Retirement payout
40 years ago, my previous employer offered a pension plan benefit. After a few years, the pension plan benefit was replaced with a 401k benefit. The employer later conveyed administration of the pension to Principal. I’ve been offered a selection of payout options by Principal : lump sum, monthly lifetime benefits, ten-year certain payments, payments with various survivor % payments. I’m inclined to take the lump sum and invest it in Vanguard but here’s my question: would I be taxed on the entire lump sum as ordinary income? I’m still working and maybe it would be better to defer payout until my income is lower?
Terry Says
The first question to ask is whether your lump sum can be ROLLED OVER into an IRA. High likelihood. In that case read this recent column. https://www.terrysavage.com/rollover-now/
If there is no rollover privilege, I’d wait — although they probably aren’t giving you the real benefit of additional time invested.
