Hi, I can help with this ...
The first thing that comes to mind is to ask for a rollover to an IRA
Almost ALL qualified plans (defined benefit pensions, 401(k), money purchase, profit sharing, end even 401(b) plans for teachers) have the option to do be received as an IRA rollover or custodial transfer
As long as the transfer is done from the Pensions custodian as a rollover (where the check is made out to an IRA plan that you open ... OR ...
at 83 I do not believe I can contribute to an IRAS
done as a trustee to trustee (sometimes called custodial) transfer this is not a taxable event
this IS NOT a contribution
this is simpy a transfer of pre-tax money from one plan (the pension plan) to another, (the IRA)
a electronic transfer is scheduled for monday, is it too late to stop what they propose to send to the IRS?
then you will ()because you are over 70 and 1/2) be required to taek a certain amount out each year, but only the amount taken OUT of the IRA is taxed
I would certainly try to get hold of the today of first thing monday and tell them you'd rather take it as a rollover
the company proposes paying the IRS 55,000.
If the transfer can't be stopped .....
I bet thats 20%
??? it listed as M3
If you can get hold of the "plan document" (of the pension plan) which they should have provided by law
The M3 means nothing legally, or relative to tax, probably an internal code
u were going to say " if it cannot be stopped?
THe plan document will tell you whether they are required to provide a rollover option ALSO, it will tell you whether you should have been ngiven an option to take it over a number of years, or as a monthly income for life
YOu could still get it back into an IRA within 60 days and it can still be considered a rollover, you will have to come up with the difference between what you receive and the amount of the distribution
the bulk amount will be sent to my checking account ( less the 55,000 and then there will be a monthly amount hence
the number coming out of the pla ... must be the same as the amount going back into the IRA to be considered a rollover
again, It's really strange (if this is an actual pension plan ... which is governed by Dept of Labor and IRS rules) that they did not provide options
I understand, worse case is that I will probably get a large refund next april but this will throw me into a high bracket to file under, right now I am in a 10%
They are trying to meet their obligation (under those ERISA-DOL) rules to provided what should have been paid to you all along
Yes, you have it
it will all simply be taxable income if you can't effect a rollover
Do you have access to their company website or a phone number for the custodian of their pension plan?
income averaging is no longer possible, so unless you can ask for a more level payout or a rollover of then lump sum amount it will be ordinary income
yes, but no one there until Monday, I have received notice from a bank that the transfer will take effect on Monday
Well, i wish there were more options, but this sounds like a pretty good problem to have
I do appreciate your help, I was thinking of incomwe averaging was not aware that it no longer existed
I would, however, STRONGLY urge you to call 1st thing and ask why they didn't offer a rollover option
Also, see if you get hold that "plan document," its called
that is the communication that should have been provided outlining your options and the provisions of the pla
all pensions have them, and they're supposed to be provided at least once per year and whenever changes are made to ALL plan participants
And finally, enjoy it!
If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.
HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.
Thanks so much for the rating James.As a follow-up (not sure if you saw this at the end of our chat, but this is the booklet about rights participants have in pensions:http://www.dol.gov/ebsa/publications/wyskapr.htmlAnd this is an article that documents for you that income averaging won't work, since the tax act of 1986:http://www.dol.gov/ebsa/publications/wyskapr.html
If you'd like to work with ME again just say "For Lane only," at the beginning of your next question
... and thanks again,