Why I Turned Down My Former Employer’s Lump Sum Buyout Offer
By Ian Berger, JDIRA AnalystFollow Us on X: @theslottreport Earlier in my career, I worked for a company that sponsored a...
lump sum buyout
Inherited IRA Q&As
Each week the Ed Slott team answers questions from financial advisors across the country. Sometimes we see a pattern in repeating questions, sometimes the questions are relatively basic, and sometimes they are real stumpers. We never know what the next phone call or email will bring. Recently, we’ve fielded a rash of inherited IRA inquiries. Here are a few:
Should I Accept a Lump Sum Buyout Offer?
Should I Accept a Lump Sum Buyout Offer?
With economic uncertainty increasing, more companies with defined benefit (DB) pension plans will likely attempt to improve their bottom line by offering lump sum buyouts. A lump sum buyout is a limited opportunity for DB plan participants to elect a one-time cash payment in exchange for giving up future periodic payments. Some buyouts are offered to participants who are near retirement age, while others target those already receiving benefits.
Deciding whether to accept a lump sum buyout is an important choice that you shouldn’t make without consulting with a knowledgeable financial advisor. Here are several factors you and your advisor should be looking at:
SHOULD I TAKE A LUMP SUM BUYOUT?
As a result of the current economic downturn, we can expect more and more companies to offer lump sum buyouts to employees with defined benefit (DB) plan benefits. A lump sum buyout is a limited opportunity for DB plan participants to elect one lump sum distribution in exchange for giving up future periodic payments.
The decision of whether to accept a lump sum buyout is a difficult and important one. Because the stakes are so high, it is crucial that you consult with a financial advisor before making a final decision. Here are several factors that you and your advisor should consider:
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