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bobjet69
First Time Poster
Cash: $ 0.25
Posts: 1
Joined: 23 Oct 2012
Location: PA
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| Lump Sum, Rollover or Level Income Annuity Options |
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Was offered a lump sum pension buyout of $42,000...
Monthly retirement $$ at age 65 would be $405 100% spousal...
Our financial situation is not the best, but could be better...
Mortgage $907
Plus Taxes $3,800 per year
Own both cars
Credit card debt $25,000(down from $35,000 in 12 months) Using snowball
method(allocated $1,300 per month)
Parent Plus Loan $400 per month(10 years)
Combined gross income of $102,000
The money sounds great, but I know the tax implications are way to large to consider just cashing out(would lose at least 20% off the top, plus another 10% penalty, besides moving into the next tax bracket.
Since I'm 55, I am eligible to receive a Level Income Annuity Benefit option
with 3 scenarios:
Up to age 62: $450.48 per month, then $52.48 for life
Up to age 65:$385.08 per month, then zero
Up to SSNRI(66 1/2): $358.64 per month, then zero
We are also still paying some education expenses for son who has one year left
in college.
The extra monthly income would really be great for the next 9-10 years.
I know I would be taxed, but it would not put us in the next bracket. Also,
my tax situation fo the next few years is ok due to educational expenses and taking some stock losses.
Any thoughts on this scenario would be greatly appreciated.
Bob
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Tue Oct 23, 2012 3:00 pm |
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oldguy
Senior Member
Cash: $ 751.85
Posts: 3656
Joined: 21 May 2006
Location: arizona
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quote:
the tax implications are way to large to consider just cashing out(would lose at least 20% off the top, plus another 10% penalty, besides moving into the next tax bracket.
20% is a common withholding rate. But there is no 20% tax bracket, it is either 15% or 25% - at $100,000/yr you are most likely in the 25% bracket. So the tax bill would be 10% + 25% + state tax, probably about $17,000.
The $405/m annuity sounds good to me - is there a COL adjustment?
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Tue Oct 23, 2012 6:47 pm |
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