Cash out,. Pay the penalty and tax, take the rest and buy a Genesis G90.
Lump sum buyout or?
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I am not suggesting what to do with your pension buyout money, I can only tell you what I did and I certainly don't have all of the answers for someone else.
I took my pensions from two different companies and had those companies put the money into "Qualifying Accounts"(401K, IRA, ect.). In my case, I had them put into my company's 401K's which I had kept with that company since leaving them. This is often a good/safe move because it allows you to take more time with your future decisions with this money.
If you do this, be sure to make the changes(allocate) the money immediately as the company will put the money into your 401K but, they will put the money into some e.g., "Life Plan Portfolio"(or something
), and these are mostly bad moves. The company often WILL NOT put your pension money where you have currently have your monies allocated in said account. You'll have to do this on the next business day...often taking a lo$$ overnight so, move quickly!
If you have the company put your pension buyout money into your own qualifying IRA, then I CANNOT answer how the money is allocated for that account. Their Benefit Resource Center(BRC or YBR) should be able to help you with the transaction.
Every situation is different and you have to do all of your own research for your particular situation and the company typically gives you about 30 days to make a decision which will then take effect on Dec 31st of this year.
I took my pensions from two different companies and had those companies put the money into "Qualifying Accounts"(401K, IRA, ect.). In my case, I had them put into my company's 401K's which I had kept with that company since leaving them. This is often a good/safe move because it allows you to take more time with your future decisions with this money.
If you do this, be sure to make the changes(allocate) the money immediately as the company will put the money into your 401K but, they will put the money into some e.g., "Life Plan Portfolio"(or something
If you have the company put your pension buyout money into your own qualifying IRA, then I CANNOT answer how the money is allocated for that account. Their Benefit Resource Center(BRC or YBR) should be able to help you with the transaction.
Every situation is different and you have to do all of your own research for your particular situation and the company typically gives you about 30 days to make a decision which will then take effect on Dec 31st of this year.
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Originally Posted by Quattro Pete
Originally Posted by Mr Nice
Large Cap growth
SCHG or something else?
Since I have Vanguard, its MGK and VUG.
Did you ever take my advice and buy some AMZN ?
Stock will really pop at the end of October.
Originally Posted by Mr Nice
Large Cap growth
SCHG or something else?
Since I have Vanguard, its MGK and VUG.
Did you ever take my advice and buy some AMZN ?
Stock will really pop at the end of October.
A couple of points to consider:
1. The PBGC (which is like the FDIC for pension funds) will pay pennies on the dollar for pensions it considers large, much like the FDIC only guarantees up to a certain sized deposit.
2. When calculating what you can safely withdraw from an IRA or other investment account, the planning number is 4%. That takes into account inflation, and market fluctuation, with a 95% chance of your asset/account lasting as long as you need it. Average stock returns are higher, of course, but if you take out all of the growth each year, you're losing compared with inflation, and you'll bury yourself in a down market year.
3. Your nearly $500/month now is nearly $6,000/year, and represents a 6% return on the $100,000 they're offering. That's not bad.
4. The nearly $1000/month 9 years from now is an 8% annual return on the value of the pension. Also, not bad.
5. The $100,000 lump sum, invested properly, at market rates, will yield slightly less than what they're offering in monthly pay out. See note 2. above.
6. We've seen phenomenal market gains over the past few years. I can't predict the next correction, but don't forget where we were in the summer of 2008, with some stocks losing 50% of their value in that year. (It was a great time to buy, and I did, but that's another subject altogether). So, in taking the lump sum, you're open to that type of market fluctuation. That type of risk.
7. The real question for you is one of risk tolerance and asset allocation. You may decide, for personal reasons, that you would like control of the money, understanding that you will likely not meet the monthly payout that they're offering. That's a reasonable decision. Similarly, leaving it with them, to have a fixed income/guarantee allocation in your overall financial position, is a reasonable decision.
1. The PBGC (which is like the FDIC for pension funds) will pay pennies on the dollar for pensions it considers large, much like the FDIC only guarantees up to a certain sized deposit.
2. When calculating what you can safely withdraw from an IRA or other investment account, the planning number is 4%. That takes into account inflation, and market fluctuation, with a 95% chance of your asset/account lasting as long as you need it. Average stock returns are higher, of course, but if you take out all of the growth each year, you're losing compared with inflation, and you'll bury yourself in a down market year.
3. Your nearly $500/month now is nearly $6,000/year, and represents a 6% return on the $100,000 they're offering. That's not bad.
4. The nearly $1000/month 9 years from now is an 8% annual return on the value of the pension. Also, not bad.
5. The $100,000 lump sum, invested properly, at market rates, will yield slightly less than what they're offering in monthly pay out. See note 2. above.
6. We've seen phenomenal market gains over the past few years. I can't predict the next correction, but don't forget where we were in the summer of 2008, with some stocks losing 50% of their value in that year. (It was a great time to buy, and I did, but that's another subject altogether). So, in taking the lump sum, you're open to that type of market fluctuation. That type of risk.
7. The real question for you is one of risk tolerance and asset allocation. You may decide, for personal reasons, that you would like control of the money, understanding that you will likely not meet the monthly payout that they're offering. That's a reasonable decision. Similarly, leaving it with them, to have a fixed income/guarantee allocation in your overall financial position, is a reasonable decision.
Originally Posted by Mr Nice
Originally Posted by Quattro Pete
Originally Posted by Mr Nice
Large Cap growth
SCHG or something else?
Since I have Vanguard, its MGK and VUG.
Thanks. I need to open a Vanguard account since they don't charge for ETF trades.
Quote
Did you ever take my advice and buy some AMZN ?
I did. Thanks.
Originally Posted by Quattro Pete
Originally Posted by Mr Nice
Large Cap growth
SCHG or something else?
Since I have Vanguard, its MGK and VUG.
Thanks. I need to open a Vanguard account since they don't charge for ETF trades.
Quote
Did you ever take my advice and buy some AMZN ?
I did. Thanks.
Something to keep in mind. Employers who provide pensions are supposed to contribute funds to the pension in order to maintain an agreed distribution. In fact almost all pension plans (public or private) require additional cash infusions. This occurs because employers routinely overestimate the rate of return on the pension plan investments which reduces the companies liabilities and consequently makes their financials look better.
Why am I tell you this? I'm tell you this so you don't assume your lump sum distribution that's invested by you will ever be able to provide the monthly distribution promised by your pension.
Why am I tell you this? I'm tell you this so you don't assume your lump sum distribution that's invested by you will ever be able to provide the monthly distribution promised by your pension.
Originally Posted by Astro14
A couple of points to consider:
1. The PBGC (which is like the FDIC for pension funds) will pay pennies on the dollar for pensions it considers large, much like the FDIC only guarantees up to a certain sized deposit...
AND if you do like my Dad did and take a less-than-100% monthly payout so your spouse can get 50% after you die and the PBGC winds up taking over the pension, that arrangement is null and void. Mom got shafted big-time on that one.
A couple of points to consider:
1. The PBGC (which is like the FDIC for pension funds) will pay pennies on the dollar for pensions it considers large, much like the FDIC only guarantees up to a certain sized deposit...
AND if you do like my Dad did and take a less-than-100% monthly payout so your spouse can get 50% after you die and the PBGC winds up taking over the pension, that arrangement is null and void. Mom got shafted big-time on that one.
What? How is that even a question? If you can roll the entire amount in to your retirement account without paying any tax *right now*, then it is a no-brainer! One of the previous reply explained it as if annuity meant you get 6% but your principal remains intact. Of course that is wrong! Your money is gone on the day you take out the annuity. At your age, you do NOT look at annuities.
Quote
3. Your nearly $500/month now is nearly $6,000/year, and represents a 6% return on the $100,000 they're offering. That's not bad.
ONLY IF HE GETS HIS $100k BACK AT THE END! It is called "return of capital" i.e. you are getting your own money back.
3. Your nearly $500/month now is nearly $6,000/year, and represents a 6% return on the $100,000 they're offering. That's not bad.
ONLY IF HE GETS HIS $100k BACK AT THE END! It is called "return of capital" i.e. you are getting your own money back.
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Originally Posted by opus1
Originally Posted by Astro14
A couple of points to consider:
1. The PBGC (which is like the FDIC for pension funds) will pay pennies on the dollar for pensions it considers large, much like the FDIC only guarantees up to a certain sized deposit...
AND if you do like my Dad did and take a less-than-100% monthly payout so your spouse can get 50% after you die and the PBGC winds up taking over the pension, that arrangement is null and void. Mom got shafted big-time on that one.
The PBGC took over my pension during my company bankruptcy.
I will get 1/10 of what was originally projected.
I'm well aware of the limitations.
However, the OP will likely not hit the PBGC limits, or run afoul of their rules.
Originally Posted by Astro14
A couple of points to consider:
1. The PBGC (which is like the FDIC for pension funds) will pay pennies on the dollar for pensions it considers large, much like the FDIC only guarantees up to a certain sized deposit...
AND if you do like my Dad did and take a less-than-100% monthly payout so your spouse can get 50% after you die and the PBGC winds up taking over the pension, that arrangement is null and void. Mom got shafted big-time on that one.
The PBGC took over my pension during my company bankruptcy.
I will get 1/10 of what was originally projected.
I'm well aware of the limitations.
However, the OP will likely not hit the PBGC limits, or run afoul of their rules.
The fund is at 90%+ funding as of today. The investment company that has the fund used to own a bunch of paper mills and lumber mills along with vast tracts of forest land throughout the U.S. They have sold off virtually all of their physical assets like the mills and have the forest lands as their cash cow now. Selling off tracts etc. It is/was a private business and was well over a billion dollars a year sales in its heyday. The reasoning given for the buyout of former employees who have separated,(current employees are covered by the company who bought that asset/mill etc), is uncertainty over future markets. They do investments but don't want the headache of administering the pension. If I don't take the lump sum they say they will buy an insurance policy to take over the pensions at the same agreed upon rate. I know these people and they have sharp pencils. There is undoubtedly a financial incentive for them to do what they are doing. I am probably just going to roll the lump into my existing 401K. I don't have the time or savvy to start making complex financial decisions and their upkeep. I am also thinking of the monthly dispersal and adding more money to my 401k to avoid the tax liability. I have another defined benefit pension that I can access when I am 65. It has $60K+ as a lump or $275 a month. When I retire it is going to be predominately social security around $2300 a month and whatever my 401k is with maybe these two pensions equaling less than $775 after adding my wife. I'm lazy. I have until November 8th to get the paperwork in if I want to roll the money.
Once a insurance company gets involved it's their gain they care about and not yours. Their general method is to convert your pension into a annuity which is sold to you with ease of mind being the top selling point. Never mind that annuities charge for that ease of mind and in the end the insurance company wins.
I would still take the lump sum. If you don't need the money right away just put it in a rollover account and reinvest the dividends and capital gains. At some point you will have to take it though.
I will recommend again calling Schwab and speaking with a rollover specialist. Not knowing your tax situation, both federal and state, there may be options that person might suggest.
I would still take the lump sum. If you don't need the money right away just put it in a rollover account and reinvest the dividends and capital gains. At some point you will have to take it though.
I will recommend again calling Schwab and speaking with a rollover specialist. Not knowing your tax situation, both federal and state, there may be options that person might suggest.
I'd counter at 150k just to see if they'll come up.
Originally Posted by turtlevette
I'd counter at 150k just to see if they'll come up.
Pension buyouts don't work like that.
I'd counter at 150k just to see if they'll come up.
Pension buyouts don't work like that.
I kept my retirement because it lasts as long as I do. A fixed amount of money may end up very low in value due to market forces.
My employeer offered 25 grand. Then 45 two years later. Then 90 grand 8 years ago . The people they bought off cheap were very angry.
My employeer offered 25 grand. Then 45 two years later. Then 90 grand 8 years ago . The people they bought off cheap were very angry.
Without knowing more details on terms and conditions, it’s never that simple.
Either way, I expect the OP made his decision several years ago.
I think impossible to say what I would do, so many things can be different but I have to say this, I would think long and hard about going for the payout instead of risking a sure thing. More or less seriously would consider taking the money and running with it because being left in the hands of someone else that maybe in trouble is troubling.
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