Published on September 14, 2014
Review your annual benefit statements and payout options Besides that, experts also say that you should ask for your annual benefit statement. “If you do not ask, you may not get,” said Nick Paleveda, an adjunct professor in the Graduate Tax Program at Northeastern University and the CEO of National Pension Partners. The employer is required by law to furnish a statement known as the 204(h) notice, he said. Others agree with the advice. “Review your annual benefit statement to see how much you will be eligible for in retirement,” said Russell. “Even a small monthly amount can take some of the pressure off their monthly cash flow needs in retirement.” In addition, Russell recommends that you look at your summary plan document or what’s called the SPD and speak with your human resource and ask whether they can take a lump- sum payment at retirement and invest it themselves. “This might be a good option if the company providing the pension is having financial difficulties and may have too little money saved in the pension to pay a lifetime benefit,” she said. “It pays to be prepared for either option: retaining the monthly benefit as paid by the company, or taking the lump sum and investing it themselves.” Russell also suggests that you become familiar with the different periodic payment options available as a pension, such as a straight lifetime payment, or a joint and survivor payment. “This way when you get to retirement and want to create a monthly payment, you will know their options and what will work best for your monthly budget needs,” said Russell.