retirement lump sum

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L1: retirement lump sumI am retiring soon. I have a lump sum retirement payment and an employee Fidelity 401k plan. Can I roll them both over into one IRA and use the combined amount to set up a 72t account? Thank you. bigt2010-01-15 16:27, By: bigt, IP: []
L2: retirement lump sumYou could, but are you sure you need to? There may be other options. What will your age be on 12/31/2010?Is this retirement permanent? Do you have any highly appreciated employer stock shares in your 401k plan?2010-01-15 20:17, By: Alan S., IP: []

L3: retirement lump sumI will be 55 08/24/2010. Permanent, yes I believe so unless something unforseen happens. No stock shares in plan. I may include the lump sum, ormight just put it in another IRA,just wondering if it was legal to do it. Thanks, bigt2010-01-16 00:00, By: bigt, IP: []

L4: retirement lump sumYou can split them to meet your needs. Just make sure that they have their own account number and that you treat them as distinct accounts. A good place to start is to determine the amount that you want to receive on an annual basis. Then use out Last Payment Date Calculator to determine the amount to place in the SEPP & transfer the balance to a new distinct IRA. The non-SEPP funds can be used for emergencies (subject to the 10% penalty) without any bad impact on the SEPP plan. If needed it (or part of it) could also be used to create a new SEPP.2010-01-16 10:33, By: Gfw, IP: []

L5: retirement lump sumSince you will be separating IN the year you turn 55 (or later), you will be eligible for penalty free distributions directly from your 401k plan. This does not apply once the funds are rolled to an IRA. But the practical benefit of this exception loses most of it’s appeal if the plan will not provide you with reasonably flexible distributions. If they make you take a lump sum distribution, and you choose an amount that you think will get you to age 59.5, then all that income will be bunched into one tax year and would probably increase your marginal rate by the same 10% you avoided as a penalty. But if they allow you to set up installments, adjustable even once a year, you can collect these distributions penalty free and AVOID a 72t plan entirely. At age 59.5, you can then roll over what is left in the plan to an IRA.Note that these distributions will have mandatory 20% withholding, but you can easily work with that requirement. At age 59.5, a direct rollover to an IRA will avoid withholding because that check will NOT be made out to you individually.So check with Employee Benefits to see what they offer in the way of flexible distributions. If they offer nothing, then a 72t plan would be your “Plan B”.2010-01-16 18:37, By: Alan S., IP: []