Severance Payments -
What You Need to Know
In the coming weeks, many AT&T employees will be faced with the unfortunate news that they are being force-reduced. In most cases, AT&T employees who are forced off payroll will be provided a severance package. A severance package is typically that employee's annual base salary (bonuses are not included) paid out to them in a single lump-sum payment at 50% of their annual base salary. For example, if your annual base salary is $84,000 then your severance payment will be 50% of that or $42,000 Gross, minus taxes.
Issuance of Severance Payment -
If you are provided a severance payment, this payment is typically issued within 2 to 6 weeks from your last day on payroll. However, be advised that since you are no longer on payroll your severance payment will be sent to your home address via regular U.S. mail. It will NOT be direct deposited to your checking account.
Taxes -
For AT&T employees in Texas, your severance payment will be assessed the following taxes: Federal, Social Security, FICA, and Medicare. For AT&T employees in other states, if you are subject to state tax withholding, those state taxes will also be withheld. Please contact our office and we can provide you with an estimate as to what your NET severance payment will be, so long as you know your annual base salary.
Reportable Income -
A severance payment is considered income and will be reported on your W-2 in the year in which you received the severance payment. It is important to note that if you are forced-reduced later in the year as opposed to the earlier part of the year, your severance payment could push you into a higher tax bracket. This is because if you are forced off payroll in November 2020 (for example), you will have received 11 months worth of your annual salary, plus any bonus(es) you may have received earlier in the year, and then all of a sudden you are going to get 50% of your annual salary added on to what you've made for tax year 2020. In some cases, you may be provided the opportunity to defer your severance to the following tax year, and may want to consider this option in order to lower your income for that year.
Unemployment Benefits -
A big question from many AT&T employees is "Do I still qualify for unemployment benefits if I receive a severance payment?" In most cases the answer is YES! If you are force-reduced, laid off, voluntary or involuntary severance'd from AT&T, you can file for unemployment insurance from the state of Texas and will be considered eligible to receive unemployment insurance (benefits) from the state of Texas. In regards to how much in benefit payments you are eligible to receive, it is based on "past wages" and a "base period" which is calculated off your annual salary from AT&T. Please refer to the Texas Workforce Commission link below for more detailed information on unemployment benefits.
- Click Here to find out more about eligibility and benefit amounts from the Texas Workforce Commission
- NOTE: For AT&T employees outside of Texas, please contact our office for guidance on your state's rules regarding eligibility)
More Information -
Be on the lookout as we will be providing more "good-to-know" information regarding your benefits with AT&T and how this force-reduction could impact those benefits. In the coming days we will be hosting a webinar session and a luncheon or dinner event (if possible) to educate and inform AT&T employees on how to be better prepared for a force-reduction. Please subscribe to our e-mail notifications or follow us on Facebook and LinkedIn so you are up-to-date with news and events.
Here to Help -
Being notified that you are going to be force-reduced can be emotionally and psychologically draining, not to mention the financial impact it could have on your livelihood. Having to prepare and be ready for the possibility that you may longer have a job is surreal. Especially if you will only have 14-days to make arrangements for a life-changing event, it can certainly be overwhelming. However, hope is not lost. We can help you in this time of uncertainty and the unknown. We understand it is a difficult time for many, but know that we are here to assist you. Know that there is someone with your best interests in mind and ready to guide you down this path. Padilla Wealth Management has been providing retirement planning services for AT&T employees for over 15 years now with a deep understanding of your 401(k) plan, pension options, healthcare and life insurance benefits, and much more. Put our knowledge and expertise to work for you.
If you or a colleague is in immediate need of financial guidance, or simply want to know how you can be be better prepared with your financial well-being, please do not hesitate to contact us at (210) 223-8700 or via e-mail at info@padillawmg.com.
Book a Meeting -
You can book a meeting using our online calendar software. Click Here to book a conference call, webinar, or in-person meeting.
We wish everyone at AT&T all the best.
The Padilla Wealth Management Team