<p>OK – I’m confused – If you did a rollover IRA from a 401K, and then Roth’d a bit of it, can you roll the remainder back into a 401K if the 401K administrator allows?</p>
<p>I’d thought that the backdoor roth wouldn’t be useful for us because we both have pretty decent size IRA accounts, but DH’s is from rollovers.</p>
<p>Now I’m thinking we might have some options.</p>
<p>Lump sum question. Pension plan has lump sum option as their “primary option” but by law they have to have annuities available. How do you decide which is best?</p>
<p>It sounds like the lottery, where you can take it all now or get a payout. But if you out-survive the payout, you still get the annuity from a pension, correct? Or do they take the lump sum and annuitize it and you get it all in 10 years or something?</p>
<p>I suppose that we could ask the 401k (457) plan administrator about rolling the funds BACK into a traditional IRA but see no reason to do so, since I may do more Roth conversions in 2015 and future, if I have income and remain under age 65. The 457 plan I am under is OK anyway and has OK options and somewhat reasonable admin fees. </p>
<p>I converted ALL the after tax $$$$ I contributed to my traditional IRA into a Roth IRA and may merge it with my other Roth IRA. Since it’s after-tax $$$, I see no point in only converting part of the funds and think there is good reason to convert it all.</p>
<p>You have to check with your plan administator to see what your options are for rolling money IN and OUT of the plan. None of us can answer that for you. If you decide in the future to roll things back into the plan, seems like more work to keep moving the funds around and more likely to end up with glitches. I like keeping things as simple as possible.</p>
<p>rhandco- I think most people with a pension should take the monthly check and not the lump sum.</p>
<p>There are several issues in deciding whether to take the lump sum or a monthly check. The major one is WHO is writing the check and what is their financial stability and reliability looking forward the next decades that you will want to be drawing from the check. </p>
<p>If the check is being written by the federal government, or highly solvent other company or government, there is a pretty strong likelihood that it will continue to be written as agreed upon for some decades. If it is an auto manufacturer or airline, perhaps not and the company may declare bankruptcy and provide MUCH smaller pensions (if any) after the bankruptcy and reorganization.</p>
<p>Concern about the solvency about the company he had worked for was a reason my friend opted to take the lump sum and find a financial advisor he trusted (or some folks opt to buy a single premium immediate annuity with some of the funds and invest the rest in a mix of broad stock and bond index funds or target index annuities). </p>
<p>The key to investments is to be sure you have very LOW annual and administrative fees, as they eat up your gains over time otherwise, especially if you have an advisor that takes another 1% of your principal whether you make or lose money, plus commissions and taxes.</p>
<p>Good article–we do have a struggling artist, currently in the 0 tax bracket. Hopefully she will move up and out of that bracket in the near future, but who knows? Yes, there are definitely whispers about changing Roth IRAs, making us not really all that excited about converting, as S is already in a fairly high tax bracket, as are we.</p>
<p>Tom1944- why do you believe most people should take the monthly check for a pension?
Please educate me.</p>
<p>I’m four years from retirement but have begun thinking of this. My gut reaction is to make the lump sum and roll it into an IRA. I’ll have SS and a 403b as well.<br>
I like the bird in the hand approach. The annuity options for monthly pension are overwhelming to me, I get more uncertain every time I look at them. Ie my life only, 100% for spouse also, 50% to spouse, etc.
I’d like to hoard all funds at retirement and have flexibility as needs change.
Am I missing some key point?</p>
<p>@rhandco, let me add to HImom’s excellent post #2884 (this topic never dies!) two things:</p>
<p>The Pension Benefit Guaranty Corporation insures many private-company pensions, but the insurance has limits and restrictions. </p>
<p>You should also consider family longevity and your and your spouse’s state of health. Exaggerating to make a point: if you know you have 6 months to live, take the lump sum and obviously, if you’re going to live to 110, take the annuity. </p>
<p>We are aware of that potential change in 2015 budget but until it changes we just proceed as usual.
My starving artist also starts thinking about retirement. I’m doing research for her solo 401k through Vanguard.</p>
<p>IF there is a big difference in your and spouse’s age, it can be worthwhile to have a spousal survival benefit, especially if the spouse (like me) doesn’t have any pension. In our case, there is 15 years between us an only a slight decrease in the monthly pension payment (with COLA) for having the survival benefit. My family lives a very long time–dad is turning 90 this year and his uncle lived to 107 or older. We aren’t that great at investing and trust the federal government that holds his pension to pay it out to us as scheduled, plus we had no lump sum option–just with or without survival benefit.</p>
<p>One other thing–sometimes things are tied to survival benefits. In H’s case, he had to choose at least a 5% survival benefit so that we could have family medical coverage instead of just H having individual medical coverage. It’s one more thing to cover with your HR to make an informed choice.</p>
<p>musicmom- I do not think most people can manage the amount of money properly and put their financial health at risk. I do agree if you are with a company that looks like it may crash and burn it might make sense to take the lump sum. I do not think that is most situations though.
There is a reason why companies make you sign so many documents when you take the lump sum. Too many of their retirees were coming back to them after they had lost so much money they could not make ends meet in retirement. They tried to blame the company. </p>
<p>Do you not have to pay tax on the lump-sum payment? If you do, it is the same question as to convert to roth or not. If you need the distribution to live on, it’s better to take the annuity. </p>
<p>One thing to keep in mind is that certain institutions, such as assisted care facilities and lenders, are keenly interested in your guaranteed monthly income. When I was in the process of finding assisted care for my mom it became clear that her pension and annuities were more important to the business departments than her accumulated assets. I think lump sum payouts can be rolled over immediately into 401K’s without tax consequences, and as such the lump sum remains categorized as retirement funds for protection from creditors.It is nerve wracking to choose between the different survivor options for pensions. Very unpleasant thinking of all the death scenarios just before retirement. </p>
<p>Good article in WSJ, thanks for posting. </p>
<p>@iglooo and @momsquad, afaik, you can roll the lump sum into an IRA (not 401k, but “same difference”) and pay taxes on the money as you withdraw it from the IRA. </p>
<p>Check with your HR to be sure you fully understand your options. H had a sum that was after tax money we contributed. He had the option of rolling it into a Roth IRA or getting an annuity. We took the Roth, as we didn’t need those funds to live on and liked the idea of having it in a lump sum Roth. </p>
<p>This hasn’t been mentioned on this thread, but there is a great PBS Frontline program “The Retirement Gamble” that was first broadcast April 23, 2013 and recently replayed (it is available to see on web site FRONTLINE | PBS | Official Site | Documentary Series) There also are some links to articles, the experts, etc. Although some of the links go back to 2008 and 2009 (<a href=“http://www.wttw.com”>www.wttw.com</a> with the retirement revolution). </p>
<p>John Bogle is on it and makes some very good points. Interviewer is great with questions to investment ‘professionals’. Lots of great information. Some wonderful and relevant real life examples with people and their situations. They really cover many of the common pitfalls and expose the hidden and excessive costs, hit upon the mutual fund industry (and insurance/annuity) where ‘suitability’ is required instead of the higher fiduciary responsibilities.</p>
<p>This one hour show really hit upon so many of the topics discussed on this thread. I watched it twice.</p>
<p>Thanks for the frontline hint. Maybe we will watch it this weekend - <a href=“http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/”>The Retirement Gamble | FRONTLINE;
<p>We have a choice of several local classes (one at local rec center, others with private firms) discussing retirement/SS planning. I suggested to DH that we pick one and make it a “date night”. He thought it might be a good idea, but not without first commenting that our idea of a good time out has evolved over the years… </p>
<p>“I suggested to DH that we pick one and make it a “date night”. He thought it might be a good idea, but not without first commenting that our idea of a good time out has evolved over the years…”</p>
<p>Okay, I think he has a point. Maybe you could call it something other than “date night”, unless of course, it comes with wine and a great dinner. Sounds more like an obligatory function than something actually enjoyable. We have never designated something as “date night”, but if we ever were, it would have to be something that is fun. Retirement planning…blah, ugh. Kind of like meeting with your lawyer to draw up your will. Definitely not date night.</p>
<p>Retirement is something I want to have as a choice if I am “required” due to health, lay off or something to stop working. </p>
<p>So, I am saving the money to retire but I have no plan or desire to retire. At the same time, I don’t want to have to do my current job if I no longer want to do it.</p>
<p>I believe that the concept of retirement is a 20th century idea that will collapse in on itself. The Industrial Age is over and so is the idea of retiring and living off of the efforts of younger workers or the government. Of course, saving money and doing your own thing once financially well off will never go out of style.</p>