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Cash Balance Options
Old 04-06-2006, 02:59 PM   #1
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Cash Balance Options

I will be able to retire next year at 55 years old with 34 years service with a public utility. My cash balance pension will be what we will live off of until 59.5 years old when I can tap into my other incestments. All liquid assets total a little over $1M at this time. My question is, will I be required to pay a penalty if I do not roll my cash balance money into an IRA? Can I invest most in short term stuff or, at least put it into a 5 year certain annuity without penalty?

Thank you for your responses in advance.

BTW, I have been lurking for over a year now. This a great group of knowledgeable folks.

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Re: Cash Balance Options
Old 04-06-2006, 03:23 PM   #2
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Re: Cash Balance Options

Your payoff options will be described by your Pension Summary Plan Description. Look there for what you can and can't do.

If you were to take money out of the plan and not roll it over into a deferred plan like an IRA then some pretty steep tax rates will apply. For example you'll pay up to 35 percent federal rates and then whatever your state takes. If you take it out gradually or roll it over into an IRA and take it out gradually then you'll likely pay lower tax rates and your stash will go much further.

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Re: Cash Balance Options
Old 04-06-2006, 03:36 PM   #3
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Re: Cash Balance Options

I try not to talk about my incestments in public... :P
Have Funds, Will Retire

...not doing anything of true substance...
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