Expert: Allen - 3/6/2009

Question
My Mom is in the process of completing paperwork for beneficiary payout of my Dad's pension.  She is 74.  She will be expecting a death benefit payout and proceeds from a life insurance policy.  Are any of these funds taxable and should we deposit the funds into an account type other than her regular savings account?  Thank you we appreciate any advice.

Answer
If it is a payment from a pension plan and your father did not make any after tax contributions to the plan, then the amount received by your mother will probably be taxable income. In order to delay taxes, she may be able to rollover to an IRA.

The tax notice provided by the plan administrator for the pension plan should provide all the tax information.