Pension partial lump sum payment
Hi Terry
My husband is a union carpenter
He has an option of taking 10% partial lump sum payout of his pension which is $100,000.00
Which would lower his monthly payment to 5469.00 from $6076.50 does it ever make sense to do that would just role the 100,000.00 into an IRA
You are my go to girl for these questions
You are the best!!
Thanks for all your knowledge
Terry Says
I see no particular reason for taking that 10% distribution, even if it is tax-free because it can be rolled into an IRA. The only advantage would be flexibility. If you invest in the stock market you could make more money — or lose more money! But you’d also have liquidity to take the money out and pay taxes if needed in an emergency. If you already have additional savings, that shouldn’t be necessary.
Also, if you don’t spend the IRA money or take RMDs, then the balance can be left to a beneficiary. Unless a spouse is named on the pension benefit, an early death means forfeiture of the remaining balance.
One other thing, I dont have the tools to calcualte whether that reduction is “fair” based on the earned benefit. But a fee-only Fiduciary planner could let you know if that is a “fair” reduction in benefit.
In short, this is a decision that needs to be made in context of your entire retirement situation, and retirement income. Please watch this video — and consider at least one meeting with a fee-only FIDUCIARY advisor you can trust:
https://www.terrysavage.com/pam-krueger-wealthramp/
