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Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 478
Experience:  Managing Director at Caros Group
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If I have a partial lump sum option distribution, I can I

Customer Question

If I have a partial lump sum option distribution, I can I avoid paying so many taxes? If I'm retiring early?
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I am a 56 year old teacher retiring early. My teacher retirement is asking for me to rollover or find a suitable rollover plan or I will be charged 20% Federal income tax. Is there a way to avoid this?
JA: Is there anything else important you think the Accountant should know?
Customer: I plan to use the lump sum to pay bills and my daughter's tuition.
Submitted: 4 months ago.
Category: Tax
Expert:  Chad CFP ® replied 4 months ago.

Hello, My name is***** am a Certified Financial Planning ® Professional. Welcome to JustAnswer!

To avoid the automatic 20% withholding charge from your teacher retirement plan you could transfer your distribution to a IRA. Most banks offer IRA's that you could either invest in or place in a money market account.

"Rolling over" your distribution directly into a IRA will allow you to avoid the automatic withholding. You can open an IRA online with many different firms or at a local financial institution. Some teachers have availability to a Credit Union that will assist you.

Once the funds are in the IRA you will have more control over the distribution and withholding amounts and spread distribution out over years.

I hope I answered your question with sufficient detail, accuracy, and completeness based on the facts communicated. I would be happy to expand my answer should you need clarification. Accordingly, please rate my response, based on thoroughness and accuracy, rather than any good or bad news/content. We (the experts) are only compensated when an answer is accepted and rated. I appreciate your prompt response.

Expert:  Chad CFP ® replied 4 months ago.

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Expert:  Chad CFP ® replied 4 months ago.

Hello,

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Chad CFP ® professional