I wrote an article titled Lump Sum Versus Regular Pension Payments. It went into what you should consider before accepting an employer’s offer to cash out your pension plan. This piece generated quite a large number of e-mails from readers, including this one from Sandra:
“How does the lump sum work? I took a lump sum when I retired from Westinghouse. The IRS keeps wanting me to pay on the money I receive every year from Westinghouse. I used the Lump sum form and they have denied it. Please help me.”
I have a few concerns that I’ve passed on to Sandra:
1. Did she simply take the payout from her former employer and stick it in her checking account? 2. Is she over 70 ½ years old? If so, required minimum distributions from her IRA might apply.
I hope she gets back to soon; the IRS loses its patience very quickly. In the meantime, you can read the complete article at: http://www.investopedia.com/articles/retirement/05/lumpsumpension.asp. Best wishes, George