There's great advise in the answers above. Personally the fact that you must collect for 15 years to regain the lump sum weighs strongly in favor of taking lump sum and rolling over to an IRA. But the choice does depend on life expectancy experience in your family, your health and your tolerance for risk. Letting the insurance company worry about it is a close second.If you take the lump sum and roll it over, you will need to work out a distribution schedule that minimizes your income and gets it out of there before mandatory distribution. Your future expectations for income, your wife's planned date of retirement, and other income sources that will impact your income tax rate should all be factored into the decision.When you get the opportunity, as in a low tax year, rolling IRA distributions over into LTBH taxable investments usually works well for estate planning and income tax advantages.
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