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Unlocking the Rule of 55: A Guide for WestRock Employees to Navigate Early Retirement Withdrawals

Healthcare Provider Update: Healthcare Provider for WestRock: WestRock employees typically receive their health care benefits through various providers as part of employer-sponsored insurance plans. Specific details on the primary healthcare provider may vary, but it's known that large companies like WestRock often collaborate with major insurers. To identify the exact provider, employees should consult their HR department, which can provide the most accurate and relevant information. Potential Healthcare Cost Increases in 2026: As WestRock prepares for 2026, employees should brace for significant healthcare cost increases. With the expiration of enhanced federal ACA subsidies and rising medical costs, many workers could face steep premium hikes, potentially exceeding 75%. A recent survey indicates that nearly half of large employers, including WestRock, anticipate transferring more healthcare expenses to employees, raising deductibles and out-of-pocket maximums. This evolving landscape highlights the importance for WestRock employees to understand their benefits and mitigate potential financial impacts. Click here to learn more

Managing the withdrawal process from workplace retirement accounts like 401(k) or 403(b) plans poses a significant challenge. Generally, early withdrawals before age 59 1⁄2 incur a hefty penalty tax in addition to tax obligations. However, the Internal Revenue Service (IRS) offers a crucial exception for individuals who have reached the age of 55, known as 'the rule of 55,' which allows penalty-free access to retirement funds under certain conditions.

The rule of 55 serves as an essential financial strategy for those considering their imminent future. It permits withdrawals from 401(k) and 403(b) plans without the standard 10% penalty if employment ends during or after the year one turns 55. This opportunity is available to public safety workers, such as police officers and emergency firefighters, starting at age 50. This provision specifically applies to the most recent employer-linked retirement plan and does not extend to IRAs or retirement plans from previous employers, although transferring old 401(k) funds into the current plan may make them eligible for a penalty-free gap under this rule.

To effectively utilize the rule of 55 at WestRock, it is crucial to understand its limitations and requirements. For example, the retirement rule at age 55 only applies if employment separation occurs within the same calendar year that the individual reaches age 55 or older. Additionally, some employers may not offer the option for early withdrawal, making it essential for employees to consult their 401(k) plan administrator regarding the availability of this option.

While rule 55 provides an opportunity for WestRock employees to access retirement funds early, it is advisable to adopt this option cautiously. Withdrawals remain subject to income tax, and if not well planned, they can push an individual into a higher tax bracket, thus increasing the overall tax burden. Therefore, it is crucial to plan withdrawals to minimize tax consequences, possibly delaying the first withdrawal to the next year after voluntary departure.

For WestRock employees who do not meet the eligibility criteria of the rule of 55, there are other opportunities to escape the 10% early withdrawal penalty. One example is the substantially equal periodic payment (SEPP) plan, governed by section 72(t) of the IRS. This strategy allows withdrawals at any age, provided that payments are made in substantially equal installments over a period of more than 5 years or until age 59 1/2, offering a structured withdrawal process that also avoids penalties.

Additionally, the IRS permits hardship distributions for urgent financial needs that cannot be met by other means. This necessity includes medical expenses, costs related to acquiring a principal residence (excluding mortgage payments), and educational expenses. Another option to consider is a 401(k) loan, where you can borrow up to $50,000 or 50% of the remaining amount in your account (whichever is less). The benefit of this option lies in the fact that the interest paid on the loan is credited back into the individual's 401(k), although it may limit subsequent contributions until the loan is repaid.

Despite these provisions, the rule of 55 should not be seen as a reason to deplete retirement savings prematurely. The central idea of allowing investments to grow through compound interest remains a crucial element of effective retirement planning. Thus, even though the rule of 55 offers flexibility and an opportunity to alleviate financial hardships before the traditional retirement age, it should be integrated into a broader strategy that considers tax consequences, income diversification, and long-term financial health.

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It is vital to adopt a holistic approach to planning withdrawal. This strategy is not limited to assessing immediate financial needs but also anticipates future expenses and revenue sources, ensuring a stable and secure financial future. While the rule of 55 can provide immediate financial relief in some cases, its use should be part of a well-thought-out financial plan that emphasizes preserving long-term retirement savings to ensure that these funds continue to provide financial security during WestRock retirement years.

For those nearing retirement from WestRock, understanding the tax implications of early departures is essential. According to a 2022 IRS update, individuals utilizing the rule of 55 must also be aware of the potential impacts on Social Security benefits. Withdrawals under this rule are not considered 'income,' which means they do not directly affect the income test that could reduce Social Security benefits if one retires early and continues to earn money. This distinction provides a planning advantage, allowing retirees to better manage their income sources without jeopardizing their Social Security benefits.

Explore the benefits of the rule of 55 for your retirement strategy by allowing advantageous withdrawals, without penalties, from your 401(k) or 403(b) after leaving employment at age 55 or older. Examine eligibility criteria, tax implications, and strategic financial planning necessary to optimize this advantage. Explore other options such as SEPPs, hardship distributions, and 401(k) loans if you do not qualify for the rule. Essential reading for those planning their near future or wishing to access their retirement funds early.

Observing the rule of 55 is like finding a hidden path in a marathon. Generally, runners must press on to reach the finish line at 59 1⁄2 without incurring penalties. However, those who find themselves at mile marker 55 have the unique chance to take a sanctioned path, thus accessing their resources early without the usual penalties. This particular path, reserved for workers who leave their employment at age 55 or older, offers a strategic advantage for managing retirement funds more flexibly and efficiently, just like a marathon runner who finds a welcome water station just when it's most needed.

How does the WestRock Company Consolidated Pension Plan specifically calculate the Normal Retirement Benefit for its employees, and what considerations should employees be aware of regarding the Final Average Pay calculation used by WestRock Company?

Normal Retirement Benefit Calculation: The WestRock Company calculates the Normal Retirement Benefit based on the employee's Final Average Pay. This is defined as the average of the employee's highest five years of earnings over the last ten years of employment before termination. Earnings included in the Final Average Pay are most wages, bonuses, commissions, and amounts deferred under the company’s 401(k) plan. Employees should be aware that earnings after December 31, 2015, are excluded unless they qualify under the Rule of 75(WestRock Company_Issued…).

What are the specific eligibility requirements for the Disability Retirement Pension under the WestRock Company plan, and how does this differ for Legacy Mead and Legacy Westvaco participants within the WestRock Company workforce?

Disability Retirement Pension Eligibility: To qualify for a Disability Retirement Pension, an employee must have earned at least five years of Vesting Service and be deemed "totally and permanently disabled" according to specific criteria. Legacy Mead and Legacy Westvaco participants are subject to special rules detailed in the Legacy Supplement. Legacy Mead employees must apply separate criteria from Legacy Westvaco employees(WestRock Company_Issued…).

In what ways can employees at WestRock Company manage and maximize their Vesting Service to ensure they receive the full benefits from the companyâ€™s pension plan, particularly for those with interrupted service or re-employment?

Vesting Service Maximization: WestRock employees can manage their Vesting Service by ensuring that they complete at least five years of service, which guarantees their right to pension benefits. Employees with interrupted service can still receive credit for Vesting Service if they return within five years. Additionally, employees who leave and return within a year will receive credit for the time they were absent(WestRock Company_Issued…).

How does the WestRock Company handle the transition of benefits for employees who transfer between different positions within the company, and what impacts could this have on their eventual retirement benefits?

Transfer Between Positions: When WestRock employees transfer between different positions, their retirement benefit is calculated based on the greater of two methods. The first method calculates the benefit accrued at each position separately, while the second method applies the total benefit service across positions. Vesting Service is always combined, regardless of location or position(WestRock Company_Issued…).

How does the WestRock Company plan ensure that pension benefits are protected, particularly through the Pension Benefit Guaranty Corporation (PBGC), and what should employees know about their rights and guarantees under this insurance?

Pension Benefit Protection (PBGC): The WestRock Pension Plan is insured by the Pension Benefit Guaranty Corporation (PBGC). This federal insurance guarantees that employees will receive their vested pension benefits even if the plan is terminated. Employees should understand that PBGC coverage has limits, and benefits might be reduced under certain circumstances(WestRock Company_Issued…).

What are the consequences for WestRock Company employees who choose to withdraw from their pension plan or to rollover their benefits upon retirement or termination? How can they navigate these options effectively to avoid penalties?

Withdrawals and Rollovers: Employees can withdraw or roll over their pension benefits upon retirement or termination. Lump-sum withdrawals may be subject to taxes unless rolled over into a qualifying retirement account. Employees should consult the WestRock Benefits Center to avoid penalties and ensure compliance with federal tax regulations(WestRock Company_Issued…).

How does the WestRock Company maintain compliance with federal regulations and best practices under ERISA, and what specific rights do employees have concerning their pension benefits?

ERISA Compliance: WestRock complies with the Employee Retirement Income Security Act (ERISA), ensuring that employees' pension rights are protected. Employees have the right to receive information about their benefits, act prudently, and enforce their rights through the claims and appeals process outlined in the plan(WestRock Company_Issued…).

What resources are available to employees of WestRock Company for understanding their benefits under the Consolidated Pension Plan, and how can they utilize these resources to ensure they make informed decisions about their retirement?

Resources for Understanding Benefits: WestRock provides employees access to the WestRock Benefits Center, where they can obtain information on their pension plan. Employees are encouraged to review the Summary Plan Description and consult with the Benefits Center for clarification on their benefits and to make informed retirement decisions(WestRock Company_Issued…).

How will the integration of employee benefits from various company acquisitions impact current staff at WestRock Company, and what steps is the company taking to communicate these changes effectively to its employees?

Impact of Acquisitions on Benefits: WestRock has acquired various companies over time, and employees from these acquisitions may have different pension rules applied to them. WestRock takes steps to integrate these employees and communicates any changes through the WestRock Benefits Center. Special rules may apply based on the previous employer’s pension plan(WestRock Company_Issued…).

How can employees of WestRock Company get in touch with the WestRock Benefits Center to seek clarification about the Summary Plan Description, and what are the best practices to follow when requesting information regarding their pension plan?

Contacting the Benefits Center: Employees can contact the WestRock Benefits Center for clarification on the Summary Plan Description. Best practices include having detailed questions prepared, reviewing the SPD in advance, and requesting copies of documents or forms that clarify specific aspects of their pension plan(WestRock Company_Issued…).