AboutAllen Expertise Pension questions ONLY. Pension, profit sharing, and 401(k) plan design, installation, administration and actuarial services; rollovers to Individual Retirement Accounts; taxation of retirement plan distributions
Experience Over 35years experience in the pension field
Organizations Various actuarial organizations
Education/Credentials MBA and various professional certifications
Question I am 58 and plan on retiring within the next 5 years. My company allows for a monthly annuity or lump sum distribution on pension. Lump sum distribution would be $300,000. My understanding and I could be incorrect is that 2006 Pension Protect Act limits lump sum distribution amount to $195K for 2009. If this is the case then can I get a lump sum for $195K (and put in IRA) and also get a monthly annuity on the remaining $105K.
Answer The 2006 Act does not limit the amount of the lump sum payment. An older law does limit the maximum annual pension benefit that can be received from a defined benefit pension plan. For 2009 and 2010 the limit is $195,000 if the benefit is taken between ages 62 and 65. There is also a limit on the maximum lump sum. However, it is approximately $2,000,000.
Therefore you can receive a lump sum distribution of $300,000.
