In Part One of this two-part series, we will discuss both the strategy and logistics to accessing your hard-earned money after you leave Aramco.
At some point, every Aramcon will face the complexities associated with Separation of Service. And regardless of when that time of separation approaches, it is no understatement that there is much to do. Coordinating work and personal matters can often seem an overwhelming task. Proper planning is a necessity given all that must be considered.
In order to address all of the matters at hand, your first and best resource is the Separation Guide for Expat Employees provided by the Personnel Department. In it you will find information to assist you in the resignation/retirement process as you prepare to leave.
Critical to your new life in retirement will be those funds which you have in both the Company Savings Plan (401(k)) and the Retirement Income Plan (RIP). These are the funds that will largely determine the level of success of your future retirement life.
Do you know how your funds are currently invested in these plans? It is crucial that you have an understanding as to how your funds are currently invested so that you can determine the appropriate level of risk that you need to take in retirement.
What amount of return will you need to meet your retirement needs? Often, a retiree’s savings must last them up to 30 years’ time. Will the amount saved be enough? How much can be spent each month? Will you still need to work when you return home?
Leaving your funds within the plan is certainly an option, but is it the right option for you?
What options are available to you at separation?
The Retirement Income Plan
- Annuitize Your RIP Savings - Aramco has 4 distinct annuity offerings that are available to each employee through Milliman. You can contact Milliman Service Center directly to discuss the differences between each. But first consult a financial professional to determine if an annuity option is the best choice for you.
- Take a Lump Sum Distribution from the RIP – Taking a Lump Sum Distribution from the RIP allows you to take greater control over your investments. By doing so, you are actively choosing to take a more “hands on” approach to your retirement planning.
- Taxable Distribution – While an available option, tax considerations make this a prohibitively expensive option should you choose to use it.
- Move Your RIP into the Aramco Savings Plan – By rolling your RIP into your existing Aramco Savings Plan account you are able to maintain the tax deferred status of those RIP funds. You must invest the RIP funds using only those investment mutual funds available to you within the Savings Plan.
- Move Your RIP to an IRA Account – By rolling your RIP into an IRA or Roth IRA account you can maintain the tax deferred status of those RIP funds while also having access to a much broader universe of investment products, such as stocks, bonds, and ETFs. A professional financial advisor can work with you to coordinate an investment portfolio that suits your specific needs.
The Aramco Savings Plan
- If you are not yet age 59 ½ - You have the option to remain in the Aramco Savings Plan and utilize the investment options within the plan. By doing so, you may also access these retirement funds as needed prior to age 59 ½ without the usual 10% early withdrawal penalty imposed by the IRS.
- If you are age 59 ½
- You have the option to remain in the Aramco Savings Plan and utilize the investment options within the plan.
- You can move your Savings Plan assets into a new 401(k) if you decide to work elsewhere.
- You can roll out of the plan into your own individual retirement accounts such as Rollover and Roth IRAs. You can move both Savings Plan and RIP savings into a retirement account.
Choosing to work with outside experts on important tax planning strategies, investment management and creating a personalized financial plan is most often your best course of action.
Being able to understand and control the fees that you are paying and having a wide range of investment choices available to you provides you with the best chance of retirement success!
To examine all of the options available at separation in greater detail, specific to your individual needs, contact your professional retirement advisor.
Reilly Financial Advisors
Vice President – Middle East
Located in Dhahran, Saudi Arabia, Mark provides wealth management services for clients living and working in the Middle East.
Reilly Financial Advisors strives to be your true financial partner. The experience of over 40 years of our founders working with Aramcons, combined with a dedicated office and Wealth Management expert living and working in Saudi Arabia, ensures that we are committed to helping you in repatriation & retirement.
As always, if you have any questions, please contact your dedicated Senior Wealth Advisor.