DB Pension conversion to IRA?
When our old employer sold the hospital where we work , to a new organization, our vested interest was assured in their DB pension plan.
Now about 14 yrs. later the DB Pension is being dissolved and we each have a dollar amount we are being given the chance to transfer to another vehicle within a 30 day window.
I know it should be a trustee to trustee transfer, so we don’t touch , but what is the best vehicle to put in??
And after transfer, can it later be converted to a tax free vehicle , paying only the tax and no penalties when converting?
Permalink Submitted by Alan Spross on Thu, 2012-05-10 22:36
A rollover IRA or rollover to a Roth IRA is the most convenient and usual account to receive these funds by direct rollover, however if your current employer’s plan will accept such rollovers, this is also an option.
Technically, a non reportable transfer can only occur between IRAs, so your transaction should be done by direct rollover to avoid the 20% mandatory withholding. Of course, if a Roth IRA is chosen, the rollover will be fully taxable.