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Diversifying BEFORE You Retire

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If you’re like most of the Publix Associates we’ve met:
  • You’re beginning to contemplate Life After Publix.
  • You’re wondering how much money you’ll need to retire.
  • You have the majority of your retirement assets fully invested in Publix stock – even your 401(k).
  • It’s been an excellent investment over time, but you realize it’s not immune to market fluctuations, even though it’s not actually “in the market.”
  • You feel that if you experience a decline in the value of your stock, as long as you have 5 – 10 years before you retire, you should be ok.
  • You know you probably shouldn’t have “all your eggs in one basket,” but you’ve been through declines in the price of the stock and its always come back.
  • You wonder why there are times the company seems to be doing so well but the stock isn’t

But what if a year or two before you retired, the stock market experienced another major decline and your ESOP dropped by 10%, 20% – or like it did in 2008 – 35%? 

What kind of impact would that have on your plan?

The Diversification Election was designed to help you at least partially avoid this scenario.

The January after you turn age 55 – if you are still employed and have at least 10 years of service – you will receive paperwork from Publix offering you the opportunity to begin diversifying a portion of your ESOP.  It provides the opportunity to take a distribution of up to 25 percent of your ESOP shares over five years and then another 25 percent – for a total of 50 percent – in the sixth year.

Now, you may be asking yourself, “why haven’t I heard of this before?” 

Here’s how it came about for privately held ESOP’s (like Publix’s), the Diversification Election option was a result of the Tax Reform Act of 1986.  More recently however, the rules for publicly traded companies were revised as part of the Pension Protection Act of 2006.  This was only after the employees of Enron and World Com lost most – if not all – of their retirement accounts because they could not – or would not – diversify.


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