Rollover of Civil Service Retirement System Lump Sum Payment
I have a 78 year old client that will shortly receive a lump sum payment from the Civil Service Retirement System based on payments she was entitled to receive under a QDRO and that should have started in February of 2000 but were never made. Can she rollover the lump sum into a Traditional IRA? She currently does not have an IRA.
Permalink Submitted by Alan - IRA critic on Mon, 2016-03-21 02:47
Was this the DB pension, but the plan messed up by not starting payments and is making it up with a lump sum, but then paying as annuity from here on?
Permalink Submitted by Robert Dyar on Tue, 2016-03-22 20:29
Sorry for the delay. Your description is correct; it’s a DB plan that didn’t make payments to former spouse for 16 years and I notified Civil Service on behalf of my client. They’ve sent a large lump sum check and will now make monthly paymens going forward. Thanks for your interest.
Permalink Submitted by Alan - IRA critic on Tue, 2016-03-22 23:42
Client can probably roll it over, but to be sure they should ask the plan if they want to know now. If they do not want to call the plan, they can wait for the check. If 20% withholding was deducted from the check for taxes, it means that the payment was considered an eligible rollover distribution. On the other hand, if the payment is eligible they should have informed the client so that the payment could have been rolled over directly and that would avoid the 20% withholding. Note that had the annuity payments been made, they could NOT have been rolled over and future annuity payments cannot be rolled over. There is another question here as well, in relation to RMDs that were never made from this account for the last 8 years.