Ask Terry Questions Pension Buyout

Pension Buyout

By Terry Savage on December 31, 2014 | Financial Planning / Retirement

How is a pension buyout calculated?

Terry Says:  The actuary for the company and the pension fund determines the “present value” of your future pension when making an offer to give you cash from your pension.  Of course, you don’t want to take cash now and lose all future growth of benefits.  So they should also offer a “rollover” — directly to an IRA custodian.  You are given the choice of custodians –and I would choose Fidelity or Vanguard or T. Rowe Price.  But you don’t want to take a buyout check and deposit it.  Instead it must be directly transferred to the new custodian, to maintain tax-free growth.

Are you asking if you should “take” the buyout offer, assuming you have a choice?  And are you wondering if it is a good enough offer?  I suggest you read the article at this link:

And to use a calculator that will take into account the offer being made to see if it is a good one, use this link:

Recent Financial Planning / Retirement Questions



a personal
finance question