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Anyone Hear This on Pension Lump Sums?
Old 12-03-2007, 03:04 PM   #1
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Anyone Hear This on Pension Lump Sums?

Heard Ric Edelman on the radio mention because of the Pension Reform Act, starting 2008 some pensions will require retirees take monthly benefit, and the lump sum option would not longer be available.

Edelman then went on to say he generally advised people to take lump sums, so if someone was close he thought they should retire by Dec 2007.

What I did not hear was specifically what types or which pensions this requirement would apply to. Can't believe it just applies across the board to everything? Also could not believe Edelman was across the board in favor of lump sums?

Anyone else hear this?

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Old 12-03-2007, 03:36 PM   #2
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Anyone else hear this?
It's news to me also. I did a seach and came up with zilch. I have aways believed that it is up to the plan provider (employer) to decide if a plan would have a lump sum option.

could not believe Edelman was across the board in favor of lump sums?
Hmmm, more money for Ric and associates to invest in IRAs for the folks?

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Old 12-03-2007, 04:46 PM   #3
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The pension reform act of 2006 WILL change the way lump sum payouts are figured starting in 2008, but doesn't do away with them. In the past, most lump sum payouts were keyed to the 30 year treasury bond, which has been very low for years. This made lump sum pension payouts higher, since the lower the interest rate, the higher the lump sum. Beginning in 2008, lump sums will be figured on a new rate that is a mix of three different bond rates, which WILL be higher than the 30 year treasury. thus, the lump sums will be less. This will be phased in over 5 years, with 20% of the new rate blended with 80% of the 30 year treasury rate used for 2008. 40-60 in 2009, 60-40 in 2010, 80-20 in 2011, and 100% of the new rate in 2012. Looks like that may change my RE date by a month or so...
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