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I need a little direction, my father in law retired from AT&T and has been receiving a pension for 25 years. He is 75 and in perfect health, his wife is 70 and also healthy. They live in NC.
He receives 1179 per month but it has no survivorship (its a traditional pension which ends when he dies).
The company is offering him and 45,000 retirees 4 permanent choices in Sept.
1. Continue as is, but payments cease at his death (what he chose originally, not a good choice in my opinion)
2. lump sum option for the first time, in which in his case would result in a 134,000 1 time IRA distribution.
3. Joint and 50% survivor which he would only get 968.58, but she would get a survivorship payment of 484.29. If she dies first he would get bumped up to the old higher payment of 1179.
4. Joint and 75% survivor which would be 889.21 to him, 666.21 to her. Again if she dies first he would get bumped up to 1179.
I usually recommend clients take control of their IRA and roll pensions out to IRAs, and draw payments off of it so they have an inheritable asset (and they control it). This one is no different except it's the in laws which of course has its own set of challenges.
They are only bringing home 875 of the 1179 now because 100 in income tax and 200 in health insurance is being withheld. They would like to continue to bring home around 800 per month but I'm not seeing how an annuity income rider can do this on their 134k. I can sell them a much lower health insurance (about half their cost) so that would help some.
Suggestions?
He receives 1179 per month but it has no survivorship (its a traditional pension which ends when he dies).
The company is offering him and 45,000 retirees 4 permanent choices in Sept.
1. Continue as is, but payments cease at his death (what he chose originally, not a good choice in my opinion)
2. lump sum option for the first time, in which in his case would result in a 134,000 1 time IRA distribution.
3. Joint and 50% survivor which he would only get 968.58, but she would get a survivorship payment of 484.29. If she dies first he would get bumped up to the old higher payment of 1179.
4. Joint and 75% survivor which would be 889.21 to him, 666.21 to her. Again if she dies first he would get bumped up to 1179.
I usually recommend clients take control of their IRA and roll pensions out to IRAs, and draw payments off of it so they have an inheritable asset (and they control it). This one is no different except it's the in laws which of course has its own set of challenges.
They are only bringing home 875 of the 1179 now because 100 in income tax and 200 in health insurance is being withheld. They would like to continue to bring home around 800 per month but I'm not seeing how an annuity income rider can do this on their 134k. I can sell them a much lower health insurance (about half their cost) so that would help some.
Suggestions?