Let's Talk Lump Sum
This payment is made in the November 30 payroll.
The lump sum payment was negotiated by the union many years ago. Currently, the rate is 10% of your base pay. The payment is in lieu of a matching 401K that many peer institutions offer, requiring you to contribute 2 to 4% of your base pay and the employer matches the percentage you contribute up to a certain percent.
Why doesn’t the HOA bargain for a matching contribution? Several reasons. First and foremost, we want you to be able to decide if you can afford to contribute to a retirement account or not. We don’t want to force our members to contribute, but of course, it is encouraged that you save for retirement sooner, rather than later.
Some of our members use the lump sum to pay off credit cards, particularly debt incurred to make the move to Michigan. Many of you do defer the payment into a retirement account but a number of our members take it as regular taxable income. The HOA wants to keep the financial decision-making a personal choice.