(Closed) Pension Question. Help me please!

posted 5 years ago in Money
Post # 3
Member
278 posts
Helper bee
  • Wedding: June 2013

Unless you HAVE to, it’s probably not advisable to use the lump sum for the wedding!

It really comes down to deciding between taking the annuity (with the 50% survivor benefit) or rolling the lump sum to an IRA. You should have a sheet that tells you what your benefits would be with the 50% survivor benefit – you get that full amount until death and then your survivor gets 50% of it.

Generally, an IRA is a better option because it gives you access to the money at any point, and after age 59 1/2, it’s penalty free. Usually annuity payments don’t begin that early. You can also use IRA funds penalty free for higher education or a first time home purchase. It also gives you investment control – although this is risky, you can earn a much higher potential than what your annuity may give you.

Hope this helps!

Post # 4
Member
14302 posts
Honey Beekeeper
  • Wedding: June 2011

Take this with a grain of salt, but this is my understanding of a pension.  A pension is not like an IRA or retirement account.  You cannot roll it into a regular account.  It is only paid out to you upon retirement by your company.  Usually there is a formula that determines how much you get on a montly basis.  The 50% survivor annuity is saying that if you die before your pension account is paid out to you, your spouse gets 50% of what was entitled to you.  The 12k is not a lot in terms of pensions terms, so honestly, I’d pretend it doesnt even exist.  Pensions really count when you’ve been at a company decades and the expected pay out is going to be upwards for 2k/month.

Post # 5
Member
278 posts
Helper bee
  • Wedding: June 2013

@pinkshoes:  Usually that’s right, but if you are given an option of a lump sum, you CAN roll it to an IRA. There’s usually only a short window to make that choice.

Post # 6
Member
8042 posts
Bumble Beekeeper
  • Wedding: December 2013

@MrsM914:  Do NOT use your pension for a wedding!! It’s a pension… not fun money to blow. You will regret it in the future. If you can’t afford a wedding with your current savings, scale back. Starting life as newlyweds in debt or with no savings is a bad idea…

Post # 7
Member
14302 posts
Honey Beekeeper
  • Wedding: June 2011

@hartmamp:  ah, I see.  I had that happen with me with an old company 401k plan – we could roll it over or take the lump sum, but I’ve never heard of that with a pension cause I didn’t think a pension could be a fixed amound since I thought pensions were paid a set monthly amound for life.

Post # 8
Member
197 posts
Blushing bee
  • Wedding: October 2013

It depends on the type of pension that you have – traditional or cash balance.  If it is a cash balance pension, and the plan allows it, you may be able to roll that into an IRA.   I have 2 cash balance pensions from previous companies – I rolled one into an IRA when the pension plan stopped contributions.  The IRA lets me control how the money is invested.  The other pension only allows annuity payments at retirement age.  If it is a traditional plan, you will only be able to take the annuity.   You need to talk to the pension plan administrators to find if there are any restrictions.

Do not take this money to pay for your wedding.  This money will grow in your plan (or IRA) to be used in the future.    

 

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