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Tax Talk with George Saenz

Ask the tax adviser

Managing lump-sum payouts

Dear Tax Talk:
When I was 70½, I took a lump-sum retirement and rolled it over. I am still working, and each year I am given another lump sum for that year because my employer must still contribute to my retirement fund. The company tells me that this money cannot be rolled over, and I pay my taxes on this. Others tell me different. Please advise.
Re

Dear Re:
If you didn't retire at age 70½ and you're not the owner of the business, you should still be able to accumulate your pension funds in the employer's qualified plan or in an individual retirement account.

If the money is being paid to you, you should have your employer confirm with the pension-plan consultant why the funds can't remain in the employer's plan.

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It may be that the plan's governing document requires amendment to allow you to continue to accumulate past age 70½.

At a minimum, these funds should also be eligible to be rolled over to an IRA. However, because of your age, minimum distributions from the IRA are required.

-- Posted: Feb. 5, 2002

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See Also
FAQs about 401(k)s
Managing your IRA distributions just got easier
4 reasons not to tap your retirement money
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