Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Help me predict the near future...
Old 06-16-2005, 10:32 AM   #1
Recycles dryer sheets
Join Date: Jan 2004
Posts: 159
Help me predict the near future...

Hi all,

I am voluntarily separating from my employer on 10/31/05. As a result of this I have the option to take my pension and roll it into my 401(k). On my company's website I read the following:

"This lump-sum amount is determined by taking your single life annuity benefit and converting it to a lump sum by using conversion factors based on mortality tables and interest rates obtained from the IRS. These interest rates are subject to change from time to time; the lump-sum benefit amount will increase or decrease as interest rates change."

Obviously I want the lump sum amount to be as high as possible. What would y'all advise in terms of when to initiate the rollover based on interest rates? ASAP? Wait a little?

Also, am I right in understanding that if interest rates rise, my lump sum declines? Or is it the reverse? (So since everyone thinks rates are going to continue rising through the fall, it seems like ASAP is the right answer.)

Finally, what would you do with this situation if you were in my shoes? Would you roll the pension into the 401(k)? Would you leave it alone? Personally I just want to simplify things (one less account to track) and get my money into my own account as opposed to leaving it in the pension pool (thinking about GM, here).

I can provide more info if necessary, just not sure what is relevant here.


malakito is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Help me predict the near future...
Old 06-16-2005, 10:45 AM   #2
Dryer sheet wannabe
Join Date: Jan 2005
Posts: 23
Re: Help me predict the near future...

Having taken a lump sum from my former employer I know that your lump sum decreases when interest rates go up. If you go to the Pension Benefit Guaranty Corporation web site - and click on Interest Rates it will take you to Valuing Lump Sums - click on that link and it will display the lump sum interest rate for the current month and past months.

I would take my lump sum ASAP since there is no guarantee that interest rates will remain this low.

If you can, you may want to consider rolling your lump sum into an IRA and not into the company 401K.

twincity is offline   Reply With Quote
Re: Help me predict the near future...
Old 06-16-2005, 10:50 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Help me predict the near future...

Yeah, i'd just take it. As I was reading your fine print above my internal bullshit translator was just repeating "we're going to try to screw you when you take out your money" over and over again with a deep static-y hum in the background.

Unless you LOVE the investment offerings in the existing plan and its performing well, then I'd consider it further.

Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Help me predict the near future...
Old 06-16-2005, 10:56 AM   #4
Recycles dryer sheets
Join Date: Jan 2004
Posts: 159
Re: Help me predict the near future...

Thanks for the answers.

I can roll it into an IRA as well, of course.

I actually like my 401(k) investment. I have all of my money in there in a fund that is like VFINX but only charges 5 basis points. If I put it into an IRA I'd just put it in VFINX or VTSMX but then I'd be paying 18-20 bp for the privilege.

malakito is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Realistic Future Returns Mysto FIRE and Money 6 03-18-2006 01:32 PM
Looking into the future - Taxes New Thinking FIRE and Money 27 02-19-2006 08:32 PM
Bernstein's future equity return projections wildcat FIRE and Money 2 12-06-2005 09:35 AM
Poll: predict our economic future wabmester FIRE and Money 27 08-30-2005 08:27 PM
Future of stock market jimhcom FIRE and Money 45 07-13-2005 03:19 PM


All times are GMT -6. The time now is 12:05 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.