Expert: Allen - 7/31/2006

Question
Hello.. Thank you for your 2-part answer to my previous questions.
Would your answer to this same question change if I would elect to receive monthly pension payments?  
 Would your answer to this same question change if I would elect to receive a lump sum pension payment?
Could I roll over the money to my existing IRA account with appropriate instructions to both the pension plan and to the company holding the IRA, or do I need a new IRA account?
 If I first elect to take the pension in monthly payments and roll over the money to the IRA, may I later elect to take the pension payments as a monthly check (money directly to me) after changing the instructions to the pension plan and to the company holding my IRA?
Thank you very much, sue
 
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Followup To

Question -
Hello..I have not started taking my pension money as of yet.  I would like to know if I may have the pension money deposited directly into my IRA.  Would there be any advantage to do so?  I co not need the money to live

Answer -
You can either leave the money in the pension plan or "roll it over" to an IRA. If you want to roll it, you will have to set up an account with a financial institution and advise the plan administrator of the pension plan of your intention. In either event no tax is due until money is withdrawn and paid to you. You should leave it in the plan if you are happy with the way it is being invested. You should roll it to an IRA if you believe you can can do better. If you do roll it, I would suggest transferring to an institution that charges low investment management fees such as Vanguard or T Rowe Price.

Answer
A number of questions here:
1.Any payments to you, whether they are in the form of a monthly pension or a lump sum are taxable when received. 2.Your pension money can be rolled to and existing IRA or a new one.
3.If you receive monthly payments, they are taxable as received and can not be rolled over to an IRA.
4.You may be able to receive monthly (taxable) payments and then at a later date roll the balance in your account to an IRA. However, this option would be subject to the rules of the pension plan and whether it permits this type of election.