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Pension Plan

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  • Pension Plan

    So my dad was offered a pension payout by his work today. He's 65, retired and this was his first year receiving his pension.

    It's 30k per year until he dies, then 15k per year for my mom until she passes away. My mom is 63 and currently works for for fun for a small company. I'd assume she works 2-3 more years as she enjoys it.

    The payout offer is $405k lumpsum. I read that typically there is 20% taxes taken out, is this correct? Are there any taxes paid if pension payout is rollovered to his IRA?

    At 405k, 3% return yearly would give 800k at 20 years or 1m at 4%.

    Thoughts? I'd assume my dad lives about 20 more years and my my mom 25-30 based on grandparents and older siblings.

  • #2
    What does a similar spia pay? That's the first step in evaluation.
    The lifetime pay is valuable I'll say.


    • #3
      His annual payment is basically equivalent to a 1.125M portfolio at 4%. Lots to consider including actuarial tables, how many take the deal making his pension safer, strength of the company, will next offer be better, etc.. and such. Its only a 9 year payout really, and of course less than half of the draw at 4%.