Evergy Retirement Plan Considerations

Retirement and Financial Planning Considerations for Employees of Evergy

If you were an employee of Kansas City Power & Light or Westar Energy before the 2018 merger, you probably remember the way you felt in the months leading up to it better than anything.

What happened to the KCP&L and Westar Energy retirement plans and benefits after the Evergy merger?

After the merger in 2018, employees from both KCP&L and Westar Energy who had these defined-benefit plans were presented with two options:

But how do you know what the right option for you and your family is? Our goal is to make your plan simple to understand and document our process so you know what to expect and feel empowered about the future! From there, we’ll show you how small actions can help you save money, retire sooner, and build more income in retirement.

How Can A Wealth Manager Help Me?

Our Evergy Retirement Plan Specialists team will work with you to develop a plan to meet your financial and retirement goals. When you engage with us, we will sit down with you and in real-time, walk you through your entire financial picture.

There’s more!

You deserve an entire team looking out for your best interests – and that’s what we’ve built for you. We provide our clients with a dedicated Wealth Manager, Tax Professional, Investment Team Member, and Client Relationship Manager. Each professional is position-specific and designed to help you in that specific area while collaborating with the entire team.

What Kind Tax Considerations Can I Expect?

While the employee benefits that Evergy offers are exceptional, there are significant tax considerations to be aware of. For example, are you retiring before age 59½? If so, putting together a Schedule of Withdrawals will be essential.

For all retirees, it is crucial to figure out where your income is going to come from. The order you pull money from different buckets (tax-deferred and non-tax deferred) is significant for tax planning purposes.

If your tax situation is complex, it would be wise to consider outsourcing your tax preparation to a CPA who will work closely with your wealth manager. When you become a client of The Retirement Planning Group, you are assigned to a dedicated group of professionals made up of a Wealth Manager, Tax Professional, Investment Team Member, and Client Relationship Manager. Each professional is position-specific and designed to help in a specific area while collaborating with the entire team. When you have a team working on your behalf, with each person dedicated to a discipline, you can get better results.

Important Considerations for the Lump-Sum Payment

• You are responsible for making the funds last throughout your retirement.
• Your investments may be subject to market fluctuation, which could increase or reduce the value of your assets and the income you can generate from them.
• The amount of a Lump-Sum payment has an inverse relationship to interest rates—in general, as interest rates rise, Lump-Sum values will decline.
• If you don’t roll the proceeds directly into an IRA or an employer-qualified plan like a 401(k) or a 403(b), the distribution will be taxed as ordinary income and may push you into a higher tax bracket.
  • If you take the distribution before age 59½, you may also owe a 10% early withdrawal tax penalty.

Important Considerations for the Monthly Pension Payment (Annuity)

• How healthy is the entity providing the pension?
  Some pension funds are underfunded. This is particularly true of many multi-employer plans that are supposed to provide pensions to union members. As of December 31, 2020, Evergy’s pension plan assets totaled $1.733 billion, while projected benefit obligations totaled $2.718 billion. (Source) 
  • If you’re concerned about all of your pension funds being available to you 20 to 30 years from now, the better option for you might be to take the Lump-Sum Payment.
• How healthy are you and your spouse?
  If you’re healthy and believe that you or your spouse will live beyond the average life expectancy, monthly payments might be more attractive to you. 
  • SURVIVOR BENEFITS –  Your annuity payments will stop when you die unless you choose a survivor benefits option. The survivor benefit allows your heir to receive the annuity payments for their life span after you die.

Payment Type

Monthly Pension Payment (Annuity)

Pros

• You will have an income for the rest of your life
• You may be able to pass this lifetime income on to your spouse or a different beneficiary

Cons

• Annuities might give you less financial flexibility in life
• You may die before ultimately collecting all of the retirement money you’re owed
• Some annuities may not pay benefits to your family or beneficiaries in death
• The annuity might be too small to cover your medical bills if you are very sick

Timing is everything

• How does the interest rate affect the value of my Lump-Sum?
  If the interest rate calculated goes up in July, your Lump-Sum will likely go down in value. Likewise, if the interest rate goes down in value, your Lump-Sum will likely increase depending on other factors like years of service, age, and the severity of the change in interest rates from one year to the next. 

  When it comes to being financially secure in retirement, don’t rely solely on your employer to ensure that happens.

As an employee of Evergy, your financial situation is unique.

Ryan Costello, CFP®
Principal – President & Senior Wealth Manager

Ryan Costello has over 16 years of experience in the financial services industry. He works with high net-worth individuals, Defined Contribution, and Defined Benefit plans. He holds the CERTIFIED FINANCIAL PLANNER™ designation and is a Principal at The Retirement Planning Group.

If you’re looking for a financial advisor, it’s also beneficial to ask friends and family or colleagues for recommendations. Once you have good recommendations, do your homework. Research them online, make sure their values are in line with yours, check their credentials, and even call to speak to someone to see how you like their customer service.

We’re here to help. Speak with one of our Evergy Retirement Plan Specialists today by calling 888-988-6621.