Ask Terry Questions Pension — or Rollover

Pension — or Rollover

By Terry Savage on April 08, 2013 | Financial Planning / Retirement

Hello Terry, I work for a company that will be closing its door in California and have been given a date for my last day there. I have been with this company for 11 years and my question is this, If I collect my pension in full now, would this be beneficial to me? Will I be paying some kind of penalty and how do I find out how much I have in my pension?

SAVAGE SAYS: Immediately go to your HR department and ask what the alternatives are! It may be that you are getting a true, defined-benefits pension — a check a month for life. But that my not start until you are a certain age. And you may have to make some choices — such as whether to take it over your lifetime, or make sure it will also cover your spouse’s lifetime if you are married. AND, it may be that you cannot start taking that monthly lifetime check right now, but instead you can ROLL IT OVER into an IRA (Individual Retirement Account).

If you have that choice, you do NOT want to take a check. Instead contact Fidelity (800-Fidelity) or Vanguard (800-Vanguard) and ask them to handle the rollover for you, so you are not subject to taxes on that money. An IRA rollover, if that is allowed, will keep your money growing tax-deferred. So, the first step is to definitely contact HR at your company and ask these questions. Then get back to me if you still can’t figure it out! Thank you very much and I hope to hear back from you soon.

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