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Updated about 11 years ago on . Most recent reply

User Stats

33
Posts
4
Votes
Brian Nalley
  • Homeowner
  • Elkridge, MD
4
Votes |
33
Posts

Pension Plan Payout Questions

Brian Nalley
  • Homeowner
  • Elkridge, MD
Posted

I received a letter last week from a previous employer about a pension plan I didn't even know I had. I have the option of rolling it over into IRAs or employer plans, taking a lump sum payout, or getting a monthly check for the rest of my life. It is about 20k, or $86/mo for life (lol). 

I have been planning on jumping into buy & hold for a while, and finding a new place for myself to live as well after the short sale of my current house. 

If I take the lump sum, its taxed at 20% or so. Any ideas or suggestions on what options I might have to make the most of this?

Thanks!

Brian

Most Popular Reply

User Stats

423
Posts
223
Votes
Michael Evans
  • Real Estate Consultant
  • Lancaster, CA
223
Votes |
423
Posts
Michael Evans
  • Real Estate Consultant
  • Lancaster, CA
Replied

A couple of clarifications. Short sale loss for a primary home is no longer counted as income. See "The Mortgage Forgiveness Debt Relief Act and Debt Cancellation" at eh IRS website: http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-. Next, you can roll your retirement account into a Self-Directed IRA (Google it), where you can then use the money to invest, without any penalty taxes due to early withdrawal. You can even loan it to a business, including one that you a partner in (as long as you own less than 50% of the business).

I suggest you do some homework on what you can and cannot do with your $20K, as you have more options than you think.

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