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Pension lump sum payout .. taxable event?
12-13-2019, 11:52 AM
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#1
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Full time employment: Posting here.
Join Date: Sep 2017
Posts: 821
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Pension lump sum payout .. taxable event?
I have two legacy pensions, which are frozen. They both offer either lump sum or monthly annuity options.
I am leaning towards lump su, for several reasons but, I want to understand how that is looked at tax-wise. Can the lump sum be rolled over into an IRA?
I've looked at the pensions documentation and haven't found any discussion of this. If the pensions can be rolled into tax-differed accounts (tIRA) that would be great.
Thx
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12-13-2019, 12:02 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Aug 2012
Posts: 1,862
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We did this about 10 years ago when DH received his. A quick Google search found this: https://rodgers-associates.com/newsl...ension-to-ira/
I'm sure there's something on the IRS website, but I'm ready for my afternoon nap and this article seemed to provide a nice summation.
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12-13-2019, 12:12 PM
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#3
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Full time employment: Posting here.
Join Date: Sep 2017
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This is helpful. Thank you.
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12-13-2019, 12:24 PM
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#4
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12-13-2019, 12:47 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 3,931
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Quote:
Originally Posted by albireo13
Can the lump sum be rolled over into an IRA?
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Yes, we've done this twice over the years. Do it the same way as rolling a 401k to tIRA - do it as a trustee-to-trustee transfer if possible.
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12-13-2019, 01:08 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
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OP doesn't mention the type of pension plan. Any Qualified plan, as defined by ERISA, can be rolled into an IRA with no tax event. Emphasis on "qualified" Most, but not all pensions are qualified.
If you already have taxed monies in the tIRA, it may be easier to keep track of the qualified rollover in the future as a separate Rollover IRA. If it is all pretax money in the tIRA, then go ahead and combine the two.
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12-13-2019, 02:29 PM
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#7
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Join Date: Jan 2008
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Quote:
Originally Posted by CRLLS
OP doesn't mention the type of pension plan. Any Qualified plan, as defined by ERISA, can be rolled into an IRA with no tax event. Emphasis on "qualified" Most, but not all pensions are qualified.
If you already have taxed monies in the tIRA, it may be easier to keep track of the qualified rollover in the future as a separate Rollover IRA. If it is all pretax money in the tIRA, then go ahead and combine the two.
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It may also be possible to roll the after-tax money separately to a Roth IRA and send the pre-tax money to a rollover (traditional IRA). I did this with my 401(k) in 2013.
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12-14-2019, 07:08 AM
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#8
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Full time employment: Posting here.
Join Date: Sep 2017
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the pensions are all totally employer funded. I never contributed to them. So, I guess they would be considered pre-tax money a tIRA would work.
I'll dig deeper to find out if they are Qualified pensions.
Thanks.
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12-14-2019, 07:17 AM
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#9
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Full time employment: Posting here.
Join Date: Mar 2019
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I took a lump sum from my pension in 2015 and rolled it directly into an IRA.
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