IRA Rules

Archive for May, 2008

Question: My company offers a lump sum pension that I am eligible for. Are there tax implications for this when I leave?

Does this lump sum distribution require that I put this into an IRA or similar vehicle for retirement? Or do I just get it when I leave? I don’t know much about how pensions usually work. Do I treat it as income that I get taxed on after I leavfe my employer. What’s usually the case?

Answer: You need to choose a custodian for your IRA, and request the employer to have the lump sum transferred to that custodian. This will take some planning, filling out forms, etc. Check with HR, and of course with other recent retirees.

If you plan to retire 2 years or so in the future, just file the info away for future reference. But a layoff could hit sooner, so it’s good to be prepared!

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