Financial gurus here?

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pishta

pishta

I know I'm right....
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have an offer to cash out an old pension plan from a long past job, they wanna give me $22k lump sum or give me $120 a month after I retire. I honestly don't know how long Ill live past 68 but 22k pre-tax is about 15 years worth of those payments. Of course They'll take a chunk out of that lump sum for taxes but It could pay off interest bearing loans....any advice? I'm kinda leaning on paying off some debt with it...I am a home owner so I'm not going to be paying rent when I retire...knock on wood!
 
pishta said:
have an offer to cash out an old pension plan from a long past job, they wanna give me $22k lump sum or give me $120 a month after I retire. I honestly don't know how long Ill live past 68 but 22k pre-tax is about 15 years worth of those payments. Of course They'll take a chunk out of that lump sum for taxes but It could pay off interest bearing loans....any advice? I'm kinda leaning on paying off some debt with it...I am a home owner so I'm not going to be paying rent when I retire...knock on wood!
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Roll the 22k into an IRA. No tax ramifications
 
pikewi said:
Roll the 22k into an IRA. No tax ramifications
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and don't let them just send you a check. and if they do tear it up and say you never got it. go to a financial adviser you like and have them do the paper work to have it deposited properly or your going to be in tax hell. if you take the check, the company will deduct income taxes off the top, but the IRS bastards expect you to deposit the full amount in the new account. if not...

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Depends on your age, filing status and income . A financial Guru will take that into consideration. You cant just dump 22000 into an IRA.
 
Bodyperson said:
Depends on your age, filing status and income . A financial Guru will take that into consideration. You cant just dump 22000 into an IRA.
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i took IRA as shorthand for rolling it over to something qualified, and a good financial person will know what that is
 
Could be a substantial penalty also depending on your age. Also, consider the company. If they are strong and fiscally responsible and likely to last, then probably best to roll it over. If there is a chance they file for bankruptcy then you'll want to be first in line and get it while you can.
 
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A rollover IRA is a vehicle made for just your situation. Whether or not you use one would heavily depend on your age and time to you plan to retire.
A couple of reasons to rollover, are that you would have much more input as to how the funds would be invested, and could get a much nicer rate of return than by just leaving it sit. Another is as rustyfish says, that money or company could be gone by the time you retire.
Reducing debt is great, but if you can get 10% return on your money, but finance your debt at a lower rate, you come out ahead, and still have your nest egg.
There are several levels of service available from financial investment companies. Lower fees give you less service, so if you're a novice, better to go to a full service company, and have them manage for you. For reasons specific to me, I use Fidelity, and have been satisfied with the results.
Good luck!
 
Well, seems there was a time limit on this offer so its passed 2 days ago but it comes up every year. Ill ask my church finance arm, Thrivent, for some advice. I think taking it out to pay a debt is not worth the tax ding after all.
 
I think you need to get these funds in your control.
You have a year to sort this out and I suggest getting a financial advisor.
As mentioned you can roll these funds over into another form of retirement investment (this will delay paying taxes on them which assumes future taxes will be less than current taxes).
Or take the cash but you need to figure out the taxes you will owe.
Then there’s the combo option: take a little cash to pay off some stuff and roll-over most into a retirement account.
 
AJ/FormS said:
I'd take the cash, pay the taxes and give it to my kids as early inheritance.
They're always hurting for money, and they are my first responsibility.
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How old are they?
They might be better suited with that money in a savings account or something
 
pishta said:
Ill ask my church finance arm, Thrivent, for some advice.
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Thrivent is legit. The only thing that raised my arousal was that two of the first products featured on their webpage are annuities and life insurance. If you get any pressure to buy either of these, find another agent. They can be highly profitable for the agent, and maybe much less so to you. If you need life insurance, whole life isn't a bad idea, but do your research. Term life could be a much better deal for you. Under many circumstances, annuities are one of the worst investment vehicles. Well managed funds will bring a greater return. Depending on your age, a rollover IRA, invested with an amount of risk with which you're comfortable, may be the best option. It looks like you have time, so use it to check your options.
 
S'cuder said:
A rollover IRA is a vehicle made for just your situation. Whether or not you use one would heavily depend on your age and time to you plan to retire.
A couple of reasons to rollover, are that you would have much more input as to how the funds would be invested, and could get a much nicer rate of return than by just leaving it sit. Another is as rustyfish says, that money or company could be gone by the time you retire.
Reducing debt is great, but if you can get 10% return on your money, but finance your debt at a lower rate, you come out ahead, and still have your nest egg.
There are several levels of service available from financial investment companies. Lower fees give you less service, so if you're a novice, better to go to a full service company, and have them manage for you. For reasons specific to me, I use Fidelity, and have been satisfied with the results.
Good luck!
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Bingo in every way. My company from witch I retired near 4 years ago at 53, Royal Dutch Shell, administer(ed)s my pension and portfolio since I hired permanently in 1985 via Fidelity. Rock solid company.
 
Roll it to a qualified self directed IRA. Don't take a check from them.

Financial advisors... BLECK.... Most of them don't do any better than a person could buying 4-5 index ETFs. I'd talk to a few about how to allocate if you are wanting it longer term.

Mutual funds mostly suck as they rarely if ever beat the index they are benchmarked.

So you have a financial advisor and a mutual fund taking $ for performance worse than the indexes. Sounds like a great idea... NOT!!!

Just my 2 cents
 
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No one is ever more than about 7 minutes from death. I could die before I finish this post. What good will that money do you if that happens to you. Somebody is gonna have to pay the taxes on it sooner or later, and every day that you wait to spend it, it will be worth less. If the kids have to retrieve it when yur gone, that wont be cheap either.
The prices of goods and services are spiraling out of control. Soon it could be that a loaf of bread costs you a day's wages. Spend it now, or give it away for your kids to spend asap.
Believers are promised 70 years, 80 if by reason of good health. I am healthy and looking forward to my allotted 80 years, and then keeling over. How about you?
If you don't have kids, you can send it on ahead of you in the form of crowns for Jesus. Your mandates are to; slake the thirsty, feed the hungry, clothe the naked, take care of widows and orphans in their time of need, visit the sick, and those in prison......
Maybe your neighbor has a 12yr old boy with no father and he has outgrown his boots or parka. Once you start looking around, you'll see all kinds of ways to convert your cash into crowns.
 
pishta said:
Well, seems there was a time limit on this offer so its passed 2 days ago but it comes up every year. Ill ask my church finance arm, Thrivent, for some advice. I think taking it out to pay a debt is not worth the tax ding after all.
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You can go to daveramsey.com and search “smartvestor” to find an expert in your area. Dave would give the same advice others here have given. Roll it over into a direct transfer IRA.
 
AJ/FormS said:
No one is ever more than about 7 minutes from death. I could die before I finish this post. What good will that money do you if that happens to you. Somebody is gonna have to pay the taxes on it sooner or later, and every day that you wait to spend it, it will be worth less. If the kids have to retrieve it when yur gone, that wont be cheap either.
The prices of goods and services are spiraling out of control. Soon it could be that a loaf of bread costs you a day's wages. Spend it now, or give it away for your kids to spend asap.
Believers are promised 70 years, 80 if by reason of good health. I am healthy and looking forward to my allotted 80 years, and then keeling over. How about you?
If you don't have kids, you can send it on ahead of you in the form of crowns for Jesus. Your mandates are to; slake the thirsty, feed the hungry, clothe the naked, take care of widows and orphans in their time of need, visit the sick, and those in prison......
Maybe your neighbor has a 12yr old boy with no father and he has outgrown his boots or parka. Once you start looking around, you'll see all kinds of ways to convert your cash into crowns.
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I agree 100% with helping someone in need. But taking the money out now would be kinda dumb. Not only would he get hit with whatever rate income tax bracket he’s in, but if he’s less than 62yo, he’d get hit with another 10% penalty on top of that, so you’re looking at throwing 40% out the window just like that.
 
pikewi said:
Roll the 22k into an IRA. No tax ramifications
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Bingo. Roll it over and let it make money for you. I had the same thing. Little less money and I rolled it into a IRA.

Even get taxed down to 15k I'm pretty sure at tax time you'll have to claim it as income too whick can have ya paying (or paying more) at tax time.

I'm far from an expert though.
 
One thing no one has mentioned. You need to look at possible future tax ramifications. Most people assume, they/you will be in a lower tax bracket at retirement. Not always the case. In my situation, I am in better shape financilly now then I was when I was working a regular job.
 
Always pay your own debts first before gifting money to relatives. They may be in need, but nothing worse than being in need yourself and not getting reciprocal treatment, especially family.

I'm not against gifting to family if you have it, go for it. But if you have debt, you're number 1!
 
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