How to Receive Your Pension if You Are Terminated

Your pension's vesting schedule is listed in the plan document.

If you are terminated from your current employer, you may be eligible to keep your pension benefit. Your total pension benefit is based on the number of years you worked at your company and your average salary while employed. You are entitled to keep the portion of this benefit that is considered vested. When the pension was created, your employer established a vesting schedule that listed how many years an employee needed to work at the company to keep his pension benefit. Your employer must pay you your vested pension benefits after you are terminated.

Things You'll Need

• Pension plan document

Instructions

1. Review your pension's plan document for the vesting schedule. This document should have been mailed to you when you enrolled in the plan. Confirm that you have met the vesting requirements of your pension and are entitled to your benefit.

2. Contact the plan administrator of the pension and ask what options are available for transferring your benefit. Your plan could allow you to take a lump-sum payment, a series of monthly payments starting today or a delayed payment stream beginning when you retire. Not all options may be available, but at least one option must be.

3. Decide on a payout method from your plan. Contact the plan administrator and sign off any company paperwork to confirm your decision.

4. Collect your pension payments according to the plan schedule, if you elected to receive payments today or in retirement. Report all received payments as income for your tax return.

5. Contact the investment company managing your current retirement account, and let it know you want to roll over your pension benefit, if you elected a lump-sum distribution. This could be a retirement plan at your new job or an individual retirement account at a brokerage firm.

6. Contact your pension's administrator and request a transfer of your benefit to your new retirement account.

Tips & Warnings

• Do not move your lump-sum pension payment into a nonretirement account. You will be charged income tax on the entire withdrawal plus an additional 10 percent penalty for early withdrawal if you are under 59-1/2.

References

• IRS: Topic 413 - Rollovers from Retirement Plans
• Fidelity: How to Take a Pension Payment