Leaving: Rollovers: DPSP and RP
From HPAlumnipedia
...Deferred Profit Sharing Plan and Retirement Plan
HPAlumnipedia > Leaving > Rollovers > DPSP and RP
If you were at HP before 1993 (more or less), you should have some DPSP (Deferred Profit Sharing Plan) dollars in addition to RP (Retirement Plan) value. You can use OFIS form 0001 (in the green "Leaving HP" book) to roll over both at once -- and they are merged into one check, but your new custodian can separate them if you wish. (See also Fall 2003 Update.) You can take out DPSP while leaving RP, but not vice versa, said pension@hp.com (but note, as of Jun 2006, that email address was defunct):
- You cannot pull the RP and leave the DPSP. The plan description does not allow that because the RP is the newer plan and therefore dictates the entire pension fund.
For most of us that would be pointless, as DPSP is the larger amount anyway.
They also said:
- If you want to leave the RP and rollover the DPSP, you would indicate at the top of the Benefit Claim Form "RP Deferred."
Also, beware, since RP defaults to "50% survivor annuity", if you die before you take the rollover, your beneficiaries only get half the cash balance. This is incentive to roll over the money as soon as you can.
Alan Silverstein, Aug 2005:
Rumor is that any money in your RP, including EER bonus, does not increase in value if you leave it there. I don't really know how this works. All I know is that the DPSP was a "defined contributions" plan that did increase in value even after contributions ceased in 1993, while the RP is (or at least was) a "defined benefits" plan.
Alan Silverstein, Fall 2002:
They only issue checks once a month, and will not do it in the month you terminate. You must file the paperwork before the 14th of the month to have the rollover check mailed to you (for forwarding to the new custodian) on the 26th. For me this meant: Termination Oct 10, 2002; deadline Nov 14; check issued Nov 26.
The first thing I did after reading the "green book" was to contact my favorite mutual fund company, Vanguard, by phone for advice.
By the way, Vanguard is great, I've invested with them for years and I think highly of them. They are ultimately a "non-profit" owned by their shareholders. Their quarterly newsletter and more-frequent (optional) news emailings are meaningful and educational. Also if you transfer $250K or more into Vanguard you get free financial planning advice worth $300-400.
Len Sheppard, Dec 2002:
To be more specific on the free financial advice at Vanguard, anyone with more than $100,000 (I believe) at Vanguard qualifies for free Financial Engines advice. This is the same advice provided by HP to its employees starting in January of 2002. (The retail price for that advice directly from Financial Engines is $300/year.)
This is even better than what you got at HP because, through a free Vanguard service called Dashboard, you can make virtually all of your non-Vanguard accounts viewable through the Vanguard website and they will prepopulate into Financial Engines as well.
...I highly recommend Vanguard as well. After leaving HP in 2000, I worked at Financial Engines, and one of the things I learned there was the substantial impact expense ratios have on your investment returns. Vanguard's very low expense ratios give their funds a leg up on their competitors.
Alan Silverstein, Fall 2002:
As soon as I could get to it, I mailed OFIS form 0001 to HP, and the necessary paperwork to Vanguard to open two IRAs, one to receive my DPSP+RP money and the other my 401(k) money. Why? Conduiting, and just to keep them separate, even if it's not strictly required.
Vanguard in turn opened my accounts, sent me back confirmation, and forwarded both OFIS form 0003 and Vanguard's parallel "direct deposit authorization" form (which I also provided them, just to be safe) to HP. The folks at pension@hp.com (note, Jun 2006, that email address was defunct) were responsive and helpful. I wrote them to confirm they had received all my paperwork and they assured me I was on track for the Nov 2002 distributiion.
Note, having no spouse I did not need to file OFIS form 0002.
Later...
Turns out I took advantage of Vanguard's free retirement investing counseling, and learned there was no point to having two separate IRAs, so I dropped back to one.
Alan Silverstein, late 2003:
Regarding timing: Until Oct 2003 I had here some quoted text from Henry Sanchez suggesting a method for timing your withdrawal for best results. However, I received email in Jul 2003 from pension@hp.com (note, Jun 2006, that email address was defunct) saying the following:
- The actual process is payments are made once per month. The DPSP is valued as of prior month only. There is no ten day grace period to decide on which month you want your payout made. The Retirement Plan is always valued at current month only.
- An employee cannot determine which would be the best month in advance because of this process.
