By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

In my years of experience as an advisor, one of the greatest sources of stress, anxiety and uncertainty felt by men and women is when they receive the news that their pension plan is terminating.  It feels like the rug has been pulled out from under their feet.  As loyal employees, they counted on their employer to provide a paycheck while working and throughout retirement.  Pension plan terminations are nothing new, but when it happens to you, it feels like a tragedy.

What do you do?  It depends upon the options that you are given.  If the only option is that you will receive a lump sum payment in lieu of your future promised monthly benefits, you may rollover the money to another plan such as an Individual Retirement Account.  You can do this yourself or work with an experienced financial advisor.  An IRA is merely an account titling for tax purposes; you get to choose the investments inside of your IRA and your money can grow tax-deferred.  You can opt for investments oriented for growth, investments that produce income, or even investments that have contractual guarantees. * Guarantees can be offered to protect your principal or to provide reliable lifetime income for you or you and your spouse, which was the original purpose of your pension.  The truth is, your money had always been invested in some way, shape or form while in the pension.  Now, you get to choose and control the future direction of your retirement funds.  IRA’s offer flexibility that pensions do not.  You’ll have greater control of your investments, your distributions and your beneficiary choices.

You can also “cash out”, but be careful.  If you choose to cash your lump-sum check, you will pay income taxes on the full amount that you cash out, in that tax year.  Depending upon your age and employment status, additional federal and state penalties may apply.   Even worse for younger participants is losing the opportunity for compounded tax-deferred growth that an IRA offers.  If you are feeling like cashing out is your only option, consult with a professional.  They may be able to help you find solutions you didn’t know existed.

Saving for retirement is one of the largest and most important financial goals most people have.  Considerations are complex and decisions should be well thought out.  The great news is, you have options to best suit your individual needs.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Financial Professionals and can be reached at (715) 343-9600 or [email protected].  www.SchulferAndAssociates.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  *Annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.  ​