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azmom_gw

Tiny pension - Taking lump sum or monthly annuity payment

azmom
9 years ago

I just received a notice from a previous employer asking for my pension choice. I learned that it is at maximum distribution without any future increase even if I delay my decision.

Since my employment with the company was short, the pension is very small: I could take lump sum $8900.00 and roll it over to my IRA and avoid 20% tax for now. Or take monthly single life annuity of $65.00 for the rest of my life.

Because the amount is very small and DH will have good pension of his own, I won't consider other smaller amount for 'joint and survivor annuity' choices.

If I take lump sum, I will not eligible for any additional benefits from the plan. The single life annuity payment will last for my lifetime.

Take the lump sum and invest sounds tempting. Then I did a rough calculation, the lump sum will last 11.41 years based on $65.00/month, therefore may be I should take $65.00 monthly and purchase index mutual fund? Not sure if it matters with the decision as I have good heath and plan to work a few more years before retirement.

Any suggestions on this desicion will be very appreciated.

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