Mid Atlantic Permanente Medical Group (MAPMG) Physicians: Do You Know What Your Retirement Benefits Are Really Worth? Our answers to 6 questions we commonly hear about the MAPMG retirement plan.

As a Mid Atlantic Permanente Medical Group Physician in the last 5-10 years of your career there are a variety of questions that often come up. Here are some answers below:

1). I know there is a pension as part of the Mid Atlantic Permanente Medical Group (MAPMG) Retirement Plan, but I'm not sure what it might pay me?

As part of the Mid Atlantic Permanente Medical Group Retirement Plan, the pension plan, to our knowledge, for many MAPMG physicians, pays 2% of a physicians highest average compensation for each year of credited service for your first 20 years, then 1% for each additional year. For example, with $300,000 in highest average compensation, each of the first 20 years would generate $6,000 per year of annual pension benefit (or $500/month), before considering your payment option and other plan provisions. After 20 years, each additional year would add $3,000 annually to the pension. The key is determining your “highest average compensation” and credited service, because those figures drive the actual benefit.

You should know that these numbers generally quoted for a single life or for the life of the employee. Payments often stop after the former employee is deceased. For some families it may make sense to elect a joint and survivor payment, which may result in a lower initial payment but might last the life of you and your spouse, which may provide more retirement security for your whole family.

2). I need to know what I give up if I leave Mid Atlantic Permanente Medical Group (MAPMG) before retirement age (age 65 or early retirement at 55)?

Kaiser generally has a 5 year vesting cliff for both the pension plan and the 401(k).

For the pension plan which is fixed annual payments based off your salary you will receive nothing if you leave before 5 years of service.

For the 401(k) plan, Kaiser can partially claw back their employer contributions if you leave before your 5th year at Kaiser.

So in short if you make at least 5 years at Kaiser you'll get some meaningful employer benefits that you'll get to keep.

The largest group of MAPMG physicians that we know of are in their mid 40s with 5-10 years with MAPMG and there is dramatic drop off of employments of MAPMG physicians after age 55 which suggests to us most MAPMG try to work long enough to vest in their Kaiser benefits and long enough to reach the early retirement age.

In short if you make it 5 years at MAPMG we believe you have a decent chance of getting at least some pension from Kaiser and you'll get to keep most of the employer contributions to your MAPMG 401(k).

3). I may reduce my clinical FTE before I retire. Will part-time work lower my pension, slow my service credit, or jeopardize retiree-medical eligibility?

While this question should be asked directly of the benefits people at MAPMG the general expectation is lowering your CTE matters most for a MAPMG physician if they are still beneath the threshold to qualify for certain benefits.

Once you've cleared the threshold to qualify for benefits the next issue is whether you get service credit for that year. This is a question to ask the benefits people at Kaiser but the typical standard in the industry is that you need to work at least 1,000 hours a year (about 20 hours a week) to get a year of service credit at most employers. Each employer is allowed to have different rules for what counts as a year of service for your retirement plan and pension benefits but if you are under 20 hours at work, at most employers that might disqualify you for earning service credit towards retirement for that yer of work, in our experience.

4). The pension looks valuable, but I need to compare it with a portable 401(k)-heavy offer. How should I value it when deciding whether to stay?

This is a personal choice that should be discussed with a good fiduciary financial advisor, if you have a relationship with one, but in general Kaiser's 401(k) is quite good and the vesting schedule is not that abnormal. For an employee who was considering working at MAPMG for just one or two years and they knew they were going to leave soon after, MAPMG's benefits may not be as good as some other employers that have shorter vesting schedules for benefits, but to our knowledge many MAPMG physicians work there for at least 5-10 years so for the typical employee with the most common tenure we see (5-10 years at MAPMG) that MAPMG 401(k) and pension are quite good and that most common employee has a good chance of vesting in both, in our opinion and experience.

5). I hear MAPMG puts in 5% to the 401(k), but I need to know what I should contribute myself. Can I use Roth contributions, catch-up contributions, and in-plan conversions?

In our experience your financial journey is a lot like taking a trip - before you decide to pack or when to leave, you have decide where you want to go.

If you have a relationship with a good fiduciary financial advisor, whose loyalty is to you, contribution amounts are something is normally discussed and at firm the answer really varies for each client depending on where they want to go and what they want to do (how long they want to work, what other financial priorities they have in their life, how happy they are at their job etc.).

To our knowledge MAPMG physicians may be able to contribute up to 50% of their salary as Roth or tax deferred contributions and up to 25% of their salary in after tax contributions, up to IRS limits on contributions.

6). How would you rate the quality of MAPMG 401(k)?

In general we would rate the MAPMG 401(k) to be excellent for a medical group the size of MAPMG. It is generally low fee, has great fund companies operating the funds, and most importantly it has a self directed brokerage account in it to our 401(k).

A 401(k) is sort of like an airplane - certain airplanes can fly further than others and have heigher or lower ceilings or different amounts of baseline fuel efficiency. What really matters is the pilot - most people don't fully utilize the features of their MAPMG 401(k) so they are sort of like flying with the flaps up and the landing gear down the whole trip, in our view. The plan is very high performance but you have to know how to use it well and know what your options really are (in the self directed brokerage account) to really get the full potential out of the excellent plan, in our view.

Disclosure: This article may include information about Daniel Harris and D.R. Harris & Co. It also includes information about the benefits that may be available to MAPMG physicians through your employer. While we believe the information in the article is accurate to be the best of our knowledge, the only true authoritive source about your benefits at MAPMG is your benefits group and HR at MAPMG. So before acting on any information in this article we highly recommend that you confirm it with the benefits people at MAPMG or HR at MAPMG. This article is educational in nature. Neither Daniel Harris nor D.R. Harris & Co. are your fiduciary financial advisor unless you have a signed written agreement with D.R. Harris & Co. If you are looking for a fiduciary financial advisor who works closely with physicians you can learn more about Daniel Harris here.

If you are looking into whether working with D.R. Harris & Co. is a good fit for you feel free to fill out our contact page to request an introductory call from D.R. Harris & Co. to get to know you and disucss your situation. Note the introductory call is for customers who are looking to work with a fiduciary financial advisor and are trying to feel out whether we might be the right fit for you - it's purpose is not to give free personalized advice - which you should not expect to receive on an introductory call with us.