electing lump sum or annuity

[Guest schlender]

new to this, so bear with me. I am a lawyer with about 30 years of contributions to my plan; I am the only participant at this time. It is a Defined Benefit Plan.

I will be 59.5 in a couple of months. I understand I am to make an election for an annuity or lump sum ? If I have say, one million in the plan, how do I know how much tax I will pay, how much an annuity will be per month, how much lump sum tax would be payable, etc. ? I have no idea and cannot get much from my plan people back East.

Lee

[Guest]

Who says you need to "make an election for an annuity or lump sum"? If your in a 1 participant plan, I would think that you are the Plan Administrator. There is no requirement to take the annuity or lump sum at 59.5 unless your Plan document requires it, and even that can be changed. If it's a defined benefit plan, your actuary should tell you what your options are, what the amount of the lump sum is and what the amount of the annuity is.

Also, if its a 1 participant plan, you may want to think about terminating it if your getting ready to retire. That may involve an excess or shortage of assets which can bring a whole different set of problems. You should be addressing all of these questions to your actuary. Your accountant and lawyer (who drafted the Plan) should also be involved in the process.