lump sum pension to 401k
My client is receiving an early retirement offer (currently 58)he has a 401k plus a pension for which they are going to offer a lump sum settlement. Can he deposit the lump sum into the 401k and withdraw without the 10% penalty since he is over 55, under 59 1/2 and retired. The 401k and pension are both with his current employer.
Permalink Submitted by Alan - IRA critic on Fri, 2013-10-18 01:11
If all he needs to withdraw living expenses for one year until he reaches 59.5, he could get the distribution from either plan and roll the balance to an IRA. There will be no penalty under the age 55 separation exception. It should not be necessary to roll the pension to the 401k and the plan may not allow that either. Securing the needed distribution from the plan is a far better solution than starting a 72t plan from a rollover IRA when there is only one year left to 59.5.