I plan to take a lump sum payment from my retirement account and have entered it into the system as a lump sum payment. However, when reviewing the reports, it taxes the lum sum payment as regular income. How can I make is so the lump sum rolls over into an IRA so the lump sum can grow tax deferred until a later time?
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I believe you'd just enter the amount as a non-tax related special expense and then enter an amount in the IRA. I think that's right. Perhaps others will comment.
Yeah, that should be right. IRA contributions are tax deferred, so that has the right effect. Just remember to lower your retirement account by the amount of the lump sum payment.
Best,
Dick Munroe
Could you please be very explicit as to how to model a rollover of lump sum pension into an IRA - is the following the correct procedure for ESPlanner 2.15.2 ??
Example $100,000 pension received in 2010 as lump-sum and rolled into IRA immediately
- Pensions & Annuity Tab - enter $100,000 pension received in 2010
- Retirement Account Tab - enter $100,000 company contribution in 2010
- anything else?
As a side issue, if one takes a $100,000 lump sum pension in 2010 and does not roll it into an IRA, how is ESPlanner handling this situation? The pension funds don't seem to show up in the detail cashflow for net worth???
Sorry to be repetitive about this question - but there are several previous posts in the forum that have addressed this, some conflicting and some referring to changes to be made in ESPlanner software code so its not entirely clear to me what to do.
Thanks, Jeff
i noticed the high tax issue also after first modeling as lump sum. my thought was to model in 'retirement acct' section as employer contributions (in addition to 401k matches) since my client is actively employed and still accruing er credits. any issues?
it would be nice if it would be separate acct since cash balance plan has no market risk until retire (just credit risk over PBGC limits) but i will adjust down my return for all retirement accts.
I am helping a client with the same question. Should they take the pension or lump sum. Can you model it by just entering the amount of the lump sum in the individuals retirement account as an employer contribution?
Bruce Galvin, MBA, CFP