| Company Name | For plan years beginning in | Year | Month | First Segment | Second Segment | Third Segment | Plan Type |
| Monsanto | All | 2025 | January | 4.74% | 5.55% | 5.92% | |
| Monsanto | All | 2024 | January | 4.89% | 5.14% | 5.29% |
Lump Sum vs. Annuity
Retirees who are eligible for a pension are often offered the choice of whether to actually take the pension payments for life, or receive a lump-sum dollar amount for the “equivalent” value of the pension – with the idea that you could then take the money (rolling it over to an IRA), invest it, and generate your own cash flows by taking systematic withdrawals throughout retirement.
The upside of keeping the pension itself is that the payments are guaranteed to continue for life (at least to the extent that the pension plan itself remains in place and solvent and doesn’t default). Thus, whether you live 10, 20, or 30 (or more!) years in retirement, you don’t have to worry about the risk of outliving the money.
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By contrast, selecting the lump-sum gives you the potential to invest, earn more growth, and potentially generate even greater retirement cash flow. Secondly, if something happens to you, any unused account balance will be available to a surviving spouse or heirs. On the other hand, if you fail to invest the funds for sufficient growth, there’s a danger that the money could run out altogether, and that you may regret not having held onto the pension’s “income for life” guarantee.
Ultimately, though, whether it is really a “risk” to outlive the guaranteed lifetime payments that the pension offers, by taking a lump-sum, depends on what kind of return must be generated on that lump-sum to replicate the payments. After all, if the reality is that it would only take a return of 1% to 2% on that lump sum to create the same pension cash flows for a lifetime, there is little risk that you will outlive the lump-sum even if you withdraw from it for life(1). However, if the pension payments can only be replaced with a higher and much riskier rate of return, there’s also a greater risk those returns won’t manifest and you could run out of money.
Rising Interest Rates
In defined benefit plans, current and future retirees are offered a lump-sum payout or a lifetime monthly pension benefit. Often these plans have billions of dollars worth of unfunded pension liabilities, and in order to get the liability off the books, they pay the lump-sum.
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Depending on lifespan, the initial lump-sum is typically less money than regular pension payments over an entire retirement. However, if interest rates increase by 1% it could decrease the lump-sum offer by approximately 8-10%. Other factors such as income needs, need for survivor benefits, and tax liabilities often dictate the decision to take the lump-sum.
What is the purpose of Monsanto's 401(k) Savings Plan?
The purpose of Monsanto's 401(k) Savings Plan is to help employees save for retirement by allowing them to contribute a portion of their salary into a tax-advantaged retirement account.
How can I enroll in Monsanto's 401(k) Savings Plan?
Employees can enroll in Monsanto's 401(k) Savings Plan through the company's HR portal or by contacting the HR department for assistance.
What types of contributions can I make to Monsanto's 401(k) Savings Plan?
Employees can make pre-tax contributions, Roth (after-tax) contributions, and possibly catch-up contributions if they are age 50 or older in Monsanto's 401(k) Savings Plan.
Does Monsanto offer any matching contributions to the 401(k) Savings Plan?
Yes, Monsanto offers a matching contribution to the 401(k) Savings Plan, which can vary based on employee contributions and company policy.
What is the vesting schedule for Monsanto's 401(k) Savings Plan?
The vesting schedule for Monsanto's 401(k) Savings Plan typically outlines how long an employee must work at the company to fully own the employer's matching contributions, which may vary based on tenure.
Can I take a loan from my Monsanto 401(k) Savings Plan?
Yes, employees may have the option to take a loan from their Monsanto 401(k) Savings Plan, subject to specific terms and conditions outlined in the plan documents.
What investment options are available in Monsanto's 401(k) Savings Plan?
Monsanto's 401(k) Savings Plan offers a variety of investment options, including mutual funds, target-date funds, and possibly company stock, allowing employees to diversify their portfolios.
How often can I change my contribution amount to Monsanto's 401(k) Savings Plan?
Employees can typically change their contribution amount to Monsanto's 401(k) Savings Plan at any time, subject to the plan's guidelines.
When can I access my funds from Monsanto's 401(k) Savings Plan?
Employees can access their funds from Monsanto's 401(k) Savings Plan upon reaching retirement age, termination of employment, or under certain hardship circumstances as defined by the plan.
What happens to my Monsanto 401(k) Savings Plan if I leave the company?
If you leave Monsanto, you can choose to roll over your 401(k) savings into another retirement account, leave it in the plan if allowed, or cash it out, subject to taxes and penalties.