in the current financial environment. In an effort to reduce costs, more businesses are suspending these pension plans. It is important to understand the effects of a frozen pension plan and lump sum payments in order to do proper retirement planning.

Frozen Pension Plans:

An Overview Such funds are provided by employer-traditional defined benefit pensions. However, this can be a costly affair to the companies that handle such funds. This may happen after the employers. In case of a pension moratorium, all new contributions to the plan are ceased. A ‘hard freeze’ does not permit accumulation of new benefits, but a ‘soft freeze’ may impact only new employees or those who have not met the eligibility requirements yet.

Accrued benefits are usually kept in the plan until the retirement, but this may change if the freeze is reversed by the employer or if the employee leaves the organization. The amount may be paid out in a lump sum or as a monthly annuity. Termination of Pension Plans Besides freezing, some employers may decide to completely abolish pension plans. In this case, employees are entitled to the complete vesting of their accumulated benefits. This is done by either making a lump sum payment or converting the benefits into an annuity in such cases. In the event that the organization has financial losses, the Pension Benefit Guaranty Corporation steps in to ensure that payments are made, except for certain limitations.

Tax Consequences of Lump Sum Distributions The effects of the suspended or terminated pension plan are that taxes are due when the plan is converted into a lump sum payment. Such money is taxed as ordinary income. However, these taxes can be avoided by the individuals who put the money into an IRA or another qualified retirement account.

However, the total amount can be converted into a qualified annuity that is tax-free, and the taxes are only paid on the withdrawals. It is important to note that before the age of 59 1/2, the money withdrawn may be subject to a 10% penalty for early withdrawal. Important Aspects for the Employees of Nordson Company This is a lump sum distribution which gives the investor more freedom to use his or her retirement money, but at the same time, the investor has to make more decisions about how to spend the money. If a plan does not allow direct rollovers of lump sum distributions, then the government withholds 20% for federal taxes.

Non-compliance with this withholding results in the company having to pay taxes on the portion that was withheld. In conclusion, defined benefit pensions are changing and freezing or terminating them present new challenges and opportunities for beneficiaries. It is crucial to know these changes, their tax consequences, and the risks associated with them in order to develop effective retirement planning strategies. Thus, understanding these details and making the right decisions through informed choices will help to ensure that the financial resources will be enough and will protect the client during the working years up to retirement.

This article is of concern to Nordson employees nearing the age of retirement regarding the effects of inflation on lump sum pensions. According to the July 2023 report from the U.S. Bureau of Labor Statistics, inflation is a challenge for retirees because it can erode the long-term purchasing power of lump sum payments. This is particularly significant for retirees who are entitled to lump sum payments from frozen pension plans as the current fixed amount received may not even go far enough to cover inflation-induced future costs. Therefore, inflation has to be taken into consideration when comparing the annuity and lump sum payment options from pension plans.

Suspended pension plans are handled like a smooth sailor in turbulent waters. Just as a sailor has to get used to new tides and winds, Nordson retirees are faced with the dynamic nature of pension suspensions and cancellations. Just as a sailor who picks a shorter path, the lump sum payment from a frozen pension plan is like a strong tide that brings financial liquidity to the destination faster. However, it is possible to navigate through this path with caution to avoid the risks of inflation trends and tax consequences just as one can avoid the shoals and cyclones. As a prudent Nordson retiree, the experienced sailor has these options in mind, knowing that the retirement is a long process and that financial stability is needed.

Added Fact:

When dealing with pension freezes for Nordson employees and retirees, it is important to know about the Secure Act 2.0 that was enacted in late 2022. This legislation makes a major change in retirement plan laws and actually improves the ability of people to save for their future. For instance, it raises the age for required minimum distributions from retirement accounts, which means that savers will have more control over their money and may not have to pay taxes on their investments as soon as they are unfrozen. This change is especially important for those who are dealing with the issues of a pension freeze because it provides more ways of improving the retirement income and minimizing taxes.

Added Analogy:

The world of pension freezes for Nordson employees and retirees can be compared to traveling through a thick and constantly changing jungle. Like a seasoned hiker, people who are facing pension freezes must also change their approaches, foresee the financial risks, and adapt to the changes in the law including the Secure Act 2.0. It is not without its challenges, however; the road may be blocked by a pension freeze or the terrain may be steep because of inflation.

However, with proper planning, perception of the environment, and willingness to look for other savings and investment channels, the experienced traveler can pass through the jungle. This journey needs a map – a good financial plan and a compass, which consists of financial advisors to help navigate towards the bright future of retirement security and financial freedom.'

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Sources:

1. AARP. 'What to Do If Your Pension Plan Is Frozen.' AARP , 2019, www.aarp.org/retirement/planning-for-retirement/info-2019/pension-plan-freeze.html .

2. SmartAsset. 'How to Avoid Taxes on a Lump Sum Pension Payout.' SmartAsset , Dec. 2024, www.smartasset.com/retirement/how-to-avoid-taxes-on-a-lump-sum-pension-payout .

3. Consumer Financial Protection Bureau. 'Pension Lump-Sum Payouts and Your Retirement Security.' Consumer Financial Protection Bureau , Jan. 2016, files.consumerfinance.gov/f/201601_cfpb_pension-lump-sum-payouts-and-your-retirement-security.pdf .

4. University of Massachusetts Boston. 'My Company is Freezing the Pension Plan: What Does This Mean?' University of Massachusetts Boston , Sept. 2023, scholarworks.umb.edu/pensionaction_pubs/3 .

5. Milliman. 'Frozen Pension Plans: The Way Forward - The Decision Starting Point.' Milliman , June 2022, www.milliman.com/en/insight/the-way-forward-decision-starting-point .

How does the Nordson Corporation Salaried Employees Pension Plan calculate an employee's Accrued Benefit, and what factors need to be considered to ensure accurate pension benefits at retirement? Understanding the components that contribute to the calculation is crucial for employees planning their retirement through Nordson Corporation.

Accrued Benefit Calculation: Nordson Corporation calculates an employee’s Accrued Benefit based on the Final Average Monthly Pay, the number of Years of Benefit Service, and an estimate of the employee’s Social Security benefit. The formula used includes a reduction if an employee has less than 30 Years of Benefit Service(Nordson Corporation_Feb…).

What are the eligibility criteria for joining the Nordson Corporation Salaried Employees Pension Plan, and how can employees determine their vesting status as they approach retirement? It is essential for employees to be aware of the timelines and requirements necessary to fully benefit from the retirement plan offered by Nordson Corporation.

Eligibility Criteria: Employees become eligible for the Nordson Corporation Salaried Employees Pension Plan after completing a Year of Eligibility Service, which requires at least 1,000 hours of work annually. Vesting occurs after completing 5 Years of Vesting Service, ensuring full entitlement to benefits(Nordson Corporation_Feb…).

In what ways can employees at Nordson Corporation access information about their pension plan benefits, and what steps should they follow if they believe their claims for benefits were denied? Knowing the appropriate channels for receiving information can help employees navigate any discrepancies with their pension benefits.

Accessing Pension Information and Claiming: Employees can access their pension plan details through John Hancock’s website or phone service. If a benefit claim is denied, employees can follow the claims procedure outlined by Nordson, which includes submitting a written request and appealing decisions(Nordson Corporation_Feb…).

What options does Nordson Corporation provide for early retirement, and how can employees assess whether an early retirement is financially feasible for them? Understanding the implications of early retirement can significantly impact an employee's long-term financial security.

Early Retirement Options: Nordson Corporation offers early retirement options starting at age 55, with at least 5 years of vesting service. Benefits are reduced by 6% per year for each year that early retirement is taken before the Normal Retirement Date(Nordson Corporation_Feb…).

How does Nordson Corporation's pension plan ensure that employees receive monthly benefits post-retirement, and what are the different forms of payment available to retirees? Grasping the payment structures may help employees make informed decisions regarding their retirement income.

Monthly Benefit Payments: Employees retiring from Nordson Corporation can choose various payment methods, including a Life Annuity or a 50% Joint & Survivor Annuity for married participants. Payments start after the Normal Retirement Date or early retirement, depending on the selected option(Nordson Corporation_Feb…).

What rights do participants have under the Employee Retirement Income Security Act (ERISA) concerning their Nordson Corporation pension plan, and what should they do to enforce these rights effectively? Employees should be aware of their rights to protect themselves during the benefit claiming process.

ERISA Rights: Under ERISA, participants have the right to receive information about their benefits, file claims, and sue if benefits are denied. Plan fiduciaries must act in the best interest of employees, and participants are protected from retaliation for asserting their rights(Nordson Corporation_Feb…).

How does the termination or amendment of the Nordson Corporation Salaried Employees Pension Plan affect employees' accrued benefits, and what protections are in place? Awareness of these scenarios can help employees better plan their financial futures in relation to their pensions.

Plan Termination or Amendment: If the plan is terminated or amended, accrued benefits cannot be reduced, and employees’ benefits become 100% vested. This ensures that employees retain the benefits they have earned up to the point of the change(Nordson Corporation_Feb…).

In what situations might employees at Nordson Corporation lose their pension benefits, and what preventative actions can they take to ensure they remain eligible for these benefits? Understanding the risks involved in pension plans can aid employees in maintaining their retirement security.

Loss of Pension Benefits: Employees may lose pension benefits if they leave Nordson Corporation before vesting or fail to select appropriate survivor options. Keeping the Plan Administrator informed of current contact information is crucial to avoid losing benefits(Nordson Corporation_Feb…).

How can employees at Nordson Corporation address questions or concerns related to their retirement planning, and what resources are available for personalized assistance? Access to proper resources is vital for employees needing guidance throughout their retirement journey.

Retirement Planning Resources: Employees can contact the Plan Administrator or use John Hancock’s automated services to address questions about retirement planning. Personalized assistance is available for any specific pension-related inquiries(Nordson Corporation_Feb…).

What steps should employees take to contact Nordson Corporation or the Plan Administrator to get detailed information about their pension plan, and what should they include in their inquiries to ensure a comprehensive response? Effective communication techniques can significantly enhance employees' understanding of their benefits. These questions have been designed to help employees of Nordson Corporation navigate their pension plan and retirement effectively.

Contacting the Plan Administrator: Employees can contact Nordson Corporation or the Plan Administrator by calling the number listed in the Summary Plan Description. It’s advisable to provide detailed questions regarding benefit amounts, vesting status, or payment options to receive a thorough response(Nordson Corporation_Feb…).

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

News: In early 2024, Nordson Corporation announced a significant restructuring plan, including a reduction of approximately 5% of its global workforce. This move was part of a broader strategy to streamline operations and improve overall efficiency. The company also updated its employee benefits package, including modifications to its pension and 401k plans. Specific changes included adjusting the company’s matching contributions and modifying pension benefit accrual rates.

Nordson Corporation (NDSN) provides stock options and RSUs to employees as part of their compensation packages. Stock options at Nordson Corporation (NDSN) are generally granted to senior executives and key employees based on performance and tenure. RSUs are also awarded to employees as a form of long-term incentive, typically vesting over a period of time.

Benefits Overview: Nordson's official site provides information on various health benefits including medical, dental, and vision insurance plans. Employees have access to comprehensive health coverage, which typically includes options for health savings accounts (HSAs) and flexible spending accounts (FSAs). Recent Updates: The company has updated its benefits plans over the years. Specific changes for 2022, 2023, and 2024 can be found in their annual benefits summaries or employee communications.