If your pension offers a lump sum, you may be able to roll it into an IRA. Here is how that works.
Can you roll a pension into an IRA?
Yes, if your pension plan offers an eligible lump-sum distribution, you can usually roll it directly into a traditional IRA tax-free. Many private pensions allow a lump-sum payout when you retire or leave the company. A direct rollover moves that lump sum trustee-to-trustee, so no taxes are withheld and the money stays tax-deferred. Not all pensions allow lump sums, and some only pay lifetime monthly income, which cannot be rolled over. Review your specific plan documents, and call 1-800-MEDIGAP at 1-800-633-4427 to talk through your choices.
Lump sum vs. lifetime monthly payments
Choosing a lump-sum rollover gives you control, investment flexibility, and the ability to leave remaining funds to heirs, but you take on investment and longevity risk. A lifetime monthly pension provides guaranteed income you cannot outlive, which some retirees value for stability. There is no universally right answer; it depends on your health, other income, risk tolerance, and estate goals. Because this is a major, often irreversible decision, many retirees consult a financial professional before choosing. Our team can help you frame the question within your broader retirement and Medicare picture.