 |
Pension lump sum payout .. taxable event?
12-13-2019, 11:52 AM
|
#1
|
|
Full time employment: Posting here.
Join Date: Sep 2017
Posts: 821
|
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
__________________
“Earth is the insane asylum of the universe.”
― Albert Einstein
|
|
|
 |
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!
|
|
12-13-2019, 12:02 PM
|
#2
|
|
Thinks s/he gets paid by the post
Join Date: Aug 2012
Posts: 1,862
|
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.
__________________
FIRE Class of 2018 @ 61
Old men and women sit in the shade of trees they planted long ago
|
|
|
|
|
12-13-2019, 12:12 PM
|
#3
|
|
Full time employment: Posting here.
Join Date: Sep 2017
Posts: 821
|
This is helpful. Thank you.
__________________
“Earth is the insane asylum of the universe.”
― Albert Einstein
|
|
|
|
|
12-13-2019, 12:24 PM
|
#4
|
|
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
|
|
12-13-2019, 12:47 PM
|
#5
|
|
Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 3,931
|
 Quote:
Originally Posted by albireo13
Can the lump sum be rolled over into an IRA?
|
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.
|
|
|
|
|
12-13-2019, 01:08 PM
|
#6
|
|
Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 3,019
|
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.
|
|
|
|
|
12-13-2019, 02:29 PM
|
#7
|
|
Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,671
|
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.
|
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.
|
|
|
|
|
12-14-2019, 07:08 AM
|
#8
|
|
Full time employment: Posting here.
Join Date: Sep 2017
Posts: 821
|
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.
__________________
“Earth is the insane asylum of the universe.”
― Albert Einstein
|
|
|
|
|
12-14-2019, 07:17 AM
|
#9
|
|
Full time employment: Posting here.
Join Date: Mar 2019
Posts: 760
|
I took a lump sum from my pension in 2015 and rolled it directly into an IRA.
|
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|
Linear Mode
