Lump from city to 457

[nun]

You need to do the numbers. What is your age, the pension amount, gender, is it single of joint life and what is the lump sum? With those you can work out an IRR and assess that chances that you can do better investing it yourself. FYI I just bought into a State pension because I calculated only a 30% chance of a 60/40 portfolio providing the the income of the pension out to age 82.....my expected life span.

[rocks911]

Quote:

Originally Posted by pb4uski Why not roll the lump sum from your city pension into an IRA? You'll have more investment options, possibly lower fees and can control it.

This is most probably what I'll do. The no COLA thing is a deal breaker for me. A friend on my fire dept (BBA from SMU) said that the money would be taxed when withdrawn from TMRS (Texas retirement system) and moved to an IRA. If that is right thats nearly a deal breaker....sheeeeesh its so hard to know what to do.

[hnzw_rui]

Quote:

Originally Posted by rocks911 This is most probably what I'll do. The no COLA thing is a deal breaker for me. A friend on my fire dept (BBA from SMU) said that the money would be taxed when withdrawn from TMRS (Texas retirement system) and moved to an IRA. If that is right thats nearly a deal breaker....sheeeeesh its so hard to know what to do.

It likely depends on how the rollover is processed.

If you do a direct custodian to custodian transfer/rollover, there's no withholding tax.

Otherwise, for an indirect rollover (you receive the check, cash it, then you send the funds to your IRA custodian within 60 days) it's mandatory 20% withholding. That doesn't mean that's your tax bill. Just means you need to cough up the remaining 20% from taxable or other accounts and then you just get the withholding amount refunded to you at tax filing.

[pb4uski]

Quote:

Originally Posted by rocks911 ......A friend on my fire dept (BBA from SMU) said that the money would be taxed when withdrawn from TMRS (Texas retirement system) and moved to an IRA. If that is right thats nearly a deal breaker....sheeeeesh its so hard to know what to do.

That doesn't sound right. Usually, money transferred from a pension plan to an IRA is not a taxable event. Clearest to do a custodian to custodian transfer. But can also have a check from the plan made out to "[your IRA custodian] for the benefit of [rocks911]" and then you relay the check to the IRA custodian for deposit into your IRA account... no withholding.