Expert: Allen - 12/15/2005

Question
My ex-husband is eligible to retire, but has elected not to. I can collect my portion of his retirement now but am told there would be an actuarial reduction.  My ex will probably retire in the next 5 to 7 years.  Currently my age and his age is 50.  My portion of pension benefits will stop when he passes away.  I do not receive survivor benefits.  Should I begin collecting now or wait until he retires?  And is the actuarial reduction significant should I collect now.  Also, will I be paying any extra tax on the pension income if I collect now.  I currently work a full time job.

Answer
Sorry that I couldn't get back to you sooner. I have been out of the office due to a death in the family.
There is no simple answer to your basic question. The correct answer would depend on an analysis of the provisions of the pension plan, the amount of the actuarial reduction if you start receiving payments now vs. waiting, your health, your ex husband's health and your current tax bracket.
The best I can do is to say that if the reduction is not too large, I would start the payments now. But that is a very qualified answer.
I can answer is your final question - Under most circumstances you would pay ordinary income tax on any pension payments to you.  The only possible exception occurs if the pension plan was what is known as a contributory plan.