Magazine article Editor & Publisher

Does Early Withdrawal Really Incur a Penalty?

Magazine article Editor & Publisher

Does Early Withdrawal Really Incur a Penalty?

Article excerpt

As Tribune Company slashes hundreds of jobs from the Los Angeles Times to the Orlando Sentinel, the severance being offered to most departing employees is not the usual straight payout. Because the Tribune Co. is using an over-funded pension to provide the two weeks' pay for each year of service that the majority of exiting staffers are getting -- whether forced out or not -- the money is actually going into their retirement accounts.

If the former employees want to tap into that money, they have to pay an early withdrawal penalty if they have not reached retirement age -- up to 10%, in most cases.

"Ten percent is a chunk of change," says Lynn Anderson, a reporter and Newspaper Guild leader at The Sun of Baltimore, who took a recent buyout and then left the paper in July. "I would have absolutely wanted to keep it."

But Tribune Senior Vice President/Corporate Relations Gary Weitman says the pension approach is not costing employees more, despite some paying early-withdrawal charges. "It is different," he told E&P, "in the sense that you are not getting a check handed to you, that is true." But, he explains, the eventual payout to employees is the same: "It is a payment made into the cash balance portion of their retirement benefits. …

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