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Author: gurdison Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Re: Income in Retirement Date: 10/30/2001 7:31 PM
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<The pro of taking the pension is that there is not a 10% IRS penalty for early withdrawal (I'm not 59-1/2). You also have a (pretty safe) guaranteed life-time income. The con is that you relinquish control of that money to others - my former company buys an annuity from an insurance company to provide me with the pension.

The pro of rolling over to an IRA is that I keep control. The con is that, in order to avoid the 10% penalty, I will have to take a certain amount out each year at least for 5 years, based on complicated IRS life expectancy calculations. Aaah, me.>


You are correct that there are many variables that must be considered in making the decision. As with many things in this area one size does not fit all. One other factor to consider that makes rolling it over look better is the fact that it then becomes YOUR asset.

If you take the pension it will probably be reduced if you want to establish a survivor benefit. You should also clearly understand if there is a minimum payout period. If you both reach normal life expectancies, the issue may not be important. However if either or both of you pass away early (we hope not!), the IRA will be an asset that you can pass on to your heirs. This can hold true even if you live past the normal life span. The pension offers no such provision (outside of any stipulated minimum payouts).

Of course, the IRA involves YOU being personally responsible for it's proper management. If you do a poor job of managing it, you could run out of IRA before you run out of life. If the SS "Trust" fund also happens to run short down the road, you could get hit with a hard 1-2 punch. Hopefully, however you make your plans, there will be enough of a "comfort zone" for you to allow for down periods and government screw ups. Good luck!


BRG

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