I received a lump sum pension when I retired. Can I roll this lump sum into a 401K or IRA?
Lump sum pensions can be rolled directly into an IRA rollover account or a 401k if you are employed elsewhere, and you are eligible for the 401k. It is important to be sure it is a direct rollover and that you do not take possession of the funds.
PPG 128300 (8/17)(Exp 8/19)
You can roll the old pension into an IRA. Congrats on retiring.
DAVID RAE, CFP®, AIF® is a Los Angeles-based retirement planner with DRM Wealth Management. He has been helping people reach their financial goals for over a decade. Follow him on Facebook, or via his website www.davidraefp.com. Los Angeles Retirement Advisor Blog
Congratulations on your retirement.
Did you receive the lump sum pension, meaning it was distributed already to you? If not, then you should definitely make a direct transfer from the account to either an older 401(k) or an IRA, a trustee to trustee, so that you don't get a big IRS tax bill for the entire amount. Or you can deposit it personally within the time allowed (usually within 60 days). You should call your HR department and ask about your options.
The advantages of an IRA over a 401(k) plan are usually lower fees and more investment choices, vs. only mutual funds as in the case of most 401(k) plans.
You can roll over a Lump sum pension payment into an IRA or 401(k).
One thing I would suggest is to contact your former employer and ask them what the procedure, is and which paperwork is required, for rolling the lump sum pension into your IRA or 401(k).
Make sure you clearly state that the funds are being rolled over to an IRA or 401(k) this way it is considered a trustee to trustee transfer. You will need to provide them with the IRA custodian name or new 401(k) administrator details.
Thank you for the question and congratulations on retiring!
You have a number of options when looking to rollover a pension or retirement account. Check out this IRS chart in a recent article I wrote about rollovers. Given that you are retired, do you still have a 401(k)? If you do, you may be able to roll it into the 401(k). If you do not, then chances are you will be able to roll it into a traditional IRA. Speaking with a representative for your Pension would be a good way to find out what options are available for rollover as well. Either way I would encourage to to speak with a CFP professional to evaluate your options and see what is best for your situation.
Please consider me a resource should you have any additional questions.