[Joanna]

I have a pension (under $100k) from an old employer that I’d like to roll over into brokerage, retirement, or other vehicle to increase the rate of return.

What do I need to consider outside of annual 401k & IRA limitations?

I assume it adds to my tax burden if I take it as a lump sum.

What else should I think about in this decision?

[Jule]

If you roll it to an traditional IRA or 401K, there will be no tax implications

[Prasad]

Just to clarify, roll overs do not count towards yearly contribution limits.

Can you call up your current 401k provider and ask them if the plan accepts incoming roll over from the pension, assuming your 401k has good low cost index funds; else call your brokerage for rolling over into TIRA.

[Lara]

I had a similar situation about a year ago. My current work 403b is with fidelity. I opened a rollover IRA through fidelity and put the pension buy out in there.

So, they are separate accounts but at the same brokerage.

There was no tax implications since I put the money into the rollover IRÁ right away.

I called fidelity support for assistance setting up the right type of account and instructions and they were very helpful.

[Karen]

First, you’d want to check with the pension system to see if there are any benefits you’d be giving up by withdrawing a lump sum.

(Some pension systems offer death benefits or even retirement benefits even if you are no longer active, in some cases including employer money, similar to a match.)

Second, if not, you likely want to roll it over to an IRA or other retirement vehicle, otherwise you’ll need to pay taxes plus possibly a 10% penalty.

You can roll it into an IRA and self-direct the assets, and a rollover does not count towards annual contribution limits.

[Author]

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