Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
jones01
Posts: 2
Joined: Mon May 13, 2024 1:54 pm

Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by jones01 »

[Topic is now in Personal Finance (Not Investing) - mod mkc]

Hello. My wife recently changed jobs and had a small ($15k) pension with her former employer. It is just sitting there barely earning any interest at all and we would like to transfer it to an IRA so we can better optimize the investment. Her former company is saying she cannot do anything with it at all until she turns 55 which conflicts with most of the info we are finding online. We are being stonewalled by low-level support people who cannot really answer our questions.

Since she is no longer employed there, is she not entitled access to those funds so we can put this money to better use? Or does her plan simply have some draconian rule about being 55 and there is nothing we can do whether she is an employee or not? Any help would be very appreciated.
Nuestroro
Posts: 69
Joined: Sun Jun 03, 2018 9:44 pm

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by Nuestroro »

I’d request the written benefit plan and the summary plan description. Then look for a provision that prohibits rollovers. It’s possible the low-level reps are making this up.
toddthebod
Posts: 6450
Joined: Wed May 18, 2022 12:42 pm

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by toddthebod »

jones01 wrote: Mon May 13, 2024 1:57 pm Hello. My wife recently changed jobs and had a small ($15k) pension with her former employer. It is just sitting there barely earning any interest at all and we would like to transfer it to an IRA so we can better optimize the investment. Her former company is saying she cannot do anything with it at all until she turns 55 which conflicts with most of the info we are finding online. We are being stonewalled by low-level support people who cannot really answer our questions.

Since she is no longer employed there, is she not entitled access to those funds so we can put this money to better use? Or does her plan simply have some draconian rule about being 55 and there is nothing we can do whether she is an employee or not? Any help would be very appreciated.
The fact that you used the word "pension" and not 401(k) or one of the other common defined contribution plans means the answer is, "it depends."

Tell us more about the current pension plan.
avalpert1
Posts: 570
Joined: Sat Mar 02, 2024 6:15 pm

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by avalpert1 »

Unless it is a cash balance plan, there is a good chance the plan doesn't allow for withdrawals until she reaches the plan's retirement (or early retirement) age.
User avatar
retired@50
Posts: 13416
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by retired@50 »

jones01 wrote: Mon May 13, 2024 1:57 pm Hello. My wife recently changed jobs and had a small ($15k) pension with her former employer. It is just sitting there barely earning any interest at all and we would like to transfer it to an IRA so we can better optimize the investment. Her former company is saying she cannot do anything with it at all until she turns 55 which conflicts with most of the info we are finding online. We are being stonewalled by low-level support people who cannot really answer our questions.

Since she is no longer employed there, is she not entitled access to those funds so we can put this money to better use? Or does her plan simply have some draconian rule about being 55 and there is nothing we can do whether she is an employee or not? Any help would be very appreciated.
Welcome to the forum.

Severing employment is typically enough to allow someone to take the cash value of the pension and put it into an IRA (assuming your wife is vested within the pension plan). At least it was in my case, when I left an employer with a vested pension.

If the company has "rules and regulations" regarding the pension plan, ask for a copy (if your wife doesn't already have a copy) and look for what events can create a payout or distribution.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
Geologist
Posts: 3172
Joined: Fri Jan 02, 2009 6:35 pm

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by Geologist »

As others have stated, you need to know exactly what kind of pension and what kind of rules it has. I had a defined benefit pension at a former employer. If you left before age 55 (and 15 years of service), you could not get a lump sum distribution. This was clearly spelled out in the pension plan rules.

Therefore, you need the plan rules. I'm afraid that saying that your wife is "entitled to the funds so she can put them to better use" is of no avail if the plan rules don't permit it.
crefwatch
Posts: 2566
Joined: Sun Apr 15, 2007 1:07 pm
Location: New Jersey, USA
Contact:

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by crefwatch »

Start by telling us if she paid her own money into the plan? Do you get annual reports on how well funded the plan is?
Cecelio
Posts: 195
Joined: Sun Jun 06, 2021 10:19 am

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by Cecelio »

I moved my fully vested pension money into a rollover roth ira when I resigned. Paid tax on it that year as income. Was told I was not allowed to be rehired by the company for 1 year since I chose to take the pension money out. I was younger than 55 years old.
IzItBo
Posts: 47
Joined: Thu Feb 25, 2021 11:15 am

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by IzItBo »

When I left my job, I had a window to take/rollover my pension. I missed that window and have to wait until I'm 55. I'm still waiting to hit 55 to rollover to my IRA. You may need to look at the SPD to see what it says.
queenofthemadhouse
Posts: 326
Joined: Fri Jun 04, 2021 5:26 pm

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by queenofthemadhouse »

Having to wait until 55 is not at all uncommon for non-contributory pension plans if the present value is over $7k.

I have two pension plans from the same past employer, and one I can take anytime and one I cannot.
Topic Author
jones01
Posts: 2
Joined: Mon May 13, 2024 1:54 pm

Re: Can we transfer money from a company pension to an IRA if my wife changes jobs? They are saying she must be 55yo.

Post by jones01 »

Thanks for the info everyone! Yes, she definitely needs a copy of the plan rules, which she will request asap. But from what I'm gathering, it seems these kinds of plans are not uncommon so I am doubtful that they will release the funds to her.

We just wanted an opinion outside of their rather unhelpful support people. I thank you all for your help!
Post Reply