Pension Question

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It boils down too, do you need the money now, all or part. Always look ahead, try to think through what you need, what could happen to need it. Investing large sums of money gains to me was important. It worked well for me in most cases. I had money advisers.
We were doing really well until my wife had cancer at 63. Her bill in 6 months was nearly 1/2 million bucks. We had insurance and I paid about 26,000 in bills from saving. Then came an uninsured helicopter ride to the hospital. 62 air miles cost 64,000 bucks. They were so kind they lowered the bill to 56,000 and said I could make payments or pay in full.
So how much should you keep around somewhere to get hold of saved up money if needed.
I paid off her all her medical bills when due, the Air Ambulance bill took 6 weeks of several phone calls to find out, since the ER ordered it as necessary. It was all covered but 2500.
Moral of the story, if you live, work or play 50 or so miles from trauma centers, get air ambulance insurance is it's available. Myself, I am covered in all of WA, OR, ID and part of MT. cost is 75 bucks a year. That will cover all Air Ambulance costs with 3 air ambulance companies.
 
Best advice here is retain a good CPA that deals in Taxation.
Look at your current situation and set up a plan for the future.
Financial Planners are mostly useless.
My 2 cents.
 
I look at it just like the retirement strategy of a 3 legged stool. SS, savings, pension.


CPA, fiduciary, you. CPA knows taxes, but not saving/investing strategies, fiduciary know the sav/inv but not taxes, you need to be able to know your wants and needs and how use the info the other two give. BTW a good fiduciary will know taxes too.
 
Financial planers are rip offs Bend over and take it like a man Think about how they get paid!!
You are paying them for what?? I can baby sit my own pension Thank you very much!
It's nothing more than Common sense! not rocket science!
I can agree and disagree with this post. IF a person has basic needs AND is willing to read diligently on new changes yearly, then NO, a financial planner is not a necessity.

However, if you have questions about wills and trusts, estate planning, Roth conversions, Charitable Trusts, or suffer from investment paralysis, then a professional who has access to all these services can be a bargain in the long term. Their fees are generally around 1% taken quarterly. The government has made all of this much more confusing and difficult than it needs to be. As an example, I am nearing 71 and getting ready for AMD's at age 73. Few people know that you can actually begin to minimize tax liabilities earlier than with a Charitable Trust. The majority of our giving goes through this account. It takes time to set up, an expertise I did not have.
 
Whatever you do, learn how to avoid triggering federal (and state, possibly) income taxes until you're ready to pay them. IRS taxes distributions when received by the taxpayer. "When received" includes an IRS concept termed "Constructive receipt."

For example, you have money in a pension plan. That pension plan permits you to take a lump sum distribution payment in lieu of payments over months/ years. You want to elect that lump sum payment option and want to deposit all of that lump sum in your 401(k) or IRA.

Generally speaking, there are two methods for getting that lump sum distribution into your 401(k) or IRA:
1. Have the pension play write you a check for the entire lump sum. You receive that lump sum check and immediately deposit all of the money in your 401(k).
2. Instruct the pension plan to electronically transfer (deposit) the lump sum money directly into your 401(k) and avoid receiving a check as an intermediary step.

Method 1 will cost you federal income taxes in the year you receive the check. Why? Because IRS deemed your receipt of the lump sum check as your "constructive receipt" of the lump sum. IRS requires you to report the lump sum check amount as taxable income during the same tax year as when you received the check.

Method 2 will NOT cost you federal income taxes in the year when you received the lump sum check. Under IRS rules, you did not constructively receive the money. You will only be taxed when you take periodic distributions from your 401(k) or IRA.

The same "constructive receipt" trap applies when you wish to roll over your 401(k) balance into your IRA.

This is a key reason why you want your CPA/tax attorney's advice before you take the money out of your pension plan.
 
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Didn't read whole thread but from my personal experience take the money and roll it in
another company and invest it all in the S&P 500 fund. No bonds. You will thank
me in 20 years. MAKE SURE YOU ROLL IT OVER....DO NOT TAKE IT OR TAXES WILL
EAT YOUR LUNCH.
 
I worked as a Plant Engineer for a local company for only 5 months. I was supervising the build of a new plant process, and quit after finding out they were crooks. (didn't pay contractors, payed certain people double what others got, etc....but that's another story)

As it turned out the first month I was there was also the first time they offered a 401K. I sat in the meeting with their chosen Financial Advisor, who I knew very well from local advertisements. Anyway, I put in the max amount and got a 50% contribution. (my next company gave me 150%, but that's also another story).

My paychecks clearly showed that my money was taken out for the 401K. Finally fed up I gave 2 weeks notice and the day after my departure I went to roll over the money into an existing IRA. I found out I HAD NO MONEY in my account.

I called the "Advisor" and he said very matter-of-factly "Oh no, you don't get the money until 9 months. I sad You have to be kidding - you mean they are keeping my money for 9 months without giving me any interest? "Well, You will get 50%".

Seems there is (was) a loophole in the law that they don't have to deposit it for 9 months.

I DID get my money in 9 months, but I was ready to "make all hell break loose" (I quoted Donald there
Sounds like your company and 401k custodian were working together to make coin off of you. Have you looked into if they violated any federal laws?
 
Didn't read whole thread but from my personal experience take the money and roll it in
another company and invest it all in the S&P 500 fund. No bonds. You will thank
me in 20 years. MAKE SURE YOU ROLL IT OVER....DO NOT TAKE IT OR TAXES WILL
EAT YOUR LUNCH.
By "another company" do you mean a low cost broker like Fidelity, Schwab or Vanguard?
 
I used Vanguard due to size and low cost. BUT I am now going to move due to the fact
they are one of the biggest reason companies are forced to embrace DEI crap. Blackrock
is the other. They use our money and voting power to force companies to do this stupid
stuff to their determent.
 
Sounds like your company and 401k custodian were working together to make coin off of you. Have you looked into if they violated any federal laws?
No I did not. I moved along quickly. I had been a consulting engineer for 45 years and the few months I was there hurt my reputation with local contractors. I spent a year telling people that I quit because they were crooks.

When I finally got my money I simply chalked it up to not working with ******* again.
 
OP: I had a lengthy response planned out in my head and then read the additional info you provided about your wife and her job. This is the perfect opportunity and situation to say "Whatever you think dear".
 
So I have a pension question. I know I ask a lot about money for retirement, but it's pretty confusing.

So my wife is starting a new job, next week actually. Yippie! Without going into a lot of details, she was high up in her last job, and when they elected a new president for the company, she was asked to leave. Yes she was friends with the outgoing president. And yes, many of his other supporters have also left. She did not vote for the new guy either…

Just as an aside, she worked there for 20 years and definitely wasn't the same culture as when she started. What a shame.

Anyway, she did find a much better job so it all works out in the end.

Her last day was December 31 and she just found out today she has a pension.

So here's my question: Should she take the payout all at once? Or should she take the monthly payments forever. If she dies, I would get half.

Now if she waits for 12 years which is when she would have retired had she stayed…and let the company manage the money both amounts would approximately double.

She's 49 years old. The monthly amount today would be right at $2,000 per month. Or $4,000 in 12 years.

For me to be eligible for the half if she buys the farm is $20 less per month. Or $40 less per month and I would get 75%.

Let's just say she's worth keeping. 😀

I hope this makes sense, I tried to make it as short as possible.

Any thoughts? We don't need the money for rent and she won't let me buy a new Ruger each month, so it will just go into an IRA account.
I mean no offense, however asking a question like this (especially here) means you are ill equipped to make the right move on your own. Find an experienced financial advisor.
 
I mean no offense, however asking a question like this (especially here) means you are ill equipped to make the right move on your own. Find an experienced financial advisor.
Those are they types that especially should stay away from a FA. The OP would be at their mercy. Time to put their big boy pants on and learn about finances.
 
Maybe the OP has a pretty good handle on the situation but is fishing for ideas and opportunities he is not aware of?

Just because he's asking doesn't mean he is following what is suggested.

Much like automotive, medical, legal and a host of other questions. Fishing for ideas across a broad spectrum of opinions isn't a bad idea. Now following these ideas without follow up research is a different story.
 
Who would have ever thought a coal fired generating station would be shuttered, let alone every single one of them. A pension tied to that went away for all intents and purposes.

Nothing is sacred. I feel like a person can invest that same dollar just as well as the company can.
 
Again, this thread has been eye opening. Thank you to everyone who commented. And yeah, as @Dan in MI pointed out, I did have some ideas and was sort of fishing, looking for perhaps something either I or my wife hadn't thought of.

As far as financial advisors go, Schwab has one, but they charge a 1% fee per year. That can add up to some serious fees.

I just read a news story about this couple in Minnesota I believe. They won a lottery and got $60 million after taxes.

Well the financial advisors they hired from Des Moines Iowa invested in annuities and within something like 10 years ate up their fortune in transaction fees. Now there is a huge legal battle going on.
 

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