Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Pension Lump Sum Roth IRA
Old 11-30-2007, 06:00 AM   #1
Recycles dryer sheets
tomz's Avatar
 
Join Date: Mar 2006
Posts: 251
Pension Lump Sum Roth IRA

A few years ago, Megacorp ended our defined benefit pension plan and switched everyone over to a 401K plan. However, if you were vested in the plan, they calculated what your balance would have been at the time the plan ended. In short, I have around $30K waiting for me.
I am pulling the plug at the end of the year. At that time, I can choose to take a lump sum or there are a variety of payout options. My question is this: can I take the lump sum, pay the taxes, and put the entire amount into a Roth IRA or am I subject to the Roth limits? I know I can roll over the entire amount into my regular IRA and defer the tax. I've looked at the FAQs and did some searches but couldn't find an answer. Thanks in advance.
__________________

__________________
tomz 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 Early-Retirement.org 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!

Old 11-30-2007, 10:17 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by tomz View Post
My question is this: can I take the lump sum, pay the taxes, and put the entire amount into a Roth IRA or am I subject to the Roth limits? .
I believe you would roll your pension lump sum into a rollover IRA and then convert that to a Roth IRA, paying ordinary income taxes on the amount you roll over.
__________________

__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-30-2007, 10:28 AM   #3
Recycles dryer sheets
tomz's Avatar
 
Join Date: Mar 2006
Posts: 251
Thanks for the reply. I did some digging on this and found that starting in 2008, you will be able to do direct rollovers from a 401k to a Roth IRA without having to go through the extra paperwork of first putting the funds into a regular IRA.
__________________
tomz is offline   Reply With Quote
Old 11-30-2007, 10:54 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by tomz View Post
Thanks for the reply. I did some digging on this and found that starting in 2008, you will be able to do direct rollovers from a 401k to a Roth IRA without having to go through the extra paperwork of first putting the funds into a regular IRA.
That sounds like a change for the better! Gets you to the same place, but without the intermediate step.

While you were looking, did you notice if you still have to meet the income requirement for that type of direct transfer?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-30-2007, 12:14 PM   #5
Recycles dryer sheets
tomz's Avatar
 
Join Date: Mar 2006
Posts: 251
Quote:
Originally Posted by youbet View Post
While you were looking, did you notice if you still have to meet the income requirement for that type of direct transfer?
Yes. You still have to meet the income requirement.
__________________
tomz is offline   Reply With Quote
Reply

Tags
ira


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
monthly pension vs. lump sum kbst FIRE and Money 25 11-20-2007 05:31 PM
Lump Sum,Pension History runnerr FIRE and Money 0 03-26-2007 03:07 PM
Lump Sum or Dollar Cost Averaging your Roth/IRA mickeyd FIRE and Money 3 11-23-2006 04:38 PM
Lump Sum vs. Annuity Pension zaqxsw Other topics 3 10-20-2006 06:24 AM
Annuity vs Lump Sum Pension moguls FIRE and Money 5 05-26-2003 03:09 PM

 

 
All times are GMT -6. The time now is 05:27 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.