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Distributions from Your Retirement Plan


Advantages and Disadvantages of a Lump-Sum Distribution

Advantages:

  • You can roll the money into a traditional IRA within 60 days and continue to defer income taxes.
  • You may qualify to convert the traditional IRA to a Roth IRA and enjoy tax-free growth and distributions.
  • You have your money in hand and thus don't run the risk of dying prematurely and losing all of your future annuity payments.

Disadvantages:

  • You have to actively manage your pension amount.
  • There is a large up-front cash drain to pay income taxes on the entire distribution if it is not rolled over to a traditional IRA or other eligible plan.
  • Depending on how the money is invested, future earnings on the amount distributed may be fully taxable.
  • Distribution may be subject to the claims of creditors in the event of personal bankruptcy, even if rolled over to an IRA.

IMPORTANT NOTE: When you leave your job, one decision to make is whether the investment managers or investment opportunities through your employer pension plan are better than those available to you through an IRA rollover. Keep in mind that the investment management of your prior employer's pension plan may change, so monitor your investment performance to make sure your investments are still meeting your objectives.



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Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.
Investment products are:
  • * Not a deposit
  • * Not FDIC Insured
  • * Not Insured by any federal government agency
  • * Not guaranteed by the bank
  • * May go down in value