Distributions from Your Retirement Plan

Advantages and Disadvantages of a Lump-Sum Distribution


  • You can roll the money into a traditional IRA within 60 days and continue to defer income taxes.
  • You may convert the traditional IRA to a Roth IRA and enjoy tax-free growth and distributions (however there are potential taxes due from conversion).
  • You have your money in hand and thus don't run the risk of dying prematurely and losing all of your future annuity payments.


  • You have to actively manage your pension amount.
  • There is a large up-front cash drain to pay income taxes on the entire distribution if it is not rolled over to a traditional IRA or other eligible plan.
  • Depending on how the money is invested, future earnings on the amount distributed may be fully taxable.
  • Distribution may be subject to the claims of creditors in the event of personal bankruptcy, even if rolled over to an IRA.

IMPORTANT NOTE: When you leave your job, one decision to make is whether the investment managers or investment opportunities through your employer pension plan are better than those available to you through an IRA rollover. Keep in mind that the investment management of your prior employer's pension plan may change, so monitor your investment performance to make sure your investments are still meeting your objectives.

Share Article:
Add to GooglePlus

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Heartland Bank and Heartland Planning Associates are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Heartland Planning Associates, and may also be employees of Heartland Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Heartland Bank and Heartland Planning Associates.  Securities and insurance offered through LPL or its affiliates are:

Not Insured by FDIC or Any Other
Government Agency
Not Bank
Not Bank Deposits or
May Lose


The LPL Financial registered representatives associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.