Pfizer Employees and Retirees

RIS provides advice to Pfizer executives, retirees and other people leaving the company. Your Pfizer Savings Plan is similar to many 401k plans that we write about on this web site. However, there are at least five issues that are unique to Pfizer employees and retirees that you should be concerned about.

FIRST, there are provisions in the Pfizer Savings Plan that make it disadvantageous for retirees and terminees to stay in the plan after they leave the company. If you are not careful, it can have a big impact on your heirs, and certain decisions could mean your heirs could get only 10% or 20% of what they might otherwise get. For example, if a couple dies with $500,000 in the Plan, the Plan will distribute the assets to the heirs (children), and they may have to pay up to $200,000 in income taxes. If this were handled properly, we could get those $500,000 in assets into an account that will grow tax-deferred and could distribute $2.5 million to $5 million to the heirs over their lifetimes. We can show you what this specifically could mean to your account. Do not ignore this issue. If you are no longer active with the company. have a family and are still in the Plan, you need to setup an appointment with us as soon as possible.

SECOND, it may be advantageous for some of you to distribute your Pfizer shares in the Savings Plan directly to yourself. If handled correctly, you can get the gains in the Pfizer Stock treated as long-term capital gains rather than ordinary income. That means a tax rate of 15% on long term capital gains versus a tax rate up to 39% for ordinary income. We can help you determine whether you should take advantage of this. We will examine the costs and benefits. But, you have to examine this before you rollover your Plan to an IRA or otherwise liquidate your Pfizer Stock in the Plan.

If you have held the Warner Lambert –Pfizer stock in your Plan for a long time, please do not sell your Pfizer Stock in the Plan without talking to us first. This applies to existing employees, terminees and retirees. If you are retired, do not rollover the Plan without talking to us first. There are important benefits that can be permanently lost if you take certain actions.

THIRD, we find many executives have a large portion of their net worth tied up in Pfizer stock in the form of (1) direct stock ownership, (2) ownership of Pfizer Stock in the Savings Plan and (3) indirect ownership of Pfizer through unrealized gains in Pfizer stock options. In some cases, Pfizer stock is too large a percentage of your family’s net worth. We help determine which of the three types of ownership should be sold first and whether it should be done very soon or over a longer timeframe.

FOURTH, the Pfizer pension that retirees will receive can be a very meaningful portion of their income during retirement. We show clients how this can and probably should have a significant impact on your mix of investments – the percentage you have in equities and fixed income. This mix, of course, is one of the most important parts of determining the future size of your retirement nest egg for your use or for your heirs.

FIFTH, because we have helped so many retirees, we understand some of the pitfalls of retiring at Pfizer. We can help you avoid some of the mistakes that people can make. Some will become minor irritants while others can have a very negative or beneficial impact. Don’t allow "dumb luck" or serious mistakes to affect your retirement dreams negatively. We can help you take pro-active control of the issues that are important to you.

We are familiar with the fund choices that you have in the Savings Plan. As a result, we can help you determine which funds to select and which to avoid.

We can also help you with exercising your Pfizer options with Merrill Lynch. We are constantly watching the stock for various stock option holders.

If you find the right financial advisor, the value of the advisor can be a multiple of the cost that the advisor charges. We try to make these complicated issues easy for you to understand and act upon. You have worked long and hard for the benefits you can enjoy in retirement. It is important for you to make sure you get all the benefits that you deserve and avoid costly mistakes in implementing your retirement decisions.

We have just discussed some of the issues that are unique to Pfizer employees and retirees. There are other issues that apply to all 401k participants (Savings Plan) and retirees that you can read about in Our Services and RIS 10 Steps to Wealth.

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Retirement Income Solutions, Inc. is an independent Registered Investment Advisor.