Expert: Allen - 9/26/2006

Question
I have been employed by my company for 5 years. They have a pension plan for me and I dont put any money into it (Defined Benefit Plan?) We have been taken over by  a larger company that has no pension plan. At years end the transition officially takes place. Am I entitled to any monies accrued? I am 56 years old. I could sure use it

Answer
I believe you are entitled to the benefit you've earned based on your 5 years of employment. However, you may only be entitled to a monthly pension when you reach the retirement age specified in the plan rather than an immediate lump sum payment. It would depend on the terms of the plan and the way the termination is structured. If you are entitled to a lump sum, you should consider transferring it to an IRA. If it's paid to you, you will have to pay income tax plus a 10% excise tax on payments received before age 59 1/2.