Retirement question — open letter to client

Dear M and J,

Regarding your retirement question
here is some information to help you make a decision.

Taking a lump-sum distribution can be detrimental.
Mainly because “emergencies” always seem to pop up (for all of us).
And before you know it, you’ve spent all the money you had.
Leaving you with nothing for retirement.

Additionally, because these are pre-tax money (meaning this income has never been taxed)
you would have to pay tax when you take the lump-sum distribution.
And that would put you in a higher income tax bracket.

Here are some choices that would not trigger any high taxes for you.
And would keep your money safely tucked away for retirement.

  1. IRA account.

Open either a traditional IRA or a SEP IRA and have the pension rolled over into that account.
You can then continue to make pre-tax contributions every year.
(When you have available funds, of course).


  1. Solo 401(k) Plan

This plan is designed for self-employed/individual business owner.
It’s available to the spouse as well.
And you can save higher amounts to this type of plan. (Again, when funds are available.)


  1. Monthly payments

You can keep the money where they are and take monthly payments.
As long as the monthly payment provide a good ROI (return on your investment).
If not then either option 1 or 2 would be a better choice.

Fidelity, Vanguard, and others offer IRA’s and Solo 401 (k)
You can decide to stay with Fidelity (where your pension is now) or check out the other guys.

Make sure you find out about fees (if any) to maintain any of these retirement plans.
Even more importantly, make sure their retirement plans allow the rollover (of your pension).
Hope this information makes it easier for you to make a decision.

Wishing you the best,

 *     *     *     *     *

Hope this letter helps those of you who are in a similar situation.

Wishing you success in all you do.


Sharing this site with your friends is much appreciated.
Thanks for visiting.
Mariana Fieraru
Mariana Fieraru, an Eastern European transplant, fell in love with her new home shortly after landing in New York. She "discovered" pizza! Years later she still loves pizza. And so do her two feathered-kids, Sunny and Flipper

Mariana worked on both, the east and the west coast.
Big or small, each project she worked on helped define the importance of gaining and sustaining a competitive edge in an increasingly complex business environment.

Business know-how, love of teaching and writing – all combined in 2006 to form OBI.
Its mission: to make learning fun! And easy.

Through its training, consulting, and publications OBI builds bridges of knowledge to take you from where you are to
where you want to go. Using a mix of serious, informal, analytical, and optimistic approach, OBI truly makes learning fun.

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