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  1. #1
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    Unexpected Pension payout - not sure what to do with it...

    Some background - I worked for one of the large Telecoms for almost 18 years until this past May when sweeping rounds of layoffs finally caught my workgroup. There's some political BS going on, but oh well.

    I got a pretty solid severance package, and my 401k is doing pretty well - I've just turned it into a standalone account and kept it at Wells Fargo where it was being managed before. No more contributions, but it keeps earning.

    I've landed a new job, and I'm enrolling into their corporate 401K moving forward.

    Now, I just received notice that my Pension with my former employer is due to begin distributions in November, since I'm no longer with that company.

    Caught me a little off guard, because I never remembered being part of a corporate pension plan. Thinking back on it now, this was from yeaaaars ago before the company moved away from a Pension to a company supported 401K program.

    The lump-sum value of this pension is a little north of $12k - and the disbursements are ~$30/month, which I really don't want to collect on at this point - I'm only 43 and have no need to pull from that fund.

    What's my best opportunity here, especially with keeping my tax liability down - roll over to a IRA? Hookers & blow? I'm not a financial genius when it comes to investments.

  2. Joe4d
    Guest
    #2
    go spend $100 bucks or so on an accountant or investment adviser. Laws change. And I havent kept up with it. But taking that money now could result in losing half of it to the IRS. Probably have to roll it over into a traditional IRA.. DONOT take the distribution in your name first. I think it has to go direct. But again Probably well worth the minor fee it will cost you if any to get it straight.

  3. Member
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    #3
    I had the same thing happen to me couple summers back. I used to work for Temple-Inland before IP bought them out. Got a letter and it told me at 70 I could start drawing $188/mo pension. I was 47 at the time and that was a LONG time for me. Or, I could take a one time lump sum of $25k and they would take out the federal tax before distribution. I opted this route. I had some bills I paid, was driving a long distance to work at the time, and did not trust the "evil empire" to actually have the monies available for me when I retire. I managed to keep a fair amount for a while but it got ate up when I was out of work for 6 months. Strange how things happen for a reason!
    1997 STRATOS 285 PE EVINRUDE INTRUDER 175

  4. Banned
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    Muscle Shoals, Alabama-Wilson Lake
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    #4
    You will want to establish an account with one of the big brokers like Fidelity or Charles Schwab. The current holder of those funds to transfer those funds into an IRA Rollover account directly. You always will need to keep that account separate of any other retirement funds--not adding or taking away from it.

    You should consider putting the funds into an Exchange Traded Fund (aka ETF) that has extremely low service fees. ETF's are essentially index funds of index funds--highly segmented. Just leave it.

    You are fortunate to have had a defined pension, however small it is. Very few companies are now funding pensions with 401K's being the major source of future income. To retire comfortably with social security supplementing your income, most people will need $1 million in their 401K and IRA accounts.

    It sounds as if you're behind schedule saving for your long term future. You should contribute as much as you can where your employer matches your withdrawals. Then begin Roth IRA's to the maximum level. And don't put money into any annuity or money market account. You need to work your money in order to get to your future goals of financial security.

    I saved for my future and retired at age 58. 10 years later, my investment accounts are up 90% in value. My dilemma today is figuring out where to put a large maturing CD that comes due tomorrow. We have no debt and nothing to do with the $. Even my boats are paid for.
    Last edited by Bamaman; 10-17-2018 at 08:33 PM.

  5. Member
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    Aug 2018
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    Louisiana
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    #5
    My primary 401K is doing fine - I honestly just wasn't ever aware of this separate pension balance. I thought that everything we had in our pension funds were automatically rolled either into an ESOP or the 401K.

    But yeah - I am going to reachout to a financial planner that has a good track record with people I trust, and just go over everything with him. I'm willing to spend a little money to see where he thinks I am and what I need to be doing differently.

  6. Member
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    May 2012
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    Louisiana
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    #6
    Man, you don’t need a financial planner for a $14k rollover. Open an IRA at fidelity or vanguard and roll it in there. I have been in the investments business for 18 years. Shoot me a PM if you have any questions.

  7. Member
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    Jun 2009
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    Beauregard, Alabama
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    #7
    I agree with Janky. $360/year is not a game-changer as far as taxes. Just use all of it as part of your Roth IRA each year. At your age, you should be able to contribute up to $5,500 in a Roth each year.

  8. Member
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    Sep 2007
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    SE Wisco/Phoenix AZ
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    #8
    If I were in your shoes, I'd take the lump sum as a DIRECT ROLLOVER into your current employer 401K or retirement plan versus the monthly payments. You PROBABLY don't need a financial advisor to orchestrate this for you but it depends on your level of comfort and understanding on how to initiate and complete the process. Make sure it's a DIRECT ROLLOVER. My wife did one this year and they tried to put it in her name even after filling out the paperwork diligently. Took 30 days to remedy and reissue the check (hahaha state government for you!) but then it was processed correctly.

  9. Member
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    Nov 2014
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    Milford Ohio
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    #9
    Direct rollover trustee to trustee

  10. Member
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    Jan 2017
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    Fairview, NC
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    #10
    Don’t give it to a stock broker! Don’t touch the money. Instead roll it over into Ameritrade or similar investment firm that don’t charge you tons of money. DUK. AT&T, SO and CSQ are a good start. Don’t buy all the stocks at once but dollar cost average. Buy every 4-6 weeks. All those stocks pay consistent good dividends.

  11. Member
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    Mar 2017
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    Northern Indiana
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    #11
    You can also take distribution to fund a business with zero tax consequences. I’m not a tax accountant,lawyer, or cpa. But I know it can be done.

  12. Member
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    Almont
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    #12
    Normally I would say invest it...but it sounds like you are set up pretty well and are headed in the right direction..So screw it take the money and invest in an experience...Travel, do a bucket list item whatever...As I've gotten a bit older, and after years of being a consistent saver I've come to the revelation that I've shortchanged myself on "Experiences" Dont get me wrong I've done some crazy sheet in the military, MX racing , and outdoor adventures but I need to do more....Life is short and it can change with one diagnosis or accident...Your 43 so if you have at least couple of years of salary saved in your 401k go for it...Maybe not Hookers and Blow though..lol
    I have a 250 dollar a month pension coming from one of my employers...I'm really surprised they havent offered me a lump sum payment..
    Last edited by brnzbaklvr; 05-07-2019 at 03:26 PM.
    "Historically the most terrible things-war, genocide and slavery-have resulted not from disobedience but from obedience"
    Zinn