US Nortel Claims tax implications

Earlier I wrote about my question to the IRS about the possibility of rolling over any payments from my Nortel US claim into a tax deferred IRA. I was contacted yesterday by the tax advocate who had forwarded my letter on to a pension tax expert.

The response was that any distribution from a non-qualified pension was not eligible to be rolled over.

I don't think they spent much time examining my question, so I plan to continue with the next step. The tax advocate told me that I could write what is called a private letter appeal. I plan to do that and will let you all know the results of my enquiry.

Yesterday I wrote about budgeting for the Canadian pension cut. I will post the first article on that later today. So look back later for that first bit of information that will hopefully be useful for you.

Budgetting for pension cut

There are 5 more months of full Nortel Canadian pension payments remaining before October when the plan winds down, and our payments will be cut somewhere between 30 and 40 percent.

That's a lot of money lost on an annual and monthly basis. If you haven't already done so, now is the time to work out how to survive with that reduced income.

For some people it may not be a big deal since they have other sources of income and support, but for many it is a nightmare that they are facing, and it is best to be prepared than to waken up on October 1st and start trying to put your life back together with a huge income cut.

My family and I have always used a budget method to keep track of our income, our expenses, and our savings. It has helped us live within our means and still have a very good life. Over the next few days I will post some basic details of how we manage our budget and maybe it will help some people realign their expenses with their new income.

There is no magic formula or silver bullet. But information is power, and knowing how to use it to manage with less will help improve peace of mind. The best approach is to be optimistic, but pragmatic, and to learn to live within your means whatever they may be.

False sense of security

Since Nortel declared bankruptcy in January last year we have all gone through many emotional ups and downs as it became apparent that we eventually stand to lose. Some people have suffered terribly as a result of loss of benefits, some have died as a result of this disastrous event, and most of us are worried.

Those of us with Canadian pensions have been lucky enough to have had continued payments each month out of the trust fund. As a result many people feel that things are continuing as always, and I think there may be a false sense of security built among our population, and an irrational trust in Nortel that they won't let us down.

Completely wrong!!

The Nortel today is no longer the Northern of old. The people who have been running the company for the last year don't care about you. They want to see the pension burden off their books and that is the only driving force behind their settlement agreement. There is no compassion for the retirees, the sick, and the disabled in the modern day Nortel. There is only numbers, and lawyers fees, and accounting plans. It is is no longer an organization whose strength is people. It is solely a shell of its former self, intent only on cash and feeding the legal frenzy that is devouring it.

Come October our pensions will be reduced. By what factor we don't know. We may be able to affect that by some of the actions proposed by the NRPC, and it behooves us to take that action and write to the elected officials proclaiming our displeasure and concern caused by the inadequate bankruptcy laws in Canada and the disregard for pensioners. Check out their suggestions at the NRPC site shown on the right hand column.

Writing and protesting is the only recourse we have. We can't sue Nortel whilst they are in bankruptcy, and the settlement agreement prevents us from suing them anyway. The power of the pen however, has always been underestimated, so write or email, or call, and include the media in your actions. It's your money. Don't become victim to government and corporate apathy and incompetence.