2019 Jan 8, 11:51am
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How much money are we talking about here (either lump sum and monthly)?
I can take a lump sump or get paid monthly until I die, then my wife gets paid until she passes. I
Take a lump sum and roll it over into an IRA or 401K of some kind. However, make sure there is no gross 'penalty' for doing this. This gives you more control over the money rather than a pension, which forces you to rely on the solvency of a fund or the gracious generosity of an employer if it stays in business. Of course an insurance agent wants to sell you annuities (huge commission, less for you) and somebody wants to manage your money (commissions, fees etc. their brains, your money). Planning annuities into your retirement requires a lot of care and research so that you aren't being fleeced. An annuity is just a pension purchased from an insurance company that is gambling that you will croak and not collect in the long run. In an IRA you can keep the money earning tax free to 70.5 of age, when there are minimum required distributions.
If you do cash out, will you be able to shelter that huge lump sum from the various income taxes? Between the federal government and state governments, you might be losing 45% right off the bat. That's a pretty big ouch.If you really are getting a full cash out equal to the net present value of the pension payments and you can roll it into an IRA or other retirement plan and not get hit with income taxes right off the bat, then the IRA looks like the safest bet. You're getting all the value and you're protected from the potential future whims or fortunes of the pension.
And I think Trump is working on that rollover into an IRA as a not taxable event.
What would be the monthly payout,