August 17, 2023
Fostering engagement, ownership, and loyalty is a big part of the Verizon story. For decades, eligible Verizon associates have been sharing in the Company’s financial success thanks to the Verizon Corporate Profit-Sharing (CPS) award.
The July 14th, 2022, memorandum of understanding (MOU) agreement between Verizon and Communication Workers of America (CWA) proposes that eligible associates should receive a minimum of $700 from the CPS plan for the years 2023, 2024, and 2025.
Read on to find out what you need to know about the Verizon Associates’ CPS award.
Your guide to understanding Verizon Corporate Profit-Sharing
Verizon knows that your financial well-being is important. Similarly, the company wants all its talented employees to enjoy a positive work culture. So, it’s unsurprising that Verizon has a CPS award plan that can help you earn hundreds of dollars in additional income.
Following the August 2022 ratification of the July 14th MOU, Verizon associates will receive a minimum of $700 in CPS awards for the performance years 2023, 2024, and 2025. Remember that you will receive the CPS rewards for the 2023, 2024, and 2025 performance years in 2024, 2025, and 2026 financial years, respectively.
Corporate profit-sharing allows Verizon to plan, and contribute to, participating employees'retirement. Verizon may use this qualified plan to contribute its yearly profits to help fund employee retirement.
You can receive the CPS award via check or direct deposit with your regular paycheck if you choose not to defer your award. However, doing so will make your CPS award subject to union dues, applicable taxes, and deductions.
Alternatively, you can opt to defer the entirety of the Verizon CPS award into your Verizon Savings Plan. Remember, to defer the CPS award payment, you must be actively contributing into your Verizon Savings Plan at the time the award is credited into your account.
Three reasons to defer your Verizon CPS awards
If you are thinking of deferring your CPS awards, here are three reasons that will make the decision a no-brainer.
1. In-Service Withdrawals
Sometimes life throws you a curveball. Unexpected events like financial hardships, illnesses, disability, or death may allow you to access in-service withdrawals. The Verizon CPS plan gives you access to your after-tax contributions. In contrast, other plans tend to be more restrictive about in-service withdrawals before the plan’s designated retirement age.
Also note that you can trigger in-service withdrawals after participating in the plan for a set period, say five years. Lastly, reaching 59½ years is a valid reason to make an in-service withdrawal from your Verizon CPS plan.
2. Tax Benefits
Corporate profit-sharing allows employers to contribute into a profit-sharing plan on behalf of their employees. The employer contributions are not subject to taxes as long as they remain in the plan. Moreover, the contributions are not included in the employee’s taxable income.
Funds held in a profit-sharing plan enjoy deferred taxes, and this speeds the growth of these plans. Since participants receive their funds during retirement, there is less risk of high federal and state taxes. Therefore, keeping your earnings in a CPS plan is more profitable than investing similar investments.
3. Increased Match Amount from Verizon
While the company match on your normal salary deferral contributions is $0.82 on the first six percent of compensation, Verizon will match the award that is deferred into your Savings Plan account dollar-for-dollar, assuming the award is 6% or less of your pay.
If you choose to defer your CPS award into a Savings Plan account, you must make this election by certain dates each year. For example, to defer the 2022 award paid on March 3, 2023, one had to make this election to defer between January 4 and February 3, 2023.
Are you thinking about deferring your CPS award into your Verizon Savings Plan account? Please visit netbenefits.com/Verizon to find relevant resources and information such as updated dates for making the CPS award deferral selection. You can also contact the Verizon 401(k) Savings Plan Service Center via 888.457.9333.
For more questions on retirement and retirement planning, please contact us at Hapanowicz & Associates. We are eager to continue maintaining our – over two decade – track record at working with Verizon retirees.
Neither Hapanowicz & Associates, Hapanowicz & Associates Wealth Management nor LPL Financial are affiliated nor endorsed by Verizon Communications Inc., Verizon Wireless, or any other subsidiary of Verizon. Neither Hapanowicz & Associates, Hapanowicz & Associates Wealth Management nor LPL Financial are affiliated with any of the other entities referenced on this website. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.