Job loss and taxes

[RollTideRam]

First, I guess the only way this is tractor related, I'm loosing my job and may have to sell my tractor. It was a want, not a need.
I am 41 years old and will be loosing my current job in about 6 months. We were told our pension will be paid to us or we can roll it somewhere else. Do you pay a penalty on a pension like you would on a 401k? I'm just trying to figure out my finances before I make a move. Thanks, JC

 

[Flatheadyoungin]

dang, man, i hate to hear that.......

what field/industry are you in?

i don't have a definite answer but typically there is a penalty unless you are of retirement age.....

 

[randy41]

if you take it instead of rolling it over you will pay the income tax on it plus a 10% penalty. yes, like you would if on a 401K.

 

[3RRL]

Oh man JC, sorry to hear that.
Whatever you do, try to use other funds before using your pension. It's the most expensive money you can use right now.
Like Randy said, it's added to your income and taxed and also a 10% penalty on top of that. Is there any other employment opportunity(s) for you?
That being said, there are circumstances for certain events in your life, like a disastrous illness or something like that which might not be taxed the same. It might even include losing your home as one ... forgot the wording and circumstances. But if you don't qualify for it, you get taxed. It's best to roll it over into an IRA or something. Also check with your human resource department about the financial or medical hardship clauses.

 

[RollTideRam]

I work for Basf in an industial coatings plant. They have decided they don't want to be in this particular business now and have sold our business to PPG. They sold everything but the building and employees. I have six months to find another job, and am trying to prepare for the worst. JC

 

[jdbower]

Most large companies will have some counseling available for layoffs. They may have some options for you that could be unique to your benefit programs and they may be able to help with job placement or other services.

 

[Champy]

....That being said, there are circumstances for certain events in your life, like a disastrous illness or something like that which might not be taxed the same. It might even include losing your home as one ... forgot the wording and circumstances.

I believe this is known as a Hardship Claim......taking your retirement savings to pay for medical bills; housing; college; etc...other terms and conditions apply if you can make it a hardship case.

 

[ByronBob]

I know this is bad news but believe me it gives you time to seach starting now. I've been through this a few times with no advanced warning. It's funny how life happens as the job I got was better than the one I left.

They did me a favor and I never even knew it.

 

[ToadHill]

As I remember the law, If you have the retirement funds sent directly to an IRA account and you never see the funds,( the check is made out to the fund and your name is not on it) there is no penalty.

 

[frank_f15]

sorry to hear about your job loss. but to answer your question (i am no financial guy) but WHAT DO you mean by your pension? so much will depend on what it actually is. you best bet is to check with your company before you do anything and might want to check with an advisor(some banks offer free advisors) be careful before you do anything and make SURE you understand all the options and the consequences