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Article: Evaluating lump-sum payout (Kiplinger)
Old 05-23-2019, 02:44 PM   #1
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Article: Evaluating lump-sum payout (Kiplinger)

I received a link to this April 2019 article that covers some issues surrounding choosing a lump sum payout over a defined benefit (pension):

Because of a recent IRS policy change, more retirees are likely to face that question in the near future. In March, the IRS opened the door for defined-benefit plans to offer lump-sum payouts to retirees who are currently receiving pension payments. That’s a reversal of a 2015 IRS announcement signaling its intent to prohibit those retiree lump-sum offers.

Although the IRS says it will “continue to study the issue,” the recent notice is widely seen as a green light for pension plan sponsors to dangle tempting pots of cash in front of retirees. And that alarms pension participant advocates, who say that people accepting lump sums often get shortchanged. The policy shift is “a windfall to companies and a loss to retirees,” says Karen Friedman, executive vice president of the Pension Rights Center.


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Old 05-23-2019, 04:17 PM   #2
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My pension taken as a lump sum would represent about 70% of my withdrawals for that year (65 y.o.).
Thus I am taking a lump sum and don't wish to worry about underfunding in the future and will have no extra effect on taxes that year.
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