Understand your pension benefit rollover rules.
If your pension allows a lump sum distribution, you can roll your pension into a private retirement account. Individual Retirement Accounts, or IRAs, can preserve your pension and allow maximum control over how you receive your pension income. When rolling over your pension income, make sure you understand the rules for a rollover and how they can affect your pension benefits.
Transfer
A transfer moves money directly from your pension plan into an IRA account. The transfer requires that you use a transfer request form. This form directs your pension administrator to move money into your new retirement account and specifies the new brokerage account you are opening. For example, if you would like to buy an annuity with the pension funds, the transfer request form will generally outline the brokerage that the money is being transferred to and the account type (IRA).
Rollover
Rollovers are arrangements in which you request your pension funds be liquidated and a check issued to you. You must fill out a rollover request form. The money gets deposited into your bank account, and you must open a new retirement account within 60 days, or your pension benefits become fully taxable at ordinary income tax rates.
Cash Distribution
Request a distribution from your pension as a lump sum. You must fill out a cash distribution request form. You will receive your pension benefits, which you can then deposit into your bank account. The time frame for a cash distribution largely depends on the company and how long the paperwork takes to be processed. You will be taxed on the lump sum of money at ordinary income tax rates.
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