Ask Terry Questions Retirement plan termination.

Retirement plan termination.

By Terry Savage on April 06, 2024 | Financial Planning / Retirement

Greetings Terry, my wife’s employer ( a hospital not to be mentioned by name) is terminating their pension plan. We have the option of receiving a lump sum that we would like to roll over into an existing Fidelity IRA, or Roth IRA I understand that we would pay the taxes up front on the Roth IRA . That would be fine for us. What is the qualifier to be admitted into a Roth IRA . They also offered a monthly annuity beginning right now which we do not need . we’re both still working , I will work until 65 , I’ll have a comfortable retirement based on our homework we’ve done and consulting with our “money guy”. I guess my question would be should we roll it into Mary’s existing IRA, or Roth IRA if we qualify.

Terry Says

You need to create a NEW ROLLOVER IRA —
Read this:

Keep this account separate from previous IRAs.

Now, should this rollover be a ROTH IRA, or not. That depends on whether you have the cash to pay the taxes OUTSIDE the IRA. If so, and you won’t be completely drained, then yes you could benefit from having some tax-free growth in the future, and no RMDs for this account.

But please do a direct rollover — don’t take the check. That brings some complex rollover rules into play.

Recent Financial Planning / Retirement Questions



a personal
finance question