Pension question!!

[Donzo]

Wow, I never thought that I would post that one!

My megapharma division was bought out several times during my 23 years. While I was fortunate and survived the buyouts - my pension opportunities were "smashed"--or so I thought. The last pharma company I worked for launched a new HR portal/401K info website. I visited to check on balances etc. and was surprised to see many new options - I hit pension benefit...and was shocked at what I have coming (and alittle ashamed to admit to this group-that I did not know
I will re-read 4 pillars...and.... 4 hail Marys .
The company counted my tenture through the last purchase co. hire date and I found a nice little surprise.

My main question- If you take a lump sum - is it rolled over to an IRA or is it taxed? If I can roll it.....I pretty much have decided, but:

Here is the breakdown - would you take the monthly benefit or the lump sum...and when? I did not add age 65 because it seems unlikely to pay off - and I have a good SS payment coming around that time.
I should add that so far - 19 months ER I am on track and pulling around 3% for expenses.


Age 55 age 60

Monthly $799 $1,310


Lump $148,665 $204,231

Thanks in advance,

Donzo

 

[crazy connie]

You have the option to roll to an IRA. I suggest a direct transfer and keep it out of the twilight zone which exposes you to the time constraint and having to replace the mandatory witholding as well as the 10% penalty should you err and not have in an IRA within the 60 day timeframe.

Personally I would roll to and IRA if you do not absolutely need the money to live today... It will be taxed when you do withdrawals. Let it compound for a while and enjoy life when you chose to draw on it.

Congrats that all of corp America is not screwing you over!

Also, what is you current age? I assumed about 50 for my opinion!!!

 

[Goonie]

You have the option to roll to an IRA. I suggest a direct transfer and keep it out of the twilight zone which exposes you to the time constraint and having to replace the mandatory witholding as well as the 10% penalty should you err and not have in an IRA within the 60 day timeframe.

Personally I would roll to and IRA if you do not absolutely need the money to live today... It will be taxed when you do withdrawals. Let it compound for a while and enjoy life when you chose to draw on it.

That would be my suggestion as well. I had a 'spousal refund' from my pension which was a rather significant amount that I put in a Rollover IRA. That way I didn't have to be concerned about the 10% penalty or the 20% fed tax they'd automatically hold out. It'll stay put there for at least 9 more years...probably more....growing.

 

[Donzo]

You have the option to roll to an IRA. I suggest a direct transfer and keep it out of the twilight zone which exposes you to the time constraint and having to replace the mandatory witholding as well as the 10% penalty should you err and not have in an IRA within the 60 day timeframe.

Personally I would roll to and IRA if you do not absolutely need the money to live today... It will be taxed when you do withdrawals. Let it compound for a while and enjoy life when you chose to draw on it.

Congrats that all of corp America is not screwing you over!

Also, what is you current age? I assumed about 50 for my opinion!!!

Hey Connie, I was surprised that I was'nt getting screwed by the co. also! In all the other buyouts they did whatever they could to keep bennies off the table......
I am glad to hear that the lump can be rolled over to an IRA - tax free!
I am now 51 - I retired in my late 49th year

 

[Donzo]

That would be my suggestion as well. I had a 'spousal refund' from my pension which was a rather significant amount that I put in a Rollover IRA. That way I didn't have to be concerned about the 10% penalty or the 20% fed tax they'd automatically hold out. It'll stay put there for at least 9 more years...probably more....growing.

Thanks Goonie, I think I will take the lump as soon as I am eligible and roll to my Vanguard IRA and let it grow as you suggest. If I leave it with the co.it grows about 5% per year - I should be able to beat that.....
I am glad it can have IRA protection from taxes - this made my week!

 

[Moemg]

I also had a lump sum . I rolled it over into a Vanguard IRA . They'll walk you thru the whole process and I've done a lot better than 5% .

 

[BigBob]

OP - Make sure you don't lose out on Medical Bennies or access to them if you roll it (if you get Medical). I think my plan says something to the effect that they no longer need to cover me or they eliminate their subsidization<-is that a word??.

 

[Donzo]

OP - Make sure you don't lose out on Medical Bennies or access to them if you roll it (if you get Medical). I think my plan says something to the effect that they no longer need to cover me or they eliminate their subsidization<-is that a word??.

BigBob, I would have had to stay until 55yo to get medical bennies - I prob. would have died staying 5 more years in that toxic position or at least really need the bennies earned......

This lump will go a long way towards paying for my $5,000. deductable health insurance til medicare. It is money I did not expect - what a treat!