Taking From the Pension

Keith is considering take a lump sum from a pension. Mathematically, what's the best option—leaving it where it is or taking the cash? Dave gives Keith his take.

QUESTION: Keith in Connecticut is considering take a lump sum from a pension. Mathematically, what’s the best option—leaving it where it is or taking the cash? Dave gives Keith his take.

ANSWER: I would take the cash, but I would roll it into an IRA. If you take the cash, you’re going to pay taxes on it. If you don’t take the cash by rolling it into an IRA, you don’t pay taxes. If you do that, you don’t pay taxes until you need the money, and as you need the money, you can pull it out of the IRA.

I would recommend good growth stock mutual funds with long, boring track records. I spread my personal ones across four types: growth, growth and income, aggressive growth and international.

Jump-Start Your Goals!

Jump-Start Your Goals!

Get our 8-Day JUMP START series and weekly newsletter that are packed with articles and tools to help you win with money.

Reach Your Money Goals

Reach Your Money Goals

Start with a budget. Join the millions already budgeting with EveryDollar!

Create My (FREE) Budget

Thank You!

Your 8-Day Jump Start is on its way to !