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Can anyone give me some help about exactly how the
computation is made and what it is dependent on? Are
there potential advantages or disadvantages
to waiting past the end of the year?

The calculation is extremely complicated, but you can get close by using a simple amortization schedule. That calculation uses your life expectancy, the annual retirement income you have earned and an interest rate. An organization named PBGC (Pension Benefit Guarantee Corp.)publishes the interest rates, but each company can use a different twist as to how those rates are applied. For example some companies use the average rate over the last three periods, others use the current rate, etc. Some companies have life expectancy tables for their employees, some companies use standard life expectancy tables, etc. The main thing to watch as far as timing goes is what interest rates are doing. That is the single factor that impacts the lump sum the most. Of course, you need to take into account how your retirement benefit changes with time. The best way to get accurate numbers is to have your company calculate a couple of cases.

Regards, Jim

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