Just Fired - Pension and HSA questions

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
VIP
Posts: 5
Joined: Wed Oct 30, 2019 1:38 pm

Just Fired - Pension and HSA questions

Post by VIP »

Not FIRE but let go :? I have a couple of Pension and HSA questions:

- I plan on rolling my pension into my 401k. My 401k is both Tax deferred and ROTH. Can I roll the pension into the ROTH portion of my 401k?
- If so, how do I get taxed and would this be considered ordinary income?
- The pension is about 90k. Can I roll the whole amount or do 401k contribution limits apply?

- I have high deductible medical coverage with an HSA. Should I continue to contribute to my HSA with post-tax dollars?

Thanks, Val.
terran
Posts: 1699
Joined: Sat Jan 10, 2015 10:50 pm

Re: Just Fired - Pension and HSA questions

Post by terran »

I can't say definitively as I've never had a pension, but I suspect you can roll it over to traditional 401(k)/IRA without paying taxes, or to a Roth 401(k)/IRA but you'll pay tax on the additional income. It could be a good idea to roll over to Roth if you expect this years income to be lower than your taxable income when you retire, otherwise not.

You can (should if you afford it) contribute 1/12 of the annual HSA limit for every month in which you are covered by an HSA eligible plan as of the 1st of the month, so whether or not you should contribute depends on whether you will continue to be covered by an HSA healthcare plan. There's also no hurry to this as you can contribute to an HSA any time until your tax filing deadline for the year.
Lalamimi
Posts: 563
Joined: Mon Jun 24, 2019 4:22 pm
Location: Texas

Re: Just Fired - Pension and HSA questions

Post by Lalamimi »

Why do you want to stay with the 401(k)? Low fees? great funds? Call the 401 (k) administrator and ask about rolling in the pension. They would know best. Is the pension vested? (assume so since you are asking about rolling it over). Never heard of rolling a pension over, sorry.
Cobra coverage should be your same insurance, so yes, contribute to the HSA up to the limit. Don't go over.
WarAdmiral
Posts: 153
Joined: Mon Jan 20, 2020 7:09 pm
Location: Boston

Re: Just Fired - Pension and HSA questions

Post by WarAdmiral »

Can you continue contributing to your 401k if you are no longer an employee ? I thought 401k contributions are made via paycheck only.
neilpilot
Posts: 3397
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Just Fired - Pension and HSA questions

Post by neilpilot »

Your specific pension documents define your options. Generally, depending on your age the pension generally would allow you to take a lump sum distribution which, assuming you want to move that into a tax deferred account, can go into a tIRA. I doubt it can move into your 401k, Roth or otherwise.

Of course a preferred option is likely to let the vested balance remain in the pension, and then roll it over into a tax deferred account at a later date assuming you don't want to annuitize the pension (often the better option).
infotrader
Posts: 338
Joined: Tue Feb 28, 2017 2:39 pm

Re: Just Fired - Pension and HSA questions

Post by infotrader »

VIP wrote: Fri Jun 05, 2020 1:11 pm Not FIRE but let go :? I have a couple of Pension and HSA questions:

- I plan on rolling my pension into my 401k. My 401k is both Tax deferred and ROTH. Can I roll the pension into the ROTH portion of my 401k?

- If so, how do I get taxed and would this be considered ordinary income?


- The pension is about 90k. Can I roll the whole amount or do 401k contribution limits apply?
No.

- I have high deductible medical coverage with an HSA. Should I continue to contribute to my HSA with post-tax dollars?

Thanks, Val.
1. What is the point of rolling over to your 401k? Why not just roll over to a tIRA account? You will have better control and lower fees.
2. If roll over to Roth, it is ordinary income.
3. No, there is no limit.
Topic Author
VIP
Posts: 5
Joined: Wed Oct 30, 2019 1:38 pm

Re: Just Fired - Pension and HSA questions

Post by VIP »

Thanks for the quick replies. HR has confirmed I can roll over my pension to my 401k. I think I will stick with rolling it into the tax deferred portion as I will be in a higher tax bracket this year and maybe convert it to ROTH next year when I will be in a much lower bracket (probably no job :) )

It's a fortune 500 company and the 401k is with Fidelity so I have many investment options, with low fees and free investment advice if I leave it there.

Just to confirm, contributing to my HSA while on COBRA with after-tax dollars, still gives me a tax break at the end of the year?

Thanks again, Val.
Jack FFR1846
Posts: 12646
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Just Fired - Pension and HSA questions

Post by Jack FFR1846 »

If you have anything in any 401k, you'll want to pay close attention. Employers can switch from a great provider to a garbage one. I've only personally experienced an employer switching from one garbage provider to another garbage provider. Also, fees paid by the employer can be diverted to be paid by the participant. This happened with my wife's great Fidelity 401k where she had left a decade earlier. January 2nd came around and we checked the page. There was a nice, shiny, new 0.5% administration fee that the employer decided to let us take care of. It was rolled to an IRA in less than a week.
Bogle: Smart Beta is stupid
terran
Posts: 1699
Joined: Sat Jan 10, 2015 10:50 pm

Re: Just Fired - Pension and HSA questions

Post by terran »

VIP wrote: Fri Jun 05, 2020 2:01 pm Just to confirm, contributing to my HSA while on COBRA with after-tax dollars, still gives me a tax break at the end of the year?
Yes, you'll fill out Form 8889 to indicate the amount you contribute directly.
terran
Posts: 1699
Joined: Sat Jan 10, 2015 10:50 pm

Re: Just Fired - Pension and HSA questions

Post by terran »

Jack FFR1846 wrote: Fri Jun 05, 2020 2:02 pm This happened with my wife's great Fidelity 401k where she had left a decade earlier. January 2nd came around and we checked the page. There was a nice, shiny, new 0.5% administration fee that the employer decided to let us take care of. It was rolled to an IRA in less than a week.
Where did you see this? My wife has a good Fidelity plan that we'll probably leave where it is whenever she no longer works at her current employer, so we'll need to keep an eye on this.
Lalamimi
Posts: 563
Joined: Mon Jun 24, 2019 4:22 pm
Location: Texas

Re: Just Fired - Pension and HSA questions

Post by Lalamimi »

My 401 (k) was also with Fidelity, but after reviewing the Fund's fees, I rolled it into a new TIRA at Fidelity. A few of the funds would not convert, and I sold a few.
neilpilot
Posts: 3397
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Just Fired - Pension and HSA questions

Post by neilpilot »

Lalamimi wrote: Fri Jun 05, 2020 2:11 pm My 401 (k) was also with Fidelity, but after reviewing the Fund's fees, I rolled it into a new TIRA at Fidelity. A few of the funds would not convert, and I sold a few.
With a 401k administered through Fidelity, the employer still determines the fee and investment structure. When we were both working, we both had an employer sponsored 401k at Fidelity. The funds and fees were totally different, and my 401k was much better than her's.
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Just Fired - Pension and HSA questions

Post by cherijoh »

VIP wrote: Fri Jun 05, 2020 1:11 pm Not FIRE but let go :? I have a couple of Pension and HSA questions:

- I plan on rolling my pension into my 401k. My 401k is both Tax deferred and ROTH. Can I roll the pension into the ROTH portion of my 401k?
- If so, how do I get taxed and would this be considered ordinary income?
- The pension is about 90k. Can I roll the whole amount or do 401k contribution limits apply?

- I have high deductible medical coverage with an HSA. Should I continue to contribute to my HSA with post-tax dollars?

Thanks, Val.
Since you are talking about your 401k, I doubt anyone here can give you a definitive answer. The ERISA rules outline what can legally be done, but don't require employer plans to offer all the possible options. You need to read the summary plan description for your 401k and pension. If it isn't posted on the website of your plan custodian, request a copy from HR.

Does you pension offer a lump sum option? NOT all do. (I am currently drawing a monthly pension because that was my only option at a prior employer). Without a lump sum offer I would be surprised if it could be rolled into your 401k.

Does your 401k plan accept rollovers? NOT all do. I think any pension that offers a lump sum must legally offer a rollover to an IRA, but I don't know if that also means the 401k must accept a pension rollover. (Quite often the pension and 401k are administered by different financial institutions). But if they allow it, 401k annual contribution limits should not apply. FYI- Once you leave your employer, you generally lose the ability to roll money into your 401k from another 401k or a rollover IRA. Although they may permit it for a limited period as a separating employee.

Does your 401k plan allow in-plan conversions from traditional to Roth? NOT all do. Unless, your plan offers the ability to do this, I would be very surprised if you could get your pension money into Roth inside your 401k. A different former employer did accept rollovers but traditional went into Traditional and Roth went into Roth.
reddison
Posts: 96
Joined: Mon Jul 16, 2018 11:13 am

Re: Just Fired - Pension and HSA questions

Post by reddison »

OP - I am planning to retire early next year so I have been looking into this too. My company pays the fees for our 401k participants which includes third party administrative management fees. When I retire, if I remain in the company 401k, I have to start paying the fees. For this reason and more, I intend to roll mine into a tIRA at Vanguard. You should ask if your fees will change when you are no longer employed there.
User avatar
Watty
Posts: 20664
Joined: Wed Oct 10, 2007 3:55 pm

Re: Just Fired - Pension and HSA questions

Post by Watty »

One thing to check on is that sometimes benefits like retiree healthcare are linked to leaving the money in the pension plan. In some cases if you roll the money out as a lump sum you will lose those.
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: Just Fired - Pension and HSA questions

Post by cherijoh »

terran wrote: Fri Jun 05, 2020 2:08 pm
Jack FFR1846 wrote: Fri Jun 05, 2020 2:02 pm This happened with my wife's great Fidelity 401k where she had left a decade earlier. January 2nd came around and we checked the page. There was a nice, shiny, new 0.5% administration fee that the employer decided to let us take care of. It was rolled to an IRA in less than a week.
Where did you see this? My wife has a good Fidelity plan that we'll probably leave where it is whenever she no longer works at her current employer, so we'll need to keep an eye on this.
Fidelity is only the administrator, the employer controls the fee structure. The plan may be set up so that the company pays the fees for employees, but former employees pay their own way OR the company can decide that fees it had been covering will now be paid by all participants.

FYI - I would expect it to show up as a transaction in your account on the plan website - propably labeled as an administration fee or a record-keeping fee.
lakpr
Posts: 6051
Joined: Fri Mar 18, 2011 9:59 am

Re: Just Fired - Pension and HSA questions

Post by lakpr »

reddison wrote: Fri Jun 05, 2020 2:33 pm OP - I am planning to retire early next year so I have been looking into this too. My company pays the fees for our 401k participants which includes third party administrative management fees. When I retire, if I remain in the company 401k, I have to start paying the fees. For this reason and more, I intend to roll mine into a tIRA at Vanguard. You should ask if your fees will change when you are no longer employed there.
If the fees are not too onerous, best to keep the funds within the plan. The asset protections offered by 401k plans is absolute. IRAs, not so much. Paying a $50 or even $100 per year for those protections is worth it.

Of course, if the choices within the 401k plan are all crappy and high expense ratio funds, I will be the first one suggesting you to move funds out of the plan into an IRA.

My MegaCorp's 401k plan has a $15 per quarter fees for each participant, employed or let go or retired. I would gladly pay that to leave money within the 401k plan even if I am let go from this job. I have access to Institutional Funds with much cheaper expense ratios than those available in retail IRA. Vanguard S&P500 Institutional Index Trust for 0.02%, for example; compared to VFIAX at 0.04% retail. Given my balance of $400k in the plan so far, that's a difference of $80 = (0.04% - 0.02%) * $400k, exceeding the $60 cost I pay per year.
User avatar
Thrifty Femme
Posts: 531
Joined: Sun Apr 12, 2015 1:54 pm

Re: Just Fired - Pension and HSA questions

Post by Thrifty Femme »

Verify your plan will accept roll ins after you are a former employee. None of the six companies I've work for allowed roll ins after separation. Good luck!
reddison
Posts: 96
Joined: Mon Jul 16, 2018 11:13 am

Re: Just Fired - Pension and HSA questions

Post by reddison »

lakpr wrote: Fri Jun 05, 2020 6:21 pm
reddison wrote: Fri Jun 05, 2020 2:33 pm OP - I am planning to retire early next year so I have been looking into this too. My company pays the fees for our 401k participants which includes third party administrative management fees. When I retire, if I remain in the company 401k, I have to start paying the fees. For this reason and more, I intend to roll mine into a tIRA at Vanguard. You should ask if your fees will change when you are no longer employed there.
If the fees are not too onerous, best to keep the funds within the plan. The asset protections offered by 401k plans is absolute. IRAs, not so much. Paying a $50 or even $100 per year for those protections is worth it.

Of course, if the choices within the 401k plan are all crappy and high expense ratio funds, I will be the first one suggesting you to move funds out of the plan into an IRA.

My MegaCorp's 401k plan has a $15 per quarter fees for each participant, employed or let go or retired. I would gladly pay that to leave money within the 401k plan even if I am let go from this job. I have access to Institutional Funds with much cheaper expense ratios than those available in retail IRA. Vanguard S&P500 Institutional Index Trust for 0.02%, for example; compared to VFIAX at 0.04% retail. Given my balance of $400k in the plan so far, that's a difference of $80 = (0.04% - 0.02%) * $400k, exceeding the $60 cost I pay per year.
lakpr - Correct me if I'm wrong, but many states also protect IRAs from creditors. I know my state does, but maybe I need to look further to see it protects them to the same degree as 401k/ERISA plans. The fee structure and ERs for my plan aren't nearly as attractive as yours.
Lynette
Posts: 2060
Joined: Sun Jul 27, 2014 9:47 am

Re: Just Fired - Pension and HSA questions

Post by Lynette »

I do not know if my situation applies to you but this is what I did.

I took the pension instead of a lump sum as I think it will work out better for me as I have longevity in my family. When I left one employer, I left my 401K with them but found it time consuming to administer. My second employer allowed me to roll my 401K into their 401K. When I retired I was perfectly content to leave my 401K with my former employer as they have good funds and low costs. The reason I rolled it into an IRA is that I discovered that you cannot do QCDs from a 401K.
lakpr
Posts: 6051
Joined: Fri Mar 18, 2011 9:59 am

Re: Just Fired - Pension and HSA questions

Post by lakpr »

reddison wrote: Mon Jun 08, 2020 11:59 am lakpr - Correct me if I'm wrong, but many states also protect IRAs from creditors. I know my state does, but maybe I need to look further to see it protects them to the same degree as 401k/ERISA plans. The fee structure and ERs for my plan aren't nearly as attractive as yours.
You are absolutely correct. Many states do protect the IRAs from creditors, but the point I was trying to make is that the IRA protection is state-dependent. Today, are in living in this particular state, and confident that your IRA is protected. Tomorrow? Are you absolutely sure you won't move to a different state? In retirement, perhaps? Do you want to agonize over the decision you made in the past to rollover from a 401k to an IRA, if the state you are considering to move to, does not offer similarly strong protections?

IF, the plan choices are terrible, then I would be the first one to encourage you to move funds out of the plan and into a Rollover IRA. Asset protection, at the end of the day, is theoretical. It involves conjectures such as, IF you become liable, IF you get a judgment against you, IF you are forced to file a bankruptcy, etc. Whereas with terrible plan choices, you are incurring those costs here and now, and is a reality.

But, if the plan choices are good to excellent, that rationale is removed. Even with 'decent' choices in the plan, a case can be made to keep the funds within the plan, you can think of the difference in expenses within the plan vs. IRA, as an "insurance cost" to protect your funds. It could be a cheaper cost than trying to get insurance cover for various unfortunate events that could push you towards bankruptcy.

I think I would draw the line at about 0.3% ER within the 401k plan. Below this, I'd keep the funds within the plan. Above this, I think even I would encourage rolling out funds from the 401k plan into an IRA.
User avatar
beyou
Posts: 3266
Joined: Sat Feb 27, 2010 3:57 pm
Location: Northeastern US

Re: Just Fired - Pension and HSA questions

Post by beyou »

https://www.connectyourcare.com/blog/co ... breakdown/

"Although HSAs may be used in large part to pay for health care expenses, these are viewed as financial investment accounts, not health benefits.

HSA funds are the property of the employee. So, the funds accrued in the HSA account at the time of the qualifying event can continue to be used for health care expenses.

However, an employee can’t make new financial contributions to the HSA if their employment or eligibility is terminated…unless the employee is contributing funds on a post-tax basis and then filing it on their taxes going forward."

I think the questions here are :

1) Can you contribute after tax (then deduct) to same HSA account or must you open a new HSA account for same ?
This may be up to the HSA provider, they may open an acct that only allows deposits from the employer electronically.
My employer selected provider seems to allow deposits/contributions even though I have my employer make the contributions each paycheck.
Have not tried it but seems it should work. Spouse has her own HSA with direct contributions that we deduct at year end, could do same if need be.

2) SHOULD you continue contributing. Seems to me it depends on your immediate situation.
Do you have sufficient emergency funds such that you can afford to keep saving after job loss ?
Do you expect your tax bracket to remain high and therefore worthwhile to contribute ?
Do you invest in your HSA or just use for medical spending ? One could say just save in taxable account where you have more flexibility as to
how you may spend. But if using this as an investment account, then go for it.
User avatar
LadyGeek
Site Admin
Posts: 66339
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Just Fired - Pension and HSA questions

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (pension and HSA). I'm recently retired.

Regarding the HSA:

I'm betting your employer is paying the HSA administration fees. Once you terminate, the account will be transferred to an individual account and you'll be hit with administrative fees.

This is what my plan will do. I'm rolling it over into Fidelity to have it under my control. There are no fees with a Fidelity HSA.
VIP wrote: Fri Jun 05, 2020 2:01 pm It's a fortune 500 company and the 401k is with Fidelity so I have many investment options, with low fees and free investment advice if I leave it there.
What do you mean by "free investment advice"? If a financial advisor is involved, somebody has to get paid.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
simas
Posts: 762
Joined: Wed Apr 04, 2007 5:50 pm

Re: Just Fired - Pension and HSA questions

Post by simas »

VIP wrote: Fri Jun 05, 2020 2:01 pm Thanks for the quick replies. HR has confirmed I can roll over my pension to my 401k. I think I will stick with rolling it into the tax deferred portion as I will be in a higher tax bracket this year and maybe convert it to ROTH next year when I will be in a much lower bracket (probably no job :) )

It's a fortune 500 company and the 401k is with Fidelity so I have many investment options, with low fees and free investment advice if I leave it there.

Just to confirm, contributing to my HSA while on COBRA with after-tax dollars, still gives me a tax break at the end of the year?

Thanks again, Val.
You keep using the word "pension" here, multiple times -is this actually a pension?
if it is a pension (promise of future pay as part of defined benefit plan) , it can not be 'rolled over'
if this is a defined contribution plan (401k, 403b, 457, etc), it can be rolled over.

so which one is it?
Dottie57
Posts: 9172
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Just Fired - Pension and HSA questions

Post by Dottie57 »

Thrifty Femme wrote: Fri Jun 05, 2020 6:28 pm Verify your plan will accept roll ins after you are a former employee. None of the six companies I've work for allowed roll ins after separation. Good luck!
What is roll ins?
terran
Posts: 1699
Joined: Sat Jan 10, 2015 10:50 pm

Re: Just Fired - Pension and HSA questions

Post by terran »

Dottie57 wrote: Mon Jun 08, 2020 2:08 pm
Thrifty Femme wrote: Fri Jun 05, 2020 6:28 pm Verify your plan will accept roll ins after you are a former employee. None of the six companies I've work for allowed roll ins after separation. Good luck!
What is roll ins?
A "roll"over from another plan "in"to the plan under discussion.
Dottie57
Posts: 9172
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Just Fired - Pension and HSA questions

Post by Dottie57 »

terran wrote: Mon Jun 08, 2020 2:10 pm
Dottie57 wrote: Mon Jun 08, 2020 2:08 pm
Thrifty Femme wrote: Fri Jun 05, 2020 6:28 pm Verify your plan will accept roll ins after you are a former employee. None of the six companies I've work for allowed roll ins after separation. Good luck!
What is roll ins?
A "roll"over from another plan "in"to the plan under discussion.
Thanks
terran
Posts: 1699
Joined: Sat Jan 10, 2015 10:50 pm

Re: Just Fired - Pension and HSA questions

Post by terran »

simas wrote: Mon Jun 08, 2020 2:02 pm
VIP wrote: Fri Jun 05, 2020 2:01 pm Thanks for the quick replies. HR has confirmed I can roll over my pension to my 401k. I think I will stick with rolling it into the tax deferred portion as I will be in a higher tax bracket this year and maybe convert it to ROTH next year when I will be in a much lower bracket (probably no job :) )

It's a fortune 500 company and the 401k is with Fidelity so I have many investment options, with low fees and free investment advice if I leave it there.

Just to confirm, contributing to my HSA while on COBRA with after-tax dollars, still gives me a tax break at the end of the year?

Thanks again, Val.
You keep using the word "pension" here, multiple times -is this actually a pension?
if it is a pension (promise of future pay as part of defined benefit plan) , it can not be 'rolled over'
if this is a defined contribution plan (401k, 403b, 457, etc), it can be rolled over.

so which one is it?
Not true. According to https://www.irs.gov/pub/irs-tege/rollover_chart.pdf Qualified Plans (which include defined benefit plans aka pensions) can be rolled over into any other retirement account type.

I suspect (though I don't know for certain) that SOME pensions may not be able to be rolled over (based on the rules of the pension) and I know that some retirement plans don't allow rollovers into the plan, but it's definitely allowed by law even if it may or may not be allowed by plan policy.
tibbitts
Posts: 11885
Joined: Tue Feb 27, 2007 6:50 pm

Re: Just Fired - Pension and HSA questions

Post by tibbitts »

VIP wrote: Fri Jun 05, 2020 1:11 pm Not FIRE but let go :? I have a couple of Pension and HSA questions:

- I plan on rolling my pension into my 401k. My 401k is both Tax deferred and ROTH. Can I roll the pension into the ROTH portion of my 401k?
- If so, how do I get taxed and would this be considered ordinary income?
- The pension is about 90k. Can I roll the whole amount or do 401k contribution limits apply?

- I have high deductible medical coverage with an HSA. Should I continue to contribute to my HSA with post-tax dollars?

Thanks, Val.
Nobody can answer your questions because they are all plan dependent.

So since the thread isn't going to help you until you provide much more information, just for curiosity why where you fired? Fired basically implies lots of drama.
bayview
Posts: 2266
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Just Fired - Pension and HSA questions

Post by bayview »

VIP wrote: Fri Jun 05, 2020 1:11 pm Not FIRE but let go...
Yikes, I’m so sorry to hear. I hope you’re ok to ride this out, or even better, to officially retire.

Best wishes!
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
simas
Posts: 762
Joined: Wed Apr 04, 2007 5:50 pm

Re: Just Fired - Pension and HSA questions

Post by simas »

terran wrote: Mon Jun 08, 2020 2:15 pm
simas wrote: Mon Jun 08, 2020 2:02 pm
VIP wrote: Fri Jun 05, 2020 2:01 pm Thanks for the quick replies. HR has confirmed I can roll over my pension to my 401k. I think I will stick with rolling it into the tax deferred portion as I will be in a higher tax bracket this year and maybe convert it to ROTH next year when I will be in a much lower bracket (probably no job :) )

It's a fortune 500 company and the 401k is with Fidelity so I have many investment options, with low fees and free investment advice if I leave it there.

Just to confirm, contributing to my HSA while on COBRA with after-tax dollars, still gives me a tax break at the end of the year?

Thanks again, Val.
You keep using the word "pension" here, multiple times -is this actually a pension?
if it is a pension (promise of future pay as part of defined benefit plan) , it can not be 'rolled over'
if this is a defined contribution plan (401k, 403b, 457, etc), it can be rolled over.

so which one is it?
Not true. According to https://www.irs.gov/pub/irs-tege/rollover_chart.pdf Qualified Plans (which include defined benefit plans aka pensions) can be rolled over into any other retirement account type.

I suspect (though I don't know for certain) that SOME pensions may not be able to be rolled over (based on the rules of the pension) and I know that some retirement plans don't allow rollovers into the plan, but it's definitely allowed by law even if it may or may not be allowed by plan policy.
Sorry, and that is relevant to OP question how? What does he/she have? what options are present for him/her? Should be instead go to summary plan description (SPD) provided by HR/benefits vs relying on link that says essentially nothing for him/herself specifically ( that yes, some plans, somewhere, may or may not be transferable to some other plans, somewhere else, only on Tuesdays, may be...). Not to discount your research (and thank you for the link), just relevance to the poster is unclear to me.
terran
Posts: 1699
Joined: Sat Jan 10, 2015 10:50 pm

Re: Just Fired - Pension and HSA questions

Post by terran »

simas wrote: Mon Jun 08, 2020 3:03 pm
terran wrote: Mon Jun 08, 2020 2:15 pm
simas wrote: Mon Jun 08, 2020 2:02 pm
VIP wrote: Fri Jun 05, 2020 2:01 pm Thanks for the quick replies. HR has confirmed I can roll over my pension to my 401k. I think I will stick with rolling it into the tax deferred portion as I will be in a higher tax bracket this year and maybe convert it to ROTH next year when I will be in a much lower bracket (probably no job :) )

It's a fortune 500 company and the 401k is with Fidelity so I have many investment options, with low fees and free investment advice if I leave it there.

Just to confirm, contributing to my HSA while on COBRA with after-tax dollars, still gives me a tax break at the end of the year?

Thanks again, Val.
You keep using the word "pension" here, multiple times -is this actually a pension?
if it is a pension (promise of future pay as part of defined benefit plan) , it can not be 'rolled over'
if this is a defined contribution plan (401k, 403b, 457, etc), it can be rolled over.

so which one is it?
Not true. According to https://www.irs.gov/pub/irs-tege/rollover_chart.pdf Qualified Plans (which include defined benefit plans aka pensions) can be rolled over into any other retirement account type.

I suspect (though I don't know for certain) that SOME pensions may not be able to be rolled over (based on the rules of the pension) and I know that some retirement plans don't allow rollovers into the plan, but it's definitely allowed by law even if it may or may not be allowed by plan policy.
Sorry, and that is relevant to OP question how? What does he/she have?
Well since they said "I plan on rolling my pension into my 401k" apparently they have a pension that they want to rollover into a 401(k), which is allowed according to the IRS chart I linked in contradiction to your statement. Seems pretty relevant.

Edit: looks like you added some more after I replied:
simas wrote: Mon Jun 08, 2020 3:03 pm what options are present for him/her? Should be instead go to summary plan description (SPD) provided by HR/benefits vs relying on link that says essentially nothing for him/herself specifically ( that yes, some plans, somewhere, may or may not be transferable to some other plans, somewhere else, only on Tuesdays, may be...). Not to discount your research (and thank you for the link), just relevance to the poster is unclear to me.
You're right that they should confirm that the plan they want to rollover from (the pension) and the plan they want to rollover to (401(k)) allow such rollovers. I was just wanted to correct your statement "if it is a pension (promise of future pay as part of defined benefit plan) , it can not be 'rolled over'" as it's false and I didn't want the OP second guessing themself unnecessarily.
wfrobinette
Posts: 1328
Joined: Fri Feb 20, 2015 3:14 pm

Re: Just Fired - Pension and HSA questions

Post by wfrobinette »

infotrader wrote: Fri Jun 05, 2020 1:50 pm
VIP wrote: Fri Jun 05, 2020 1:11 pm Not FIRE but let go :? I have a couple of Pension and HSA questions:

- I plan on rolling my pension into my 401k. My 401k is both Tax deferred and ROTH. Can I roll the pension into the ROTH portion of my 401k?

- If so, how do I get taxed and would this be considered ordinary income?


- The pension is about 90k. Can I roll the whole amount or do 401k contribution limits apply?
No.

- I have high deductible medical coverage with an HSA. Should I continue to contribute to my HSA with post-tax dollars?

Thanks, Val.
1. What is the point of rolling over to your 401k? Why not just roll over to a tIRA account? You will have better control and lower fees.
2. If roll over to Roth, it is ordinary income.
3. No, there is no limit.
#1 if you want/need to ever do backdoor roths rolling into a 401k is a great move.
123
Posts: 6404
Joined: Fri Oct 12, 2012 3:55 pm

Re: Just Fired - Pension and HSA questions

Post by 123 »

If it appears that you will take a lump sum payout of the pension instead of monthly benefits it can be a good idea to take the lump sum payout now when interest rates are low. Many pension plans use interest rates established by the IRS in the calculation of lump sum pension payouts. If that's the case lump sum payouts will often be higher when interest rates are lower. While the monthly benefit may not be impacted by interest rates the lump sum option usually is. In many cases the lump sum payout calcuation are based on a monthly benefit that is reduced based on your age. While that potential monthly benefit may go up if you wait to take the lump sum it is also possible that interest rates could increase in the interim causing the lump sum to be reduced.
The closest helping hand is at the end of your own arm.
Post Reply