For physicians at The Permanente Medical Group (TPMG), retirement planning is more than just saving—it’s about strategically leveraging unique benefits that reward long-term service and high compensation. One of the most powerful options is the Full Early at 60 Non-Qualified Retirement Plan, a benefit that can significantly accelerate retirement plans for eligible physicians.
What Is the Full Early at 60 Plan?
This plan allows TPMG physicians with at least 15 years of credited service to begin receiving a pension-like income stream starting at age 60, without the typical actuarial reduction applied to early retirement under traditional pension plans.
Unlike the standard Plan 1 pension, which caps compensation at the IRS annual limit ($350,000 in 2025), the Full Early at 60 plan does not impose compensation limits, allowing high earners to receive benefits based on their full income.
Why It Matters
- No Actuarial Reduction: Physicians can retire at 60 and receive full benefits, usually this is reserved for participants reaching a “normal” retirement age at 65.
- No Compensation Cap: Benefits are calculated on actual earnings, not limited by IRS thresholds.
- Five-Year Income Window: Payments continue until age 65, at which point physicians transition to the qualified Plan 1 pension.
Real-World Example
Let’s say a TPMG physician retires at age 60 with 23 years of credited service and an average annual compensation of $400,000. Under the Full Early at 60 plan:
- First 20 years: 2% accrual per year = 40%
- Next 3 years: 1% accrual per year = 3%
- Total Replacement Ratio: 43%
- Annual Benefit: $172,000 (43% of $400,000)
This benefit is paid as a single life annuity, starting within 74 days of separation from service.
Transition to Plan 1 Pension
At age 65, physicians must switch to the Plan 1 qualified pension, which does apply IRS compensation limits. This transition may result in a lower monthly benefit, especially for high earners.
However, TPMG offers a Supplemental Retirement Plan (SRP) that provides a lump-sum payout to help offset this reduction.
Strategic Planning Tips
- Model Your Benefits: Use Fidelity’s modeling tools to estimate your retirement income under different scenarios.
- Coordinate with Other Plans: Consider how Plan 2 (Company Contribution) and Plan 3 (401k) fit into your overall strategy.
- Plan for the Transition: Work with an experienced financial advisor, who specializes in TPMG retirement planning, to prepare for the income shift at age 65 and optimize SRP usage.
Final Thoughts
The Full Early at 60 Non-Qualified Retirement Plan is a powerful benefit for TPMG physicians nearing retirement. It rewards long service and high compensation with a generous, early-starting income stream. Understanding its mechanics—and planning for the transition to Plan 1—is essential for maximizing retirement outcomes.
If you’re a TPMG physician approaching retirement, now is the time to explore how this benefit fits into your broader financial strategy. Capital Advantage specializes in helping TPMG (The Permanente Medical Group) employees navigate the intricacies of their rich, and often complex, benefit plans. (TPMG link to website page)
Reach out to our team today for a complimentary personalized retirement income analysis and planning session.
