Several of the domestic automotive companies have offered pension lump sum payment programs to certain current salaried retirees or former employees. In some cases, these companies are also providing the option for current salaried employees to receive a lump sum pension benefit upon retirement. This trend is now being seen among a number of companies outside the automotive industry. NCR, Sears, The New York Times, Thomson Reuters, TRW, and Advance Newspapers are among a few of the companies that have come forward with a pension lump sum offer for certain retirees.

Mainstay Capital Management is committed to assisting our clients and others in determining which pension payment option is best for their individual situation. From time to time we conduct workshops that focus on the considerations concerning a pension lump sum decision. These workshops have covered many questions regarding pension payment options.

Below is a list of general questions that were brought to us by our clients, as well as others, through our workshops, seminars, webinars, and other discussions. You can visit the "Your 401(k)" section of our website to see questions that relate to a particular company’s lump sum pension offer.

Information contained herein has been compiled from sources believed to be reliable, but its accuracy and completeness are not guaranteed and Mainstay Capital Management assumes no responsibility for errors or omissions.

What are the tax implications of taking a lump sum distribution?

There are no tax implications for those taking a lump sum distribution and rolling it into an IRA or another qualified plan that accepts rollover distributions. However, if the lump sum distribution is taken and rolled into a qualified plan at age 70½ or older, the distribution will be used in calculating any future Required Minimum Distributions (RMDs). Taken as cash, the lump sum is fully taxable as ordinary income.

Once I receive the lump sum distribution payment, can I go back to receiving monthly payments if I change my mind?

No. Once a lump sum distribution has been paid (or new monthly benefit commences) you cannot revoke or change your election.

Can you address the different risks associated with the lump sum pension buyouts?

Please review our "Pension Lump Sum Special Report" for information on investment, tax, and longevity risk due to inflation, among others.

Do I have the ability to take a lump sum distribution while I am an active employee?

Most employees will not have an option to take a lump sum distribution of their pension benefit until the time of retirement. Although not all companies offer a lump sum pension option at retirement, many salaried employees currently have a lump sum distribution option available at retirement.

As an active employee, will I need to make an election regarding the lump sum distribution option immediately following retirement?

Some companies have a specified time period in which you will have the option for a lump sum pension benefit while other companies keep this option available for retirees until the time they turn on their pension payments.

Important Consumer Disclosures

Mainstay Capital Management, LLC is an investment advisor registered with the Securities and Exchange Commission. Due to various state regulations and filing requirements, Mainstay and its representatives may only provide investment advisory services in those states in which it is first appropriately registered or otherwise exempt or excluded from registration requirements. The purpose of this website is to provide the public with general information about the services offered by our investment management firm. Mainstay does not render personalized investment advice or services or effect, or attempt to effect any securities transactions, on this website. Our firm continuously monitors its filing requirements in all states, and will provide individualized advisory services only in accordance with various state regulations. Mainstay does not make any representations or warranties as to the accuracy, completeness, or relevance of any information prepared by any unaffiliated third party provider, whether linked to Mainstay's website or incorporated herein. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.


Disclosure Information - Rankings and Awards

Barron's Magazine - Top 100 Independent Wealth Advisors

According to Barron’s: The rankings are based on data provided by individual advisors and their firms. Advisor data is confirmed via regulatory databases, cross‐checks with securities firms and conversations with individual advisors. The formula Barron’s uses to rank advisors is proprietary. It has three major components: assets managed, revenue produced and quality of practice. Investment returns are not a component of the rankings because an advisor’s returns are dictated largely by the risk tolerance of clients. The quality of practice component includes an evaluation of each advisor’s regulatory record. The data is based on one fiscal year (7/1/22 - 6/30/23) and appeared in Barron’s on 9/18/23.

Schwab IMPACT Awards

The Charles Schwab & Co., Inc.’s IMPACT Awards® program recognizes excellence in the business of independent financial advice. Nominees are evaluated and selected by a panel of prominent leaders from both the business world and the financial services industry. Mainstay Capital Management does use Charles Schwab to custody certain client assets, however there was no direct compensation provided to be nominated for this award. Mainstay Capital Management received this annual award on November 15, 2017.