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I asked this question at the end of the retirement Seminar and it was suggested that I ask it here. This is the question with the first response:

I am vested in a local gov't retirement plan. I have not worked for the city for about 13 years. When I turned 50 - three years ago - I was eligable to start receiving payments. I have not yet elected to do so. As in other plans, the later I start receiving payments the higher they will be. Once I start the amt is essentially fixed, except for a cola. Current distribution will of course be taxed at my current marginal rate, which should be lower after I really retire.

I thought I understood how to do this analysis.... using the discounted value of the payments... but now I'm even more confused. Can you offer some guidance or some calculator that can help me.



Author: L2J Replied
Subject: Re: Q: When to start retirement plan distributio

Hi Leo, you may not get much response on this board any longer, with the seminar closed. But take your question to the "retired fools" or "retirement investing" boards. My only thoughts regarding taking a distribution prior to age 59 1/2, you could possibly be subject to a 10% penalty on top of the tax. If you have the option for a lump sum (for purposes of rollover into an IRA - self directed investing), make sure the check is not directly made out to you. Must be made out to the IRA custodian to avoid taxes and/or penalty. Good luck.


Subject: Q: When to start retirement plan distributions?

The retirement system does a matching of dollars, adds that to my contributions, and uses that as the base for actuarially determining the monthly payments. If I elected a lump sum distribution I would only get my contributions out. As far as I know there is not a penalty for receiving funds before age 59.5.

Still looking for a way to determine how to proceed.


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