I have worked for the same company for the last 12 years. Now my division is being "spun off" to form its own new company. The old company is going to give each employee affected by this a lump sum distribution of his/her accrued pension benefits at the time of the spin. I am told also that this is a taxable event so that, for example, if I have a $100,000 pension benefit due to me I will have to pay taxes on it right now. It is treated just like ordinary income. For a person in a high tax state like NY that's a pretty stiff penalty. Are there any legal ways to avoid paying taxes on this distribution until I actually retire? I am told I cannot roll the distribution into my IRA or 401-K but don't know if that's true.Thanks.
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