To take the Lump Sum Pension distribution or not??

[Jay Kaltenbach]

Good morning BP!! 

I've got something that has been eating at me for a few months now and I'm not sure how to proceed. I'm not sure who to talk to about this so I thought I would throw it out here first to get some opinions.

I have a pension with a former employer and they sent me a letter back in October about the possibility of taking a lump sum distribution (just north of $300k) or I could continue to leave it where it is and take the monthly payment whenever I decide to start (I'm 52 so it would be a while yet).

I have been investing in real estate for a few years now and have done quite a bit of private lending, out of my self-directed IRA, with good results. There are times (especially recently) that I wish I had more funds in the IRA to put to use because I'm sure I could make it grow faster than where it is now.

My ultimate goal is to have enough rental properties, multi-family ideally, to create enough passive income to live off of and retire as soon as possible. I'm sure that is limited if I were to do it inside the IRA but due to the lack of funds outside the IRA that's my best option at the present time (I believe?)

So, should I take the lump sum and roll it over into my SDIRA or leave it where it is and try another avenue to purchase more rental properties? What would you do?

Thanks in advance for your input and I'm sure I have left out some pertinent information but I thought I would at least get the ball rolling!

Have a great day!!

[Chris Seveney]

Jay Kaltenbach this would best be answered by your accountant or a financial advisor. Typically it is better to take payments in lump sum as you can reinvest that $ and get better returns than what the payment plan provides - but if you do not need the cash or you are not good budgeting your $ then they may tell you to take the payments

Based on your post and what your goals are regarding more lending it sounds like you may have answered your question yourself.