Friend left EY in Dec w/$35k in his Defined Benefit Plan (Pension). He makes $150k now. Should he roll into an IRA (Which one?), leave alone, or cash out? If he cashes out, is it treated as income?

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I just went through this last year myself. There is a lot to consider. If your friend cashed it out is is taxable Income and it gets penalized at 10%. If it gets rolled over then he or she has more control over it with no penalty or taxable income. It can be invested in the 401k plan at the new job. If it gets left at EY he or she has no control over it. And if they are married and your friend dies I believe the spouse is only I titled to half the value. I ended up rolling mine into my existing EY 401k and it has been making significant amounts of money for me. Where if I left it in a pension, all I would ever get is what they said it was worth when I retire. And I can’t use it until retirement age. 401k has an earlier distribution date than the pension. Also EY benefits said it only earns about 3% a year. My 401k earned 11% last year

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I’d leave it there. Best to just use it in retirement. Not a bad thing to have guaranteed income

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STM1 is spot on. Depends on your tolerance for risk KPMG1, but given a long time horizon you can expect to earn 7-8% on average just in the stock market as a whole. So, I think there is a strong argument to cash out. If you had a more sizeable amount - let's say a couple hundred a month at age 65 I'd let it sit bc .. guaranteed income, but if it's not a large amount anyway such that it would make a difference put that money to work for you!

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Do you have option to cash it or leave it there? I have been thinking about this as well but I have only 15K or so in my pension.

^Mad props for this response, SM! Thanks!

No problem. I really stressed about the decision and no one seemed to be able to give me useable information

At KPMG, the guaranteed growth is 5% so should I keep it there or roll over?

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