How to add a lump sum pension payment at retirement that immediately rolled into a 401k

PolymerMan

As I create my retirement planner I am running into an issue of planning for a lump sum payment from my pension plan. Under retirement the only option seems to be an annuity. Am I missing something? Ultimately I would like the retirement planner to show a lump sum payment that is immediately rolled into my 401k (or another tax deferred IRA). So I can compare the lump sum vs taking the annuity in the retirement planner.

Boatnmaniac

Hi @PolymerMan .  Pensions are defined benefit plans that provide a monthly income so they would show up in Lifetime Planner under Retirement Benefits along with Social Security. 

But 401k/IRAs are investment accounts and they will show up in the Lifetime Planner under Investments.  In order to show the 401k/IRA in this section, add the 401k/IRA investment account to Quicken.  Then fund the 401k/IRA account with a transfer transaction from your Pension account to your 401k/IRA.

PolymerMan

The issue is that the lump sum payment is in the future a number of years and when I manually put a future transfer from the new "Lump Sum" account to my existing 401k account in Quicken the LifeTimePlanner does not show this correctly. Example: I do a future transfer of $500k from my lump sum account to my 401k account in 2025 and the planner then shows that all years prior to that (2022, 20223, 2024) of also having the increased value of ($500k) to my portfolio instead of seeing the jump just in 2025 when it was added.

Surely, there is an easy way for the LifeTimePlanner to add a predicted lump sum of money at one specific time in the future to an existing 401k or IRA?

Chris_QPW

How are you entering that "transfer"?  The Lifetime Planner has no "transfer" feature.

Scooterlam

PolymerMan said:

...

Surely, there is an easy way for the LifeTimePlanner to add a predicted lump sum of money at one specific time in the future to an existing 401k or IRA?

@PolymerMan Unfortunately in Lifetime Planner, there seems to be no good option to do a "what-if" benefits study on pension annuity  vs. pension lump-sum distribution in some future year.   I've been looking at this for awhile to see if there was some sort of work-around I could offer.....At least one that involves a future rollover to a tax-deferred account.   

I'm not a pension expert but LTP lacking an option of a lump-sum rollover to a tax-deferred account seems odd.  Is it?

An option, requiring some development time, in the Retirement Benefits>Edit Pension dialog could allow the user to select a lump-sum and rollover to a tax-deferred account.  Image.   So, a user can setup the pension as either an annuity or lump-sum in LTP and use the Explore What-if  feature to assess end-of-plan balance, et al., of the other option.  Seems to me a sensible location to place this lump-sum or annuity feature.




As you found, when you setup a future-dated deposit/transfer from your "lump sum" account to a tax deferred account, like I think you're trying to do, LTP does not respect the future-dated transaction.  So, LTP sees that future dated balance increase as if it were done today.   This is why you see the plan balance increases from today forward, not at the date you expected to see it.   Creative thinking, though!

A (not so great) option....model this lump-sum distribution as a one-time, "income" event deposited into a taxable account.  Image.  In the "Other Income" dialog,  you have control over the "income" tax rate,  income frequency, and date of event.  But, it also assumes that the distribution will land in a taxable account.... So, this approach would not be subject to RMD, penalties, and such and subject to any annual tax setting you may have set.  Not so great....

Looking further... Help content offers no suggestion under pension lump-sum distributions to a tax-deferred account.  Curiously, HELP addresses the scenario where the distribution is NOT rolled over... Image 1.  Don't see any mention of how to address if the lump-sum IS rolled over....Odd.

Image 1 - Help Content Falls Short of Guidance

At a bit of a sticking point here....perhaps there are other users who have additional thoughts on a solution or workaround.

Scooterlam

For those with pensions that use or wish to use Lifetime Planner, I went ahead and created an idea post around adding lump-sum distributions, here:  

https://community.quicken.com/discussion/7908183/lifetime-planner-idea-add-a-pension-lump-sum-distribution-option/p1?new=1