A couple weeks ago, a client—having just returned from sabbatical—told me she has “one more sabbatical before retirement.” Her plan, she said, is to have her “last day of Intel employment be the last day of [her] next sabbatical. “But then,” she continued, “I will probably want to work until I receive my April vesting…and then the next quarterly bonus…” Finally, we laughed that there is almost always a carrot dangling a few months out that incentivizes working a little longer. It seemed to her like there is never a “good time” to leave.
While the reality is that these timing incentives rarely materially impact the ability of one to retire and stay retired, we do want to be aware of them when planning a date to pull the plug on work at Intel.
With that in mind, let’s list out some of the most prominent “carrot days” so you can plan that last sabbatical to finish on time.
1. Annual Performance Bonus – Carrot Date: December 31st or, if eligible for retirement, the 16th of your last month of work
In order to receive the Annual Performance Bonus payout, an Intel employee who is not yet eligible for retirement needs to work through the last day of the applicable bonus period. For APB, December 31st is the magic day. However, if you are eligible for retirement at Intel (here’s a helpful post on the subject), the APB will be prorated according to the number of full calendar months you worked. If eligible, you will receive full credit for your last calendar month of employment if you work through the 16th of that month.
2. Quarterly Performance Bonus – Carrot Date: Last date of the quarter – March 31st, June 30th, September 30th and December 31st
Intel shares it profits with employees in the form of a quarterly bonus four times per year. In order to receive the quarter’s bonus, you must be employed through the last day of the quarter: March 31st, June 30th, September 30th and December 31st.
3. RSU and OSU Grant and Vesting Dates – Carrot Date: Depends on date of grant
It’s clear that you want to be aware of vesting dates because you have to be employed through the vesting date in order to receive the stock. Most often, April is the time of which to be cognizant, but it varies depending on the grant. The actual vesting dates are easily viewed if you login to E*Trade.
If you are eligible for Retirement and over 60, or if you meet Rule of 75, you should also consider the award dates when planning retirement. Retiring at age 60 and over or reaching Rule of 75 entitles you to stock acceleration, meaning unvested stock you have been granted vests upon retirement.
- Eligible retirees age 60 and above get one year of accelerated RSU vesting for each five years of service.
- Reaching Rule of 75 entitles the retiree to one year of accelerated RSU vesting.
- Under both Rule of 60 and Rule of 75, OSU grants from all open cycles will vest on the day you retire, HOWEVER, the payment of earned OSU shares will occur at the end of the given performance cycle.
Thus, if you work through the grant date, part or possibly all of the grant will immediately vest at retirement. RSU grants are typically approved in the second month of each quarter (February, May, August, and November). OSUs are typically granted at the end of January.
4. SERPLUS – Carrot Date: January 15th
If you are eligible for and have significantly contributed to Intel’s deferred compensation plan, there can be significant tax implications for retiring before January 15th if you have elected to have your deferrals (or some of your deferrals) be paid in the “year after retirement.”
The reason January 15th matters: If, for example, you retired on the 14th of 2019, the “year after retirement” for SERPLUS would still be 2019. If instead you worked through the 15th, the “year after retirement” would be 2020. This timing matters because if your annual bonus, vesting stock and first SERPLUS distribution all hit in the same year, you may be pushed into a much higher tax bracket then if the SERPLUS distribution didn’t come until the following year. Bottom line, working that extra day could mean paying a whole lot less in taxes.
5. SERMA – Carrot Date: December 31st, 2019 (Note: SERMA is being phased out in 2020 so this is the last year this will matter)
If you were hired by Intel before January 1st of 2014, you are likely eligible for SERMA (there is some nuance to the eligibility, so I recommend consulting Chapter 18 of the Intel Stock Pay and Benefits Handbook). For each full of year of service, Intel sets aside $1,500 for some eligible medical expenses, the most prominent being private health care and Medicare premiums. While $1,500 for health care premiums may be a small carrot to hold on a few more weeks, it’s a carrot nonetheless!
As I said in the beginning of this post, the dates mentioned here are just some of the days of which to be aware. As you approach retirement it is likely there will be many issues of timing to consider—the most material of which will probably have nothing to do with Intel. This is why I highly recommend that you not only make yourself aware of key dates, but also understand how impactful they are in light of your larger objectives and goals. And if you need help, ask for it!
This information is subject to change. Please refer to you Benefits Handbook for the most up-to-date information.