Pension extension?

[UpstateNYUPSer(Ret)]

Under the Teamster UPS National 401k plan, if you retire at 55 you can receive disbursements upon retiring if you leave your money in the plan. If you roll it over you have to wait till age 59.5 to make withdraws.

I will be 58 when I retire and have no intention of touching my 401k (other than rolling it over).

 

[Catatonic]

I will be 58 when I retire and have no intention of touching my 401k (other than rolling it over).

I plan to not touch mine until I get to 70 ... you pretty much have to start withdrawing then.

 

[oldngray]

I won't touch mine unless I have unexpected expenses like medical bills.

 

[UpstateNYUPSer(Ret)]

I plan to not touch mine until I get to 70 ... you pretty much have to start withdrawing then.

70 1/2. Why is everything associated with a 401k in 1/2 year increments?

 

[Catatonic]

70 1/2. Why is everything associated with a 401k in 1/2 year increments?

​Democrats said 65 and Republicans said 76 ... compromised halfway.

 

[IVE GOTTA PACKAGE 4U]

70 1/2. Why is everything associated with a 401k in 1/2 year increments?

Just like everything else in government.................half assed!

 

[UPSGUY72]

I was with a friend last night who is in the financial sector. We were talking about pensions and under funding problems. He suggested copying social security, that is, the option of working longer, delaying withdrawal, for a larger sum. You could leave if you want at 30, however if you work 5 or 10 years longer, the monthly amounts increase.

The pension people would love you to work 5 or 10 years longer. They also hope you die sooner especially if your single and depending on how you decide to take your pension when your married..

 

[pretender]

Under the Teamster UPS National 401k plan, if you retire at 55 you can receive disbursements upon retiring if you leave your money in the plan. If you roll it over you have to wait till age 59.5 to make withdraws.

Actually, you can take a one time withdrawal when you roll it over.

 

[oldngray]

I think for social security the break even point when it was no longer better to retire early is at 78. So you have to guess how long you will live. And for me those years when you are not as old and able to enjoy life more are worth more than the money.

 

[pretender]

Huh. So you can receive credit for years of service before age 21, but cannot be a participant until age 21? That's not the way it's been explained to me in the past, although I'm certainly hoping you're right. There was an addition to Art. 34 in the NMA (after 2002) that required UPS to grant credited years of service to employees who worked for UPS after age 21 but didn't receive credit before the age of 25. I always interpreted that to mean that years of service before age 21 didn't contribute towards pension credit.

I started at age 17 and I am receiving a pension for my four years of part time service.

 

[Inthegame]

The pension people would love you to work 5 or 10 years longer. They also hope you die sooner especially if your single and depending on how you decide to take your pension when your married..

Are these "pension people" related to those "time beings" that we do things for... you know, lets just do it for the time being...

 

[CharleyHustle]

Actually, you can take a one time withdrawal when you roll it over.

I think you will be taxed on that withdraw, unless you roll it over. If you have 200k and withdraw it, you would be in the 200k tax bracket. We have many folks who would like to retire early at 55, and while you don't have to take withdraws, its nice to have your money where you can access it if something unexpected happens.

 

[pretender]

I think we are both right--If you roll it over, you have to wait until 59 1/2 before making withdrawals. (Actually, it is possible to do a 72T with an IRA.) However, you can take a one time disbursement before rolling it over. When I retired, I withdrew enough to pay off my mortgage and rolled the balance over to an IRA.

 

[Ms.PacMan]

There is also a 10% early withdrawal penalty unless you are 55 and have separated from service. Withdrawals can begin after retirement at age 55 from the 401K (probably the 72t rule). Direct rollover to a rollover IRA, at any age after retirement, has no consequences because you are just transferring the money.

Your tax bracket is what you need to pay attention to like CharlieHustle said.
Dave - This is how people do Roth conversions - they withdraw just enough to keep them in the same tax bracket and convert that money to a Roth IRA. You will have to pay the tax at the time of conversion though. You can play around with a tax simulator to figure it out https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

To figure out RMD's at 70 1/2 Required Minimum Distribution Calculator – FINRA

To figure out how much of your SS when added to your income will be taxable use
How much of my social security benefit may be taxed? | Calculators by CalcXML

Pension + SS + RMD's may be enough to push you into a very high tax bracket. Roth money is tax free.

 

[UpstateNYUPSer(Ret)]

I will let my financial adviser handle the details.

 

[Packmule]

I was with a friend last night who is in the financial sector. We were talking about pensions and under funding problems. He suggested copying social security, that is, the option of working longer, delaying withdrawal, for a larger sum. You could leave if you want at 30, however if you work 5 or 10 years longer, the monthly amounts increase.

SS is also scheduled to go broke. Where is the gain?

 

[pretender]

There is also a 10% early withdrawal penalty unless you are 55 and have separated from service. Withdrawals can begin after retirement at age 55 from the 401K (probably the 72t rule). Direct rollover to a rollover IRA, at any age after retirement, has no consequences because you are just transferring the money.

Your tax bracket is what you need to pay attention to like CharlieHustle said.
Dave - This is how people do Roth conversions - they withdraw just enough to keep them in the same tax bracket and convert that money to a Roth IRA. You will have to pay the tax at the time of conversion though. You can play around with a tax simulator to figure it out https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

.

Right--I had a relatively small balance, so I was able to withdraw what I needed without jumping tax brackets.

 

[bottomups]

With the ratification of the new contract, my pension fund has increased the monthly payment $400 if we retire at age 60.

 

[satellitedriver]

I will let my financial adviser handle the details.

The devil is in "the details", Dave.
First off, when you rollover a 401k worth $200K into a Roth IRA you will have to pay Uncle Sam $50,000, due to the 25% effective tax rate.
You can not touch that $150K for 5yrs, without penalty.
You can not touch that $150K before the age of 591/2, without penalty.
Add the expense fees paid to a financial adviser-(avg 1.5% yearly for a managed acct.) to the equation.
Those are the details that can put a hole in your financial boat.
The expense fees in our 401k plan for target date retirement-(bright horizon funds)- are 0.1%.
When one does the math it is often better to leave the monies in the tax exempt 401k until 591/2yrs old, then take distributions, at a lower effective tax rate, and use those funds to fund an ROTH IRA.

The common wisdom is that the tax advantages for a ROTH start declining after the age of 45yrs old.

I wish you well.
At least you have a plan, unlike 80% of the people I know.

 

[UpstateNYUPSer(Ret)]

Thanks for the advice and detailed explanation.

As I said, my financial adviser and I will sit down together to figure out what is best in my situation. Our next meeting will be sometime in January 2014.