I received a lump sum pension when I retired. Can I roll this lump sum into a 401K or IRA?
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.
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.
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)
Yes, you should definitely roll this over to an IRA. If you leave it in your 401(k) plan, you may be subject to higher fees and limited investment selection. Additionally, you are at risk of the plan sponsor issuing you a check which you would have to deposit to an IRA within 60 days or be subject to income taxes. You want to avoid that by being prepared. Find a local Financial Advisor through Investopedia or Wealthminder. Look for an advisor who works on a Fiduciary platform with your best interest at top of mind. More information on this can be found here: http://goo.gl/3kftpE
Good luck and hope this helps.
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.