How to take my pension without being taxed
What financial instruments can I place a lump sum of pension into where I can withdraw some cash when needed?
Terry Says
With a pension you typically have two choices — a lifetime payout (or over your life and your spouse’s life) or a direct “rollover to an Individual REtirement Account, where the money will keep growing tax-deferred.
In either case, when you take money out, it is all considered ordinary income, and added to your other income for the year for tax purposes. In addition, if you are retired and it is a significant amount, it might impact your Medicare Part B premiums, as well.
The government wants its money! So only take out what you need — and typically you will ask to have taxes withheld from the withdrawal so you don’t get a big bill (and possibly a tax penalty) when it comes time to file your return!
