lump sum/401K rollover

L1: lump sum/401K rolloverI have less than 2 years till retirement @ 56. I have an option for a lump sum or monthly pension.Since my lump sum is greater than 401K amount. Can I invest my lump sum in an IRA for 72t distributions for the next 5 years and keep my 401K till 59.5in the company plan or does it also have to go into an IRA? Or must I have to use the 401K for immediate distributions.2004-08-14 20:12, By: LA, IP: [66.214.68.103]
L2: lump sum/401K rolloverHello LA:
Much of what you pose is more of a plan issue than an IRC issue. Further, you don’t give us enough information to answer effectively. Generally, IRA assets and 401(k) asets are going to be treated similarly. Much depends on when you separate from service and specific plan rules, not IRS rules.
TheBadger
wjstecker@wispertel.net
2004-08-14 20:31, By: TheBadger, IP: [66.250.23.21]

L2: lump sum/401K rolloverLA:
Badger is correct that you have a ‘planning’ problem more than an IRC problem.
If you retire during or after the year you reach age 55 (sounds like that is the case), then you don’t have to worry about a 10% early distribution penalty from your ‘K’ plan. If you do an IRA Rollover of either or both the ‘K’ plan and / or pension, then the IRA rules apply and you have the 10% penalty till age 59 1/2. So you need to find out what distribution options you have with the ‘K’ plan and your company can provide that information. Find out if you can start distributions for a time and later rollover to an IRA.
Generally with the pension, if you start taking distributions you can’t stop it, and you can’t do an IRA Rollover later. But each company plan is different so ash your company. Whether you take the pension or the lump sum is something you really need to look at closely. With the number of ‘under-funded’ pensions that keep coming to light, you need to try and determine if your company may be in that situation. Don’t tell us the company and expect advise since legally a company’s status can’t be made public, and I don’t know anyone (me included) with that knowledge. You have to decide this one for your self but get as much information as possible.
My definitive suggestion is get a qualified Financial Planner you are comfortable with for the planning aspects and someone like TheBadger to work with if you need 72(t) planning.
Good Luck.
Jim2004-08-14 21:48, By: Jim, IP: [68.105.200.212]