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If I am planning to resign from local 770; what do I need to know about my pension?

Aug 23, 2014 by ELizabeth from South El Monte, CA in  |  Flag
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Elizabeth,

When leaving a job to either retire or take another job often requires a lot of homework on the part of the employee. There are many factors that will affect how or when you take your pension. Some of the items are marital status, financial circumstances and personal preferences just to name a few. So you need to find out if at all possible what the payout options are. For example can you roll the funds over to a new plan, possibly and IRA, or are you required to take a payout option? If you have the flexibility to roll over the plan make sure you work with someone who has experience in working with the plans to make sure the funds are properly rolled over. If you make a mistake in the process you could be subject to some unintended tax consequences. If you are required to take the payout option carefully examine all of the options before making a decision as once you make the payout decision there is no changing that choice.

Comment   |  Flag   |  Aug 25, 2014 from Neptune Township, NJ

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John Essigman Level 17

Hi Elizabeth,

I agree with Darrin… as he stated, the issue is complex and there are no do-overs. I generally recommend that people take a lump-sum if that option is available. Pensions suffered greatly in the most recent economic downturn and many are still in trouble. You may find this article regarding pensions useful. http://essigman.com/blog/?p=204

Warmest regards

Comment   |  Flag   |  Sep 29, 2014 from Cleveland, GA

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Tunc Tanin Level 10

I am not a big fan of fee only advisors but in a case like this it may make sense to get an opinion from a fee only advisor. Advisors who bill based on how much money they manage tend to recommend you to roll over your pension in a lump sum. While that advice is probably true in most cases, sometimes that is not in your best interest. I would also recommend that you don't rely solely on your union for financial advice on an issue like this. They have an incentive for you to stay in the union and also keep your money in the pension account. Decisions like this usually have pros and cons.

2 Comments   |  Flag   |  Sep 29, 2014 from Somerville, MA
John Essigman

Not a big fan of fee-only advisors? Very sorry to hear this. The rest of the world does not seem to agree with you... http://www.forbes.com/sites/davidmarotta/2012/06/11/fee-only-financial-planner-whats-the-difference/ ........ http://essigman.com/blog/?p=176

Flag |  Oct 01, 2014 near Cleveland, GA
Tunc Tanin

The article you mentioned is self promotion by NAPFA. They advertised in the Forbes magazine in exchange they were given a space to say only and only good things about fee only advisors. If you notice the article does not say anything negative about fee only advisors.Forbes magazine is also a far right wing magazine read by people who are in the upper income and asset brackets. It is not the rest of the world. I am proud to not call myself fee only advisor and only focus on the super wealthy. I wonder if fee only advisors can show how many clients they have served making less than 30,000 a year. I am in favor of full disclosure including how much I make from each client including commissions and any paybacks. It is my experience that fee only advisors lack understanding in risk management and insurance. I have seen many times fee only advisors with total lack of understanding when it comes to long term care planning. Some of the advice they have given while fitting NAPFA fee only mode, it clearly was not in the best interest of the client. Client would have been better off working with a commissioned based advisor. If I needed heart surgery, I would want the best heart surgeon I can get in my area. I don't care if he gets paid a flat fee from each surgery or gets a kick back from using one medical device over another. I would want the best doctor. If fee only worked, the real estate market would have no realtors. Would you sell your house for a flat fee of 7000 or would you want to use a local experienced realtor who may be getting some kick back which you can not see or control. I believe you would look at the numbers and decide which one would give you the best deal.

Flag |  Oct 01, 2014 near Somerville, MA

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